Category Archives: Chapter 13

Chapter 13 Confirmation Hearing: What It’s For and How It Works

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Introduction:

Filing for Chapter 13 bankruptcy can be a lifeline for individuals drowning in debt, offering the opportunity to reorganize their financial affairs and repay creditors over a structured timeline. One crucial step in this process is the Chapter 13 confirmation hearing. In this article, we’ll explore the purpose of the Chapter 13 confirmation hearing and how it works.

Understanding Chapter 13 Bankruptcy:

Before diving into the confirmation hearing, let’s have a quick refresher on Chapter 13 bankruptcy. This form of bankruptcy allows debtors to create a repayment plan that spans either three years or five years, based on their income and expenses. Unlike Chapter 7 bankruptcy, which often leads to the total discharge of most debts, Chapter 13 focuses on structured debt repayment.

Purpose of the Chapter 13 Confirmation Hearing:

The confirmation hearing is a pivotal moment in a Chapter 13 bankruptcy case. Its primary purposes are:

  1. Plan Review: During the hearing, the bankruptcy judge reviews the proposed repayment plan submitted by the debtor. The judge ensures that the plan complies with bankruptcy laws, is feasible, and meets the best interests of both the debtor and creditors.
  2. Creditor Consideration: Creditors have the opportunity to raise objections or concerns about the proposed plan. This allows them to ensure that their interests are adequately protected under the plan.

How the Chapter 13 Confirmation Hearing Works:

Here’s a breakdown of the confirmation hearing process:

Plan Submission: After filing for Chapter 13 bankruptcy, the debtor must submit a detailed repayment plan to the court. This plan outlines how the debtor intends to repay creditors over the designated period.

Trustee Review: The bankruptcy trustee assigned to the case reviews the proposed plan to verify its compliance with bankruptcy laws. The trustee also assesses the plan’s feasibility based on the debtor’s income, expenses, and the proposed repayment schedule.

Notice to Creditors: Creditors and interested parties receive notice of the proposed plan and the date of the confirmation hearing. This provides them with the opportunity to object if they believe the plan does not treat their claims fairly or is not in compliance with bankruptcy laws.

Confirmation Hearing: The hearing typically occurs several months after the bankruptcy filing. Your attorney will have presented the repayment plan to the judge well ahead of the hearing date. During the hearing:

  • The judge evaluates the plan, listens to any creditor objections, and considers its feasibility.
  • The debtor’s attorney addresses any creditor objections during the hearing.

Court’s Decision: After reviewing the plan and any objections, the judge makes a decision regarding plan confirmation. If approved, the plan becomes a court order, and the debtor must adhere to its terms. If not confirmed, the debtor may be given an opportunity to amend the plan to address concerns raised during the hearing.

Implementation: Well before the confirmation hearing, the debtor will have begun making monthly payments according to the plan. The bankruptcy trustee collects these payments and distributes them to creditors according to the plan’s terms.

Conclusion:

The Chapter 13 confirmation hearing is a critical step in the Chapter 13 bankruptcy process. It ensures that the proposed repayment plan adheres to legal requirements and is fair to both the debtor and creditors. While the process may appear complex, it offers individuals a structured path to regain financial stability and fulfill their obligations. If you’re considering Chapter 13 bankruptcy, consulting with an experienced bankruptcy attorney is essential to navigate the process successfully and increase your chances of plan confirmation.

Schedule a free bankruptcy consultation with Jennifer Weil, a New Jersey bankruptcy attorney, to discuss your options.

Modifying a Chapter 13 Repayment Plan: Understanding the Process and When Modifications Are Necessary

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Introduction:

In Chapter 13 bankruptcy, the repayment plan serves as the foundation for regaining control of your finances and repaying your debts. However, financial circumstances can change over time, necessitating modifications to the original plan. In this article, we delve into the process of modifying a Chapter 13 repayment plan, exploring the reasons why modifications may be necessary and when they typically occur.

  1. The Purpose of a Chapter 13 Repayment Plan: The Chapter 13 repayment plan is designed to provide individuals with a structured framework for repaying their debts over a specific period, typically three to five years. It allows debtors to make manageable payments based on their income and financial circumstances while protecting their assets from liquidation.
  2. Reasons for Modifying a Repayment Plan: Modifications to a Chapter 13 repayment plan may be required due to various reasons, including: a) Financial Hardship: Unexpected circumstances, such as job loss, reduction in income, medical emergencies, or other financial hardships, can impact your ability to make the agreed-upon plan payments; b) Income Changes: Significant changes in income, such as an increase or decrease, may warrant modifications to the plan to reflect your current financial situation accurately; c) Expense Adjustments: Changes in necessary living expenses, such as housing, healthcare, or childcare, may require adjustments to the repayment plan to ensure it remains feasible and reflects your current financial obligations. d) Unforeseen Debts: New debts that arise during the Chapter 13 repayment period, such as medical bills or unexpected expenses, may need to be incorporated into the plan.
  3. Requesting a Modification: To modify a Chapter 13 repayment plan, you will need to file a motion with the bankruptcy court. The motion outlines the reasons for the requested modification and provides supporting documentation to substantiate the need for the changes. Working with your bankruptcy attorney is crucial to ensure that the motion is prepared accurately and filed within the required timeframe.
  4. Consideration by the Bankruptcy Court: Upon receiving the motion for plan modification, the bankruptcy court will review the request. The court considers various factors, including the reasons for the modification, supporting documentation, the impact on creditors, and the overall feasibility of the proposed changes. The court may hold a hearing to discuss the modifications and allow any interested parties, such as creditors, to voice their opinions or objections.
  5. Types of Plan Modifications: Plan modifications can take several forms, depending on the specific circumstances. Common types of modifications include: a) Extending the Plan Duration: If you encounter financial difficulties, the court may consider extending the repayment period beyond the original timeframe to lower the monthly payment amount and provide relief; b) Changing the Payment Amount: Adjusting the payment amount based on income changes or expense adjustments can help ensure that your plan remains feasible and reflects your current financial capabilities. c) Including New Debts: If unforeseen debts arise during the repayment period, the court may allow their inclusion in the plan, adjusting the payment amounts accordingly. d) Curing Defaults: If you fall behind on plan payments, the court may allow you to cure the defaults by modifying the plan to catch up on missed payments over time.
  6. Court Approval and Notice to Creditors: For plan modifications to take effect, they must be approved by the bankruptcy court. Once approved, notice of the modifications is provided to creditors, who have the opportunity to review and raise objections within a specified period. If no objections are raised or objections are resolved, the modified plan becomes binding on all parties involved.
  7. Post-Modification Implementation: After the court approves the modifications, you are responsible for adhering to the terms of the modified plan. This includes making the revised payments as outlined in the new plan and complying with any additional requirements specified by the court. Consistent and timely payments are essential to successfully complete the modified plan and achieve debt relief.

Conclusion:

Modifying a Chapter 13 repayment plan is a crucial aspect of the bankruptcy process, allowing for adjustments that reflect changes in your financial circumstances. Whether due to financial hardships, income adjustments, expense changes, or unforeseen debts, modifications ensure that your plan remains feasible and continues to address your repayment obligations. Working closely with your bankruptcy attorney, you can navigate the modification process, secure court approval, and maintain progress toward achieving your financial goals through Chapter 13 bankruptcy.

Schedule a free telephone appointment to discuss your unique debt situation with attorney Jennifer Weil at my Setmore page.

The Chapter 13 Confirmation Hearing: Understanding Its Importance in Bankruptcy Court

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Introduction:

The Chapter 13 confirmation hearing is a significant milestone in the bankruptcy process that occurs in Bankruptcy Court. This crucial step determines the approval and implementation of your Chapter 13 repayment plan, which outlines how your debts will be repaid over a specific period. In this article, we delve into the importance of the Chapter 13 confirmation hearing and shed light on what to expect during this critical stage.

  1. Significance of the Confirmation Hearing: The Chapter 13 confirmation hearing is a pivotal moment where the bankruptcy court reviews and approves your proposed repayment plan. Its primary purpose is to ensure that the plan is fair, feasible, and complies with bankruptcy laws. The confirmation hearing also provides an opportunity for creditors to raise objections and for the court to address any concerns.
  2. Preparation for the Confirmation Hearing: Before the confirmation hearing, it’s crucial to work closely with your bankruptcy attorney to prepare a comprehensive repayment plan that addresses your financial situation and meets legal requirements. This involves providing accurate and complete financial information, including income, expenses, assets, and debts, along with supporting documents.
  3. Notice to Creditors: Creditors are provided with notice of the confirmation hearing and the opportunity to review the proposed repayment plan. They can examine the plan, raise objections if they believe it is unfair or fails to meet legal standards, and attend the hearing to voice their concerns. However, it’s important to note that objections from creditors are relatively rare in Chapter 13 cases.
  4. Presentation of the Repayment Plan: During the confirmation hearing, your bankruptcy attorney will present the proposed repayment plan to the bankruptcy court. They will explain the key provisions of the plan, including the duration of the plan, the amount to be repaid to creditors, treatment of priority and secured debts, and the source of funds for repayment. The attorney will advocate for the plan’s approval based on its feasibility and compliance with bankruptcy laws.
  5. Court Review and Decision: The bankruptcy court carefully reviews the proposed repayment plan during the confirmation hearing. The judge assesses whether the plan meets legal requirements, treats creditors fairly, and is feasible given your financial circumstances. If there are no objections from creditors or other parties, the court may confirm the plan at the hearing itself. However, in some cases, the court may require additional time to review and issue a decision.
  6. Addressing Objections: If any objections to the repayment plan are raised by creditors or other parties, the bankruptcy court will hear and consider these objections. The court may ask for further clarification, request modifications to the plan, or hold a separate hearing to resolve the objections. Your bankruptcy attorney will work to address any concerns and negotiate with objecting parties to seek resolution and facilitate plan approval.
  7. Plan Confirmation and Implementation: If the court confirms the proposed repayment plan, it becomes binding on all parties involved, including you and your creditors. From that point forward, you are obligated to make the agreed-upon payments to the bankruptcy trustee, who will distribute the funds to creditors in accordance with the plan. Adhering to the repayment plan is essential to successfully complete your Chapter 13 bankruptcy and achieve debt relief.
  8. Plan Modifications: In certain situations, modifications to the confirmed plan may be necessary. If you experience changes in income, expenses, or other financial circumstances that affect your ability to make payments, you may request modifications to the plan. However, significant modifications may require court approval.

Conclusion:

The Chapter 13 confirmation hearing is a pivotal event in the bankruptcy process, where the proposed repayment plan is reviewed and approved by the bankruptcy court. By working closely with your bankruptcy attorney, preparing a comprehensive plan, and addressing any objections raised, you can navigate the confirmation hearing successfully. Upon plan confirmation, diligent adherence to the terms of the plan paves the way for debt relief and a fresh financial start.

Schedule a free telephone appointment to discuss your unique debt situation with attorney Jennifer Weil at my Setmore page.

Calculating the Chapter 13 Repayment Plan: Understanding Your Debt Repayment Options

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Introduction:

Chapter 13 bankruptcy provides individuals with a viable path to regain control of their finances through a structured debt repayment plan. The repayment plan is a crucial element of Chapter 13 bankruptcy, as it outlines how your debts will be paid off over a specific period. In this article, we explore the various methods used to calculate the Chapter 13 repayment plan, empowering you with a comprehensive understanding of your debt repayment options.

  1. Importance of the Repayment Plan: The repayment plan in Chapter 13 bankruptcy is a vital component that determines how your debts will be addressed. It provides a roadmap for repaying your creditors based on your disposable income while considering your essential living expenses.
  2. Standard Percentage Plan: One common method for calculating the Chapter 13 repayment plan is the standard percentage plan. In this approach, your disposable income is determined by subtracting allowable expenses from your monthly income. The amount left after deducting expenses is then divided among your creditors based on the percentage they are owed. This method ensures equitable distribution of available funds to each creditor.
  3. Disposable Income Plan: Another approach to calculating the repayment plan is the disposable income plan. Under this method, your disposable income, which is the amount left after deducting necessary living expenses, is used to determine the monthly repayment amount. This approach accounts for your ability to pay and focuses on allocating available funds towards debt repayment.
  4. Liquidation Value Plan: In some cases, the repayment plan may be calculated based on the liquidation value of your non-exempt assets. The liquidation value represents the estimated amount your assets would generate if sold. Instead of relying solely on disposable income, the plan determines the repayment amount based on the value of non-exempt assets that would otherwise be liquidated in a Chapter 7 bankruptcy.
  5. Priority and Secured Debt Considerations: The Chapter 13 repayment plan distinguishes between priority and secured debts. Priority debts, such as tax obligations and domestic support obligations, must be paid in full over the duration of the plan. Secured debts, such as mortgages or car loans, typically require regular payments to avoid foreclosure or repossession. The plan may include provisions to catch up on past-due payments for secured debts.
  6. Length of the Repayment Plan: The duration of the Chapter 13 repayment plan typically ranges from three to five years. The length depends on various factors, including your income, disposable income, and the amount of debt owed. Shorter plans may be available if you can repay all allowed claims within a shorter timeframe. The length of your plan will be determined and approved by the bankruptcy court.
  7. Modification of the Plan: In certain situations, the repayment plan can be modified during the course of the Chapter 13 bankruptcy. If you experience changes in income, expenses, or financial circumstances, you may request a modification to adjust the repayment terms. However, significant modifications require court approval.
  8. Completion of the Repayment Plan: Upon successfully completing all required payments and fulfilling the obligations outlined in your repayment plan, you will reach the end of the Chapter 13 bankruptcy process. A discharge will be granted, releasing you from any remaining eligible debts outlined in the plan.

Conclusion:

Understanding the methods used to calculate the Chapter 13 repayment plan empowers individuals seeking debt relief through bankruptcy. Whether utilizing the standard percentage plan, disposable income plan, or liquidation value plan, the repayment plan plays a crucial role in determining how your debts will be repaid over a specific period. By working closely with a knowledgeable bankruptcy attorney, you can navigate the complexities of the Chapter 13 repayment plan and achieve a fresh financial start.

Schedule a free telephone appointment to discuss your unique debt situation with attorney Jennifer Weil at my Setmore page.

Navigating the Chapter 13 Timeline: A Comprehensive Guide

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Introduction:

Chapter 13 bankruptcy offers individuals with regular income an opportunity to restructure their debts and establish a manageable repayment plan. Understanding the Chapter 13 timeline is crucial for those considering this form of bankruptcy. In this article, we provide a detailed guide to the Chapter 13 timeline, outlining the key stages and milestones throughout the process.

  1. Pre-Filing Preparation: Before filing for Chapter 13 bankruptcy, it’s important to gather necessary financial documents, including income statements, tax returns, a list of assets and liabilities, and a detailed list of creditors. This preparation ensures accuracy when completing the bankruptcy petition and helps facilitate a smooth process.
  2. Filing the Bankruptcy Petition: The Chapter 13 bankruptcy process begins with filing the bankruptcy petition, schedules, and other required documents with the bankruptcy court. The petition includes detailed financial information, such as income, expenses, assets, debts, and a proposed repayment plan. Once filed, an automatic stay goes into effect, halting debt collection efforts.
  3. Meeting of Creditors (341 Meeting): Approximately 20-40 days after filing, you will attend a meeting of creditors, also known as the 341 meeting. The bankruptcy trustee, you, and your attorney will be present. Creditors have the opportunity to ask questions regarding your financial situation and the proposed repayment plan. This meeting allows for transparency and addresses any concerns raised by creditors.
  4. Confirmation of the Repayment Plan: After the 341 meeting, a confirmation hearing will be scheduled. During this hearing, the bankruptcy court will review and approve your proposed repayment plan. The plan outlines how your debts will be repaid over a period of three to five years, considering your disposable income and the amount owed to creditors.
  5. Implementation of the Repayment Plan: Once the court confirms your repayment plan, you must begin making payments to the bankruptcy trustee as outlined in the plan. These payments are made regularly, typically on a monthly basis, and cover both secured and unsecured debts. The trustee then distributes the funds to creditors according to the plan.
  6. Completing the Repayment Plan: The length of your repayment plan will be determined by the court during the confirmation hearing. Generally, Chapter 13 plans last for three to five years. During this time, you must make all required payments as outlined in the plan. It’s important to adhere to the plan diligently to ensure successful completion.
  7. Financial Education Course: As part of the Chapter 13 bankruptcy process, you must complete a financial education course from an approved agency. This course helps promote financial literacy and provides valuable tools and resources to help you manage your finances effectively in the future.
  8. Discharge of Remaining Debts: Upon successful completion of your repayment plan, any remaining qualifying unsecured debts, such as credit card balances and medical bills, may be discharged. This discharge provides relief from those debts and signifies the completion of your Chapter 13 bankruptcy.
  9. Post-Bankruptcy Recovery: After receiving your discharge, you can focus on rebuilding your credit and regaining financial stability. Establishing responsible financial habits, such as making timely payments, keeping credit utilization low, and managing your finances prudently, will aid in your post-bankruptcy recovery.

Conclusion:

Navigating the Chapter 13 timeline requires careful planning, adherence to court requirements, and the guidance of a qualified bankruptcy attorney. Understanding the stages, from pre-filing preparation to discharge and post-bankruptcy recovery, helps individuals effectively navigate the process. By following the Chapter 13 timeline diligently, you can restructure your debts, establish a manageable repayment plan, and achieve a fresh financial start. Remember, consulting with a knowledgeable bankruptcy attorney is crucial for personalized advice and assistance throughout your Chapter 13 bankruptcy journey.

Schedule a free telephone appointment to discuss your unique debt situation with attorney Jennifer Weil at my Setmore page.

Chapter 13 Bankruptcy: Your Path to Debt Collection Relief

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Introduction:

When faced with overwhelming debt and relentless debt collection efforts, Chapter 13 bankruptcy can provide a powerful solution for regaining control of your financial life. This form of bankruptcy allows individuals to restructure their debts and establish a manageable repayment plan. In this article, we will explore how Chapter 13 bankruptcy can provide relief from debt collection and pave the way towards financial recovery.

  1. Understanding Chapter 13 Bankruptcy: Chapter 13 bankruptcy, also known as a wage earner’s plan, is a legal process that allows individuals with regular income to create a structured repayment plan to repay their debts over a specified period, usually three to five years. It provides an opportunity to regain control of your finances while protecting your assets from liquidation.
  2. Automatic Stay and Halting Debt Collection: One of the most significant advantages of filing for Chapter 13 bankruptcy is the automatic stay. As soon as you file your bankruptcy petition, an automatic stay goes into effect, halting all debt collection activities. This means creditors must cease all collection efforts, including lawsuits, wage garnishments, phone calls, and letters. The automatic stay provides immediate relief, allowing you to focus on the restructuring and repayment process.
  3. Creating a Repayment Plan: In Chapter 13 bankruptcy, you work with a bankruptcy trustee to create a repayment plan tailored to your income and financial situation. This plan consolidates your debts into a single monthly payment, which is then distributed to creditors over the designated repayment period. The repayment plan takes into account your essential living expenses and allows for a reasonable repayment of your debts.
  4. Debt Reduction and Discharge: Under the Chapter 13 repayment plan, you may be eligible for debt reduction or discharge. Certain debts, such as credit card balances, medical bills, and personal loans, can be reduced or discharged based on your income and the repayment plan. However, it’s important to note that some debts, such as child support, alimony, and certain tax obligations, must be paid in full.
  5. Protection of Assets: Chapter 13 bankruptcy offers a distinct advantage in protecting your assets from liquidation. Unlike Chapter 7 bankruptcy, where non-exempt assets may be sold to repay creditors, Chapter 13 allows you to retain your assets while repaying your debts over time. This enables you to maintain your home, car, and other essential belongings, providing a stable foundation for financial recovery.
  6. Financial Rehabilitation and Credit Repair: While Chapter 13 bankruptcy may impact your credit score, it also offers an opportunity for financial rehabilitation and credit repair. By adhering to the repayment plan and consistently making payments, you demonstrate financial responsibility, which can positively impact your creditworthiness over time. Establishing responsible financial habits during and after the bankruptcy process will aid in rebuilding your credit.
  7. Working with a Bankruptcy Attorney: Navigating the complexities of Chapter 13 bankruptcy requires professional guidance. Hiring a qualified bankruptcy attorney is crucial to ensure a smooth and successful process. They will help you evaluate your financial situation, guide you through the legal requirements, negotiate with creditors, and create a repayment plan that is feasible and sustainable.

Conclusion:

Chapter 13 bankruptcy offers a powerful solution for individuals burdened by debt and struggling with relentless debt collection efforts. By taking advantage of the automatic stay, creating a structured repayment plan, protecting assets, and working towards debt reduction or discharge, Chapter 13 bankruptcy provides relief from debt collection and the opportunity for financial recovery. Consulting with a knowledgeable bankruptcy attorney will ensure that you navigate the process effectively, helping you establish a solid foundation for a brighter financial future.

Schedule a free telephone appointment to discuss your unique debt situation with attorney Jennifer Weil at my Setmore page.

Chapter 7 vs. Chapter 13 Bankruptcy: Understanding the Key Differences

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Introduction:

Considering bankruptcy as a solution to overwhelming debt? It’s essential to understand the differences between Chapter 7 and Chapter 13 bankruptcy, the two most common types of personal bankruptcy in the United States. This comprehensive guide will provide insights into each chapter’s unique characteristics, eligibility requirements, and the potential impact on your financial situation.

Chapter 7 Bankruptcy:

Chapter 7 bankruptcy, often referred to as “liquidation bankruptcy,” offers a fresh start by discharging most unsecured debts. Here are the key aspects to know:

  1. Eligibility: Individuals with limited disposable income and who pass the means test can qualify for Chapter 7 bankruptcy.
  2. Asset Liquidation: A bankruptcy trustee may sell non-exempt assets to repay creditors. However, many essential assets, such as clothing, household items, and retirement accounts, are typically exempt from liquidation.
  3. Debt Discharge: Upon successfully completing Chapter 7 bankruptcy, most unsecured debts like credit cards, medical bills, and personal loans are discharged, providing significant debt relief.

Chapter 13 Bankruptcy:

Chapter 13 bankruptcy, known as the “reorganization bankruptcy,” enables individuals to create a manageable repayment plan over several years. Consider the following points:

  1. Eligibility: Chapter 13 bankruptcy suits individuals with a regular income who can afford a repayment plan.
  2. Repayment Plan: Debtors propose a 3-5 year plan to repay a portion or all of their debts based on their disposable income. This allows them to retain assets like homes and cars while catching up on arrears.
  3. Debt Adjustment: Chapter 13 bankruptcy consolidates debts and establishes a court-approved repayment plan, often reducing interest rates and eliminating penalties.

Key Differences:

  1. Debt Discharge: Chapter 7 bankruptcy typically results in a discharge within a few months, while Chapter 13 involves a repayment plan lasting several years.
  2. Asset Protection: Chapter 7 may require liquidation of non-exempt assets, whereas Chapter 13 allows individuals to retain their assets while repaying creditors through the plan.
  3. Income Requirements: Chapter 7 focuses on income limitations, while Chapter 13 evaluates the debtor’s ability to make regular payments.
  4. Repayment vs. Discharge: Chapter 13 emphasizes repaying debts over time, whereas Chapter 7 prioritizes debt discharge.

Conclusion:

Understanding the differences between Chapter 7 and Chapter 13 bankruptcy is crucial when considering the best option for your financial situation. Consult an experienced bankruptcy attorney who can assess your circumstances and guide you towards the most suitable path. Whether seeking a fresh start through debt discharge or reorganizing debts for manageable repayments, bankruptcy can provide relief and pave the way to financial stability.

Schedule a free telephone appointment to discuss your unique debt situation with attorney Jennifer Weil at my Setmore page.

How To Get Rid Of Your Car In Bankruptcy

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Table of Contents

You might want to know how to get rid of your car in bankruptcy. But if you really want to know how to keep your car through your bankruptcy case, that was the subject of an earlier post (linked above).

Not everyone wants to keep their car through bankruptcy. Sometimes, the monthly car payment is too high, or the car has developed problems that require expensive repairs in order to keep it in good running order. And sometimes you just decide that you no longer need the car at all.

Especially in northern New Jersey, not everyone needs a car for work. Many people work in NYC or within the urban area not far from where they live, such as within Jersey City or Newark, and they take public transportation. It happens that people often make the transition from having to drive to work – say, to a more suburban area of New Jersey – to being able to take public transportation to get there.

Car Loans Are Dischargeable In Bankruptcy

First, you should know that your car loan is dischargeable in bankruptcy, just like credit card debt. Decide whether you need a car after bankruptcy. This decision will help guide your next actions.

If You Need Another Car

While you are in a Chapter 7 bankruptcy, your car cannot be repossessed due to the automatic stay, although the automatic stay can end as to your car a little earlier than the end of your bankruptcy case, under certain circumstances. If you need a car but you want to get a different car from the one you have now, you will need to wait until your bankruptcy is over before you can get a new car. Because you need a car, you may want to continue making your current car loan payments until you are certain that you can get another car.

Getting another car can be as simple as waiting until after the end of your Chapter 7 case. Or it can be as complicated as getting permission to get a new car loan during your Chapter 13 plan. Your exact strategy will depend on the specific issues in your case.

If You Don’t Need Another Car

Planning is a lot easier if you don’t need to get another car at all. In this case, you simply stop paying on the car loan. You should stop paying on the car loan once you have decided that you no longer need the car and once you have cleaned your personal belongings out of it.

You can stop paying on the car before your bankruptcy, during your bankruptcy, or after the bankruptcy. In each of those cases, your bankruptcy will take care of discharging the car loan, if you are filing a Chapter 7. If you are filing a Chapter 13, you may be repaying some or all of the car loan through your bankruptcy case, since Chapter 13 involves some level of repayment.

You Can Get A Car Loan After Bankruptcy

So many people believe that they “can’t buy anything,” or that they won’t be able to take out a new loan after bankruptcy. This isn’t true. First – of course you can buy things after bankruptcy. There’s nothing to stop you from saving up enough to pay cash for a used car after bankruptcy, except for your ability to earn enough cash to save up, which is a challenge for many.

Second, you can get a car loan after bankruptcy. Keep in mind that the loan terms won’t be the best terms – you did just come out of a bankruptcy, after all – but don’t be surprised if a car dealership is ready to throw a new car loan contract at you the same day that your bankruptcy case ends. Writing up new car loans is how car dealerships make their money.

If you’ve got questions about how to get rid of your car loan in bankruptcy, or if you need to use bankruptcy to get out of a bad car loan, call (201) 676-0722 to schedule a free telephone consultation with attorney Jennifer Weil, or go to my Setmore page.

Your Bankruptcy Consultation: The 3 Main Topics

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What happens at a bankruptcy consultation? The answer to this question is different depending on who the bankruptcy consultation is with, whether the consultation is in person or by phone, and what systems the bankruptcy attorney has set up for the consultation. I can give you some general insight as well as information about how I conduct my own bankruptcy consultations.

Consultation Fees

Many, but not all, bankruptcy attorneys do some sort of free consultation. The attorneys who don’t do free consultations aren’t necessarily more expensive; often, those attorneys feel that they are giving more value during the consultation phase, so they should charge a fee. Or they feel that they shouldn’t give away their time. There may be an incentive built into the consultation fee in the sense that the attorney may credit such a fee against the entire bankruptcy attorney fee if you hire them.

As of yet, I don’t charge bankruptcy consultation fees for the most part for a couple of reasons: First, I do all my bankruptcy consultations over a relatively short phone call and not in person. In-person consultations take up far more of my time and I always charge for those. This doesn’t mean that I do all my phone consultations for free. I may charge a small fee for other types of consultations, such as student-loan consultations, since I’m providing a lot of value during those sessions.

Second, I see the primary purpose of the bankruptcy phone consultation as determining whether your case is one that I am able to take. I ask enough questions to enable me to determine whether the case is one that I have the time for and whether it is of the type that I want to take. For example, if your primary reason for calling is to get help with keeping your home through a mortgage foreclosure, I’m probably not the lawyer for you, since I generally don’t like to take those cases. But I may have a good lawyer referral or two for you!

Discussing Your Situation

The facts of your particular financial situation will come up during the bankruptcy consultation. A variety of issues are relevant to your financial situation and to a potential bankruptcy case, the most basic of which are how much money you make and what kind of debts you would like to have discharged in bankruptcy.

Not by any stretch of the imagination are these the only two issues that will come into play in your bankruptcy case, but they are a good place to start. You should be psychologically prepared to answer all sorts of questions about your financial affairs that would be inappropriate in a social setting. Think about what you own that might have any resale value, how you incurred your debts, whether you are or have been involved in a business of any kind and with whom, whether your spouse has anything to say about you filing for bankruptcy, etc.

All the different factors that could possibly come into play regarding your financial situation are too numerous and varied to list here. Just remember that anything and everything impacting your overall financial situation is potentially relevant and don’t forget to bring it up with the bankruptcy attorney at some point.

Eligibility For Bankruptcy

One topic that’s relevant to every bankruptcy consultation is your eligibility for bankruptcy, which also ties into the question of which chapter you might file.

Sometimes, your financial goals might dictate which chapter you should file, such as saving a home from foreclosure, for example. But there’s also the question of which chapter you are eligible to file, if any.

During the bankruptcy consultation, the attorney might unearth information showing that you aren’t eligible for the chapter you had hoped to file, or that a different chapter of bankruptcy would be better for your situation. Or they might find that bankruptcy is a bad idea for you altogether.

If your gross (before tax) income is close to the line of eligibility, the attorney may want to run the means test for you. Running the means test is not simple or quick and you should expect to pay a fee for this process. In my practice, I roll this fee into the bankruptcy, if the client hires me to file their case.

Call to schedule a free telephone bankruptcy consultation with attorney Jennifer Weil at (201) 676-0722.

The 2 Biggest Bankruptcy Myths, or: How Long Does A Chapter 7 Bankruptcy Stay On Your Credit Report?

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The question of how long a Chapter 7 bankruptcy stays on your credit report is one I get all the time. The short answer is 10 years. But the real reason that people ask me this question is because they’ve heard that a bankruptcy, especially a Chapter 7 bankruptcy, destroys the credit report for as long as it appears on their credit report, or even permanently. However, this reflects a couple of fundamental misunderstandings about the impact of bankruptcy on your credit report.

Myth #1: Chapter 7 Bankruptcy Destroys Your Credit

Simply put, it isn’t true that Chapter 7 bankruptcy, or any chapter of bankruptcy, destroys your credit. Your credit score takes an initial hit of several points as a result of the Chapter 7 being filed. But in saying that a Chapter 7 “destroys your credit,” you are giving too much power to bankruptcy – even more power than your bad debts have. It’s not possible for bankruptcy to “destroy” your credit report. What does it even mean for something to destroy your credit?

Let’s examine this belief: Does it mean that, when you apply for credit after bankruptcy, the decision maker will see that you filed for bankruptcy and automatically deny you? That’s just not true, but let’s assume for a moment that it is, and work through it logically.

Let’s start with basic facts: You have unmanageable credit card debt. Either all of that credit card debt shows up on your credit report, or it doesn’t because it’s business debt or because it’s pretty old. If it shows up, your credit report already looks bad because your debt-to-income ratio is bad and/or one or more accounts shows as being in default. But whether the debt appears on your credit report or not, you are living under the threat of debt collection, which includes debt-collection lawsuits. If you get sued for a debt and get a judgment against you, you could be subject to bank levy and/or wage garnishment. That’s even worse for your income and credit; it deprives you of full control over your income and your bank account.

Let’s say that instead of keeping these unmanageable debts on your credit report, instead of subjecting yourself to debt-collection lawsuits, you qualify and file for a Chapter 7 bankruptcy and you get all those credit-card debts discharged. How does your credit report look then? Yes, the bankruptcy shows up. Yes, all your credit-card accounts show up…but NOT as owing any balances. Instead, they show up as “$0 owed, discharged in bankruptcy” or something similar.

How does the sudden lack of debt affect your credit report? Positively, to be sure. Your debt-to-income ratio, which looked pretty bad just a few months before, looks a lot better after all that debt is wiped out in bankruptcy. Any creditor, such as a mortgage company, who is interested in how much debt you’re carrying, will see that you have several $0 balances, instead of credit-card balances totaling $20,000, $30,000 or more. Owing $0 gives you more money to put toward other things, such as a new mortgage, than owing $30,000 or more on credit cards. Mortgage companies know this.

Yes, there’s a waiting period of a couple years after bankruptcy before you can qualify for a mortgage, but that waiting period is shorter than the amount of time that bad (defaulted) credit-card debt stays on your credit report. Bad debt generally stays on your credit for 7 1/2 years. Which one do you think looks “better”? Seven and a half years of owing a ton of unmanageable credit card debt, or a Chapter 7 bankruptcy notation with no credit card debt at all? If you said the former, then you really need to put yourself in the shoes of creditors and re-examine your financial belief system.

Myth #2: Chapter 7 Bankruptcy Looks Worse on Your Credit Than Chapter 13 Bankruptcy

The basis of the myth that Chapter 13 bankruptcy looks better on your credit report than Chapter 7 bankruptcy comes from the idea that it is better to repay your debts, even partially, and Chapter 13 allows you to do that.

While it’s true that any individual creditor could choose to look more favorably on Chapter 13 for this reason, it’s a myth to believe that a Chapter 13 is always better for your credit. In fact, a Chapter 7 bankruptcy can be better for your credit in that it ends more quickly. To be successful, a Chapter 13 bankruptcy must last either 3 years or 5 years, which is the length of your plan. For each month of your Chapter 13 plan, you pay 100% of your disposable monthly income into the plan.

Either chapter of bankruptcy may be used as a method of solving your debt problems. It’s helpful to keep that in mind: Bankruptcy is a solution, not a way of making your debt problems worse. Don’t let the myths override your ability to rationally think about your financial situation.

For help rationally thinking about solutions to your debt problems, call (201) 676-0722 to schedule a specific day and time to have a discussion with attorney Jennifer Weil, or email weilattorney@gmail.com.