Category Archives: potential lawsuits

Chapter 13 vs. Debt Settlement: Which one is better?

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Introduction

When financial storms hit, individuals are often faced with tough decisions on how to regain control. Two common paths are Chapter 13 bankruptcy and debt settlement. In this article, we’ll explore why Chapter 13 bankruptcy stands out as a more comprehensive and advantageous option compared to debt settlement.

Understanding Chapter 13 Bankruptcy

Chapter 13 bankruptcy, often dubbed the “wage earner’s plan,” is a structured legal process that enables individuals with a regular income to reorganize their financial affairs. The process involves creating a realistic and manageable repayment plan, typically spanning three to five years, allowing debtors to regain control of their finances.

**1. Structured Repayment Plan:

  • Chapter 13 Advantage: One of the primary advantages of Chapter 13 bankruptcy over debt settlement is the creation of a structured repayment plan. This plan is tailored to the debtor’s income, expenses, and debt obligations, ensuring a realistic and sustainable path to financial recovery.
  • Debt Settlement Challenge: In contrast, debt settlement often involves negotiating with creditors to settle debts for a reduced amount. However, the lack of a structured plan can lead to unpredictable outcomes, leaving debtors vulnerable to unexpected financial challenges.

**2. Court Protection and Oversight:

  • Chapter 13 Advantage: Filing for Chapter 13 bankruptcy triggers an automatic stay, providing immediate relief from creditor actions such as wage garnishments, foreclosure, or harassment. Additionally, the court oversees the entire process, ensuring fair treatment of creditors and debtors.
  • Debt Settlement Challenge: Debt settlement lacks the same level of court protection. Creditors may continue their collection efforts, and the debtor is left to navigate negotiations independently, without the structured oversight provided by bankruptcy courts.

**3. Debt Discharge vs. Settlement:

  • Chapter 13 Advantage: Upon successful completion of the repayment plan, Chapter 13 allows for the discharge of remaining qualifying debts. This means that debts included in the plan can be eliminated, providing a true fresh start for the debtor.
  • Debt Settlement Challenge: Debt settlement, while reducing the overall debt amount, does not guarantee a complete discharge of the remaining balance. Creditors may still pursue the debtor for the outstanding amount, and the impact on credit can be significant.

**4. Credit Impact and Rebuilding:

  • Chapter 13 Advantage: While both Chapter 13 bankruptcy and debt settlement have an impact on credit, Chapter 13 provides a clearer path to rebuilding credit. Debtors can start the process of rebuilding credit immediately after completing the repayment plan.
  • Debt Settlement Challenge: Debt settlement may result in negative entries on the credit report, potentially affecting the debtor’s ability to secure credit in the future. Rebuilding credit after settlement can be a more prolonged process.

Conclusion: A Comprehensive Solution for Financial Recovery

In the realm of financial recovery, Chapter 13 bankruptcy emerges as a more comprehensive and structured solution compared to debt settlement. The protection, oversight, and potential for a complete discharge of qualifying debts make Chapter 13 a powerful tool for those seeking a fresh start. While debt settlement may offer some relief, the lack of a formalized plan and the uncertainty surrounding debt resolution make Chapter 13 the preferred choice for individuals navigating the complexities of financial challenges. Before making a decision, consulting with a qualified bankruptcy attorney is essential to understand the unique advantages Chapter 13 bankruptcy can offer based on individual circumstances.

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

The Bankruptcy Automatic Stay in New Jersey: How It Affects Debt Collection and State-Court Judgment

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Introduction: When facing overwhelming debt, bankruptcy can provide a lifeline for a fresh financial start. However, many individuals wonder how bankruptcy affects debt collection, especially in the context of New Jersey state court judgments. In this article, we will explore the bankruptcy automatic stay and its particular impact on debt collection, with a special focus on state-court judgments in New Jersey.

Understanding the Bankruptcy Automatic Stay:

Before we delve into the specifics of New Jersey, let’s first understand the bankruptcy automatic stay, a fundamental concept in bankruptcy law.

The automatic stay is a powerful provision that goes into effect the moment an individual or business files for bankruptcy. It prevents creditors from taking any actions to collect debts or seize assets during the bankruptcy proceedings. This temporary halt on collection efforts provides immediate relief to debtors and allows them to work toward a fresh financial start.

The Impact on Debt Collection:

The automatic stay affects various aspects of debt collection, including:

  1. Creditor Harassment: Creditors are prohibited from making collection calls, sending demand letters, or engaging in other harassing actions during the automatic stay.
  2. Wage Garnishments: The automatic stay stops wage garnishments – a common post-judgment debt-collection technique – providing debtors with the opportunity to use their income for essential living expenses.
  3. Bank Levies: It prevents creditors from freezing or seizing funds in a debtor’s bank account – this is another debt-collection method that is a common result of state-court judgments.
  4. Foreclosures and Repossessions: The automatic stay temporarily halts home foreclosures, car repossessions, and other property seizures.
  5. Legal Proceedings: If a creditor has initiated a lawsuit, the automatic stay suspends the legal process, offering debtors some breathing room. Here is an example of an order to halt all lawsuits against a large corporate bankruptcy debtor.

Conclusion:

The bankruptcy automatic stay can be a valuable tool for individuals seeking relief from debt collection efforts. However, its impact on state-court judgment debt collection, especially in New Jersey, can be influenced by various factors. To fully comprehend your specific situation and explore the best course of action, consult with a knowledgeable bankruptcy attorney in your area. Keep in mind that while bankruptcy offers relief, it’s essential to weigh the consequences and implications carefully before proceeding.

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

The #1 Best Judgment Protection: Bankruptcy

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The #1 best judgment protection is bankruptcy. If you can qualify for a bankruptcy and you’re considering whether to file a bankruptcy or do debt settlement instead, consider the issue of judgment protection. Does bankruptcy protect me from judgments? Some think that hiring a debt consolidation (aka debt settlement) company provides the same level of protection as a bankruptcy.

But if you believe that a debt consolidation or a debt settlement company can protect you in any way, shape or form from debt collectors and their tactics, you’re wrong. It’s that simple. Bankruptcy can protect you from judgments and from debt collection. How does bankruptcy provide protection from judgment collection?

The Automatic Stay

Bankruptcy protections from debt collection activities come through the automatic stay. The automatic stay has the effect of a court order stopping all attempts to collect a debt from you, the debtor, during the course of your bankruptcy case. This is the biggest, most important difference between bankruptcy and debt settlement.

Bankruptcy Automatic Stay Protection vs. Debt Settlement

Whether you are settling your own debts or you’ve hired someone else to settle your debts, you need to know that no part of the debt-settlement process protects you from any type of debt collection at all. Many people believe that if they’ve hired an attorney to settle their debts, or if the debt settlement company assigns an attorney to their case, that they will get some type of protection from debt collection activities such as lawsuits, wage garnishments, or bank levy. Nothing could be further from the truth.

The reason that you don’t get any protection from debt collection through debt settlement is simply because the debt collector doesn’t have to stop trying to collect. There’s nothing to stop them.

Debt Settlement’s False Security

Federal law does require debt collectors (but not original creditors) to stop calling you on the phone if you’ve told them that you have an attorney, which gives people a false sense of security. You may falsely believe that, because the debt collector is no longer calling you, they won’t sue you or try to collect on an existing judgment. Again, it’s not true – you can be sued, you can have your wages garnished, and your bank account can be levied.

To be sure, debt collection law firms often will verbally agree to temporarily suspend collection activity while your attorney is discussing settlement with them, but there is no requirement that they do so. If settlement talks fall apart, debt collection activity will resume.

Limits Of The Automatic Stay

It’s important to know that the bankruptcy automatic stay has limits. First of all, the automatic stay only last as long as your bankruptcy case lasts. If you receive a bankruptcy discharge of your debts, you will be protected from collection on the discharged debts by the discharge order itself. The bankruptcy discharge takes the form of a court order that creditors and debt collectors must obey.

Further limits of the bankruptcy automatic stay can result from multiple bankruptcy filings within a short period of time. For example, if you filed a bankruptcy case that was dismissed and then you file another bankruptcy case within a year, your automatic stay will be limited to 30 days only, unless a judge grants your formal, written request to extend the stay. And it’s possible to have no automatic stay at all if you have filed too many bankruptcy cases in a year.

If you have questions about judgment protection, debt settlement, debt consolidation, or the bankruptcy automatic stay, call to schedule a free bankruptcy phone consultation with attorney Jennifer Weil at (201) 676-0722, or go to my Setmore page.

How New Jersey Debt-Collection Judgments Work

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If you’ve been sued for credit-card debt in New Jersey and you’re trying to decide what to do, you will need to know how New Jersey debt-collection judgments work.

Pay Attention To The Lawsuit Timeline

If you’ve been sued for debt collection in New Jersey, you should pay close attention to the timeline. Look closely at the papers you received – the first papers, the ones that start a lawsuit, are the summons and the complaint. The summons should be on the front. It may look like a mostly pre-printed form that has been filled in here and there. In some kinds of lawsuits, you will see a date somewhere in the middle of that form that is the date your written answer is due. In other kinds of lawsuits, there won’t be a date in the middle of the summons.

Which Part Of The Court Is The Lawsuit In?

The two main kinds of debt-collection lawsuits in New Jersey are those that are filed in Special Civil Part and those that are not. Ways to tell the difference is that in Special Civil Part lawsuits: 1) The plaintiff will be seeking $15,000 or less (it could be a little more with attorney fees added on); 2) The docket number will have “DC” in it; 3) The upper right-hand corner of the complaint will have “Special Civil Part” in the name of the court.

Special Civil Part vs. Law Division

Most credit-card debt-collection lawsuits that are not in Special Civil Part are situated in regular Law Division. You’ll need to look closely at the papers you receive, since the Special Civil Part lawsuits will say “Law Division” on them, but if they also say “Special Civil Part,” that means they’re not in the regular Law Division. Regular Law Division lawsuits seek to collect more than $15,000 and their docket numbers have “L” in them instead of “DC”.

Small Claims Part

Note that yet another category of lawsuit in this area could be small claims lawsuits, which have “SC” in the docket number, but this type isn’t typically used for credit-card debt collection. Small claims lawsuits typically less than $3,000 in dispute, most often involving parties who are not represented by attorneys.

Why It Matters Which Part The Lawsuit Is In

The reason it’s important to distinguish Special Civil Part collection lawsuits from regular Law Division lawsuits is that the procedure for obtaining a judgment against the defendant is a little different for each type of lawsuit.

Service Of Special Civil Part Lawsuits

As mentioned above, the first thing that happens in Special Civil Part lawsuits is that each defendant receives service of the Summons and the Complaint, usually by mail from the courthouse. The documents are sent via both certified mail, return receipt requested and regular mail. If both of these pieces of mail are returned to the court, service was not good. If at least one of them does not get returned, the court deems that as good service.

So if you’re trying to dodge service, it doesn’t do you any good to ignore the certified mail that’s waiting for you at the post office.

What Happens If You Don’t Respond

You’ll get 35 days – until the date listed on the front middle portion of the Summons – to file your written answer to the court along with proper payment of the filing fee and to send a copy to the other side. If you don’t file the answer by the answer date, the Special Civil Part automatically “enters default” against you. All this means is that the court is recognizing that you did not file a timely answer.

How New Jersey Debt-Collection Judgments Work

Then, after the court enters default against you, the other side (the plaintiff) can file a request or a motion to enter judgment against you for the full amount of money that they are seeking to collect.

You might receive a copy of this request or motion or you might not, depending on circumstances. The timing here is almost entirely dependent on the efficiency of the attorney representing the plaintiff. Some attorneys get these papers in to the court on the first possible date and some attorneys let the case lapse for 6 months or more. Most fall somewhere in between. It can help to know the practices of the various attorneys’ offices.

What If Nothing Happens?

If the case lapses for 6 months with no judgment, the court will administratively dismiss the case. That doesn’t mean you win. Administrative dismissal only means the court wants to get the case off its active rolls as quickly as possible. The other side can always file a motion to revive the case.

How New Jersey Debt-Collection Judgments Get Collected

Once the other side gets its judgment, they can start filing motions with the court to allow them to collect on the judgment, usually via wage garnishment or bank levy.

How Law Division Differs

If the case is in regular Law Division, the procedure is similar, but not exactly the same. The main difference is that the other side must file papers with the court asking it to enter default against you, declaring that you did not timely file a written answer.

Then, once they get their entry of default, the rest of the procedure is the same – the other side files papers requesting a judgment against you. And once the judgment is entered, they can start trying to collect.

What To Do When You Get A Lawsuit

Once you receive a lawsuit, you should start paying close attention to the timeline outlined above. Seek attorney help as soon as possible, either to help you file a written answer and continue defending against the lawsuit, or to settle it, or maybe even both. You’ll need to provide an attorney with a full copy of the papers and tell them everything you think you might know about the underlying facts of the lawsuit.

If you’ve been sued in New Jersey and you need help, call (201) 676-0722 to schedule a free telephone consultation with attorney Jennifer Weil, or go to my Setmore page.

Struggling to Make Minimum Credit Card Payments? Explore Your Options

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Struggling to make minimum payments on your credit card debt and unable to save any money? You may want to consider bankruptcy as an option for debt relief. If your credit card debt has become overwhelming, debt settlement and bankruptcy are the two main options for financial relief.

While debt settlement may seem like an attractive option, it can often be more expensive than bankruptcy. You will have to pay back at least a portion of your debt, and there’s no protection from debt collection lawsuits.

On the other hand, filing for bankruptcy offers protection from debt collection activities such as lawsuits. With Chapter 7 bankruptcy, you may be able to have your entire credit card debt discharged for the cost of attorney fees and filing fees. If you file for Chapter 13, you’ll pay back a portion of your debt under the protection of bankruptcy from debt collection activity.

It’s important to weigh your options and consider the financial and legal implications before making a decision on debt relief. Contact a bankruptcy attorney to discuss your options and determine if bankruptcy is the right choice for you.

Do you have questions about whether you should file for bankruptcy? Schedule a phone consultation with attorney Jennifer Weil on the Setmore page.

Business Disputes and Bankruptcy: Avoiding Creditor Challenges

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Creditors can challenge the discharge of your debts in a bankruptcy case, especially when the bankruptcy is filed after a business shuts down. To avoid these challenges, it’s important to understand why they happen and what can be done to prevent them.

Reasons for Creditor Challenges:

  • Larger debt amounts, making litigation more tempting
  • Personal debtor-creditor relationships
  • Risky behavior by the business owner
  • Creditors may know about the debtor’s risky behavior

Often, former business owners considering bankruptcy feel that a creditor will challenge the discharge of their debts in court. But such challenges are relatively rare, for the following legal and practical reasons:

1. The legal grounds under which challenges to discharge can be raised are relatively narrow. Instead of proving the existence of a valid debt—as in a conventional lawsuit to collect on a debt—the creditor has to prove that the debtor engaged in behavior such as fraud in incurring the debt, embezzlement, larceny, fraud as a fiduciary, or intentional and malicious injury to property.

2. In bankruptcy, the debtor files under oath a set of extensive documents about his or her finances, and is also subject to questioning by the creditors about those documents and about anything else relevant to the discharge of the debts. When these documents, along with any questioning, reveal that the debtor genuinely has nothing worth chasing—as is most often the case—this tends to cool the anger of most creditors. Only the most motivated of creditors will be willing to throw the proverbial good money after bad in the hopes of getting nothing more than a questionably collectible judgment.

In conclusion, a dischargeability challenge can turn a simple bankruptcy case into a complex one. Hiring an experienced bankruptcy attorney can help you avoid challenges and defend against them if necessary. Contact an attorney if you have reason to believe that a creditor may challenge the discharge of your debts.

To discuss options – bankruptcy and non-bankruptcy – in resolving your debt, schedule a free telephone call with New Jersey bankruptcy attorney Jennifer N. Weil, Esq. at this Setmore page or by emailing weilattorney@gmail.com.

How the Dodgers’ Bankruptcy Altered a Divorce Settlement

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The Los Angeles Dodgers baseball team filed for bankruptcy under Chapter 11. The filing provides a good opportunity to take a look at the often complex intersection of bankruptcy law and divorce law.

The Dodgers’ owner, Frank McCourt, has been going through a divorce for the past couple of years. One of the issues in the McCourt divorce is whether the Dodgers team is community property under California state law. If the judge decides that the team is community property, that means it is jointly owned by both Mr. and Mrs. McCourt. Under that scenario, a sale of the team to pay Mrs. McCourt in a marital property settlement would have been possible. However, the team’s bankruptcy filing changes things. Now the team’s creditors are to be paid according to the dictates of the Bankruptcy Code. As a result, Mrs. McCourt could be cut out of proceeds from a sale of the team.

Since this blog is primarily focused on New Jersey, you should know that New Jersey is NOT a community property state. However, even if you live in New Jersey now but were (or are) married and owned property with a spouse in a community property state, you should let your bankruptcy attorney know so that they can properly assess the situation. There are certain disclosure requirements in a bankruptcy where community property is involved, due to the presumption of joint ownership.

For a more in-depth analysis of the financial issues facing the L.A. Dodgers, along with a copy of the team’s main filing in the Delaware bankruptcy court, check out the blog Dodger Divorce.

Could you sue? List it in your bankruptcy papers.

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Yet another question that I always ask clients is whether they have any claims against anyone that they could file in court. In other words, I ask whether or not they have any potential lawsuits against anyone.

Of course, I do need to know about actual, ongoing lawsuits, but in this post I’m talking about claims the debtor might have against another individual or against a company.

Why would I want to know about possible lawsuits you might have against others that you never filed in court? Because they are assets. They are assets because, if filed, they might bring in some money to you.

Now, it’s true that court fees, attorney’s fees and expert witness fees might eat up a lot (or maybe even all) of a recovery you might get in a lawsuit, depending on how much in damages you stand to recover. But a danger of not telling the bankruptcy court about your potential lawsuits is that you might no longer have the right to sue after the bankruptcy is over.

This is because a person who is filing for bankruptcy has an obligation under the law to disclose all of his or her assets or potential assets to the bankruptcy court. When you fail to disclose a potential lawsuit to the bankruptcy court but then you later (after the bankruptcy discharge) file that lawsuit, you have taken an inconsistent position – you’ve sworn to a bankruptcy court that you had no assets other than those you disclosed, and those assets didn’t include a potential lawsuit; and yet, you then filed a lawsuit after the bankruptcy based on a pre-bankruptcy claim. The law basically says that you cannot have it both ways.

When you file for bankruptcy, a bankruptcy estate is created. All of your assets, including potential lawsuits, become property of the bankruptcy estate, except for those assets you have managed to exempt. If you do not specifically list and exempt an asset, it is property of the bankruptcy estate. The rule of thumb is that it is always a better idea to list it and exempt it than not to list it at all.