Tag Archives: Chapter 13

Can I File for Bankruptcy Again? Understanding the Rules and Timing

Filing for bankruptcy can be a lifeline for those overwhelmed by debt. But what if you’ve already gone through the process once and find yourself in financial trouble again? Can you file for bankruptcy a second time? The short answer is yes, but there are specific rules and waiting periods you need to understand.

Filing for Bankruptcy More Than Once: Is It Possible?

Yes, you can file for bankruptcy more than once. The U.S. Bankruptcy Code allows individuals to file multiple bankruptcies throughout their lifetime. However, there are important restrictions and time limits between filings, depending on the type of bankruptcy you filed previously and the type you plan to file next.

How Long Do I Have to Wait to File Bankruptcy Again?

The waiting period between bankruptcy filings depends on the chapters under which you filed and plan to file. Here’s a breakdown:

1. Chapter 7 to Chapter 7

Waiting Period: 8 years from the date of the first filing.
If you previously filed for Chapter 7 bankruptcy and received a discharge, you must wait eight years before you can file for Chapter 7 again. This extended period is designed to prevent abuse of the bankruptcy system.

2. Chapter 7 to Chapter 13

Waiting Period: 4 years from the date of the first filing.
If you initially filed for Chapter 7 and received a discharge, you can file for Chapter 13 bankruptcy after four years. Filing for Chapter 13 after a Chapter 7 discharge is sometimes referred to as a “Chapter 20” bankruptcy. While you won’t be able to discharge your debts in Chapter 13, you can use it to catch up on missed mortgage or car payments.

3. Chapter 13 to Chapter 13

Waiting Period: 2 years from the date of the first filing.
If your previous bankruptcy was a Chapter 13, you must wait at least two years before filing for Chapter 13 again. Since Chapter 13 plans typically last three to five years, this means you can file again almost immediately after your previous case is discharged.

4. Chapter 13 to Chapter 7

Waiting Period: 6 years from the date of the first filing.
If you previously filed for Chapter 13 and received a discharge, you must wait six years before filing for Chapter 7. However, there are exceptions. If you paid back 100% of your unsecured debts or 70% with a good-faith effort, you may be able to file Chapter 7 earlier.

Why Are There Waiting Periods?

The waiting periods between bankruptcy filings exist to ensure that bankruptcy is used as a last resort and not as a regular financial strategy. These rules are meant to encourage individuals to work toward financial stability rather than relying on multiple bankruptcies. Multiple bankruptcies in a relatively short period of time may be considered a form of bankruptcy abuse.

What If I Didn’t Receive a Discharge?

If your previous bankruptcy case was dismissed or you didn’t receive a discharge for some reason (e.g., you didn’t complete the required paperwork, or the court denied your discharge due to fraud), the waiting periods mentioned above don’t apply. You may be able to file again immediately, but the outcome of your case will depend on the reasons for the dismissal or denial.

Considerations Before Filing for Bankruptcy Again

Before deciding to file for bankruptcy again, consider these important factors:

Impact on Credit: Multiple bankruptcies will significantly impact your credit score, which may make it more difficult to obtain loans, mortgages, or credit cards in the future.
Legal and Filing Fees: Filing for bankruptcy multiple times can be costly. Make sure you understand the financial implications, including attorney fees and court costs.
Alternatives to Bankruptcy: Explore other debt relief options, such as debt consolidation, negotiation with creditors, or financial counseling, before resorting to bankruptcy again.

Final Thoughts

Filing for bankruptcy more than once is possible, but it’s important to understand the rules and waiting periods that apply. Bankruptcy can provide relief, but it’s not a decision to be taken lightly. If you’re considering filing again, consult with a bankruptcy attorney to discuss your options and develop a plan that’s right for your financial situation.

By understanding the timing and implications, you can make an informed decision that helps you regain control of your financial future.

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

Understanding Federal Bankruptcy Exemptions for Chapter 7 and Chapter 13 Filings in New Jersey

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Filing for bankruptcy can be a complex and daunting process. If you are considering either Chapter 7 or Chapter 13 bankruptcy in New Jersey, it is essential to understand how federal bankruptcy exemptions work. These exemptions play a crucial role in determining which assets you can keep and how your debts will be handled. This blog post will guide you through the step-by-step process of using federal bankruptcy exemptions when filing for either Chapter 7 or Chapter 13 bankruptcy in New Jersey.

What Are Federal Bankruptcy Exemptions?

Federal bankruptcy exemptions are specific laws that protect certain assets from being seized by creditors during bankruptcy proceedings. These exemptions are designed to help individuals retain essential property, allowing them to maintain a basic standard of living while they work through their financial difficulties.

Choosing Between Federal and State Exemptions

In New Jersey, you have the option to choose between federal bankruptcy exemptions and state-specific exemptions. It’s important to note that you cannot mix and match; you must select one set of exemptions entirely. Here’s a brief overview of how to decide:

Federal Exemptions: Generally more favorable for protecting certain types of personal property, retirement accounts, and wildcard exemptions that can be applied to any property.
State Exemptions: May offer protection for specific personal property or other assets; generally, the Federal bankruptcy exemptions are more generous than the New Jersey state exemptions. Most people choose the Federal exemptions.

Since the focus here is on federal exemptions, let’s dive into the specifics of how they apply to Chapter 7 and Chapter 13 bankruptcies in New Jersey.

Filing for Chapter 7 Bankruptcy in New Jersey

Step 1: Determine Eligibility

Chapter 7 bankruptcy, also known as “liquidation bankruptcy,” requires you to pass a means test. This test compares your income to the median income for a household of your size in New Jersey. If your income is below the median, you are eligible to file for Chapter 7.

Step 2: List All Assets and Debts

You must provide a comprehensive list of all your assets and debts. This includes real estate, personal property, bank accounts, and any other financial interests.

Step 3: Apply Federal Exemptions

Federal bankruptcy exemptions are crucial in Chapter 7 filings because they determine which assets you can keep. Key federal exemptions include:

Homestead Exemption: Up to $27,900 of equity in your primary residence.
Motor Vehicle Exemption: Up to $4,450 of equity in one vehicle.
Household Goods and Furnishings: Up to $700 per item, not exceeding $14,875 in total.
Jewelry: Up to $1,875.
Wildcard Exemption: Up to $1,475 plus up to $13,950 of any unused portion of the homestead exemption, applicable to any property.
Retirement Accounts: Exempt up to $1,512,350 in IRAs and Roth IRAs. Other tax-exempt retirement accounts are fully exempt.

The dollar amounts listed above change regularly. Please consult a bankruptcy attorney to discuss whether the items you own may be exempt.

Step 4: Liquidation of Non-Exempt Assets

Any assets that are not covered by federal exemptions may be sold by the bankruptcy trustee to pay off your creditors. However, the exemptions typically allow most filers to retain essential property.

Step 5: Discharge of Debts

Once the non-exempt assets are liquidated, the remaining qualifying debts will be discharged, giving you a fresh financial start.

Filing for Chapter 13 Bankruptcy in New Jersey

Step 1: Determine Eligibility

Chapter 13 bankruptcy, or “reorganization bankruptcy,” is designed for individuals with a regular income who can repay some or all of their debts over a three to five-year period. There are no technical income requirements like in Chapter 7, but your secured and unsecured debts must be below certain limits. In most circumstances, you must be able to afford a regular monthly payment throughout a three to five-year Chapter 13 case.

Step 2: Develop a Repayment Plan

You will propose a repayment plan detailing how you intend to pay off your debts over the plan period. This plan must be approved by the bankruptcy court.

Step 3: Apply Federal Exemptions

Federal exemptions in Chapter 13 bankruptcy serve to protect your assets from being liquidated to pay creditors. As in Chapter 7, the exemptions determine what property you can keep while making payments under your repayment plan. The same federal exemptions apply:

Homestead Exemption: Protects equity in your home.
Motor Vehicle Exemption: Protects equity in your vehicle.
Household Goods and Furnishings: Protects essential household items.
Wildcard Exemption: Offers additional protection for other property.
Retirement Accounts: Ensures your retirement savings remain intact.

Step 4: Court Approval of Repayment Plan

The bankruptcy court will review your Chapter 13 repayment plan, ensuring it is feasible and meets the requirements of the bankruptcy code. Once approved, you will begin making payments to a bankruptcy trustee, who will distribute the funds to your creditors.

Step 5: Completion of Repayment Plan and Discharge

After successfully completing your Chapter 13 repayment plan, any remaining qualifying debts will be discharged. This discharge releases you from personal liability for the discharged debts, marking the end of your bankruptcy case.

Conclusion

Navigating federal bankruptcy exemptions is a critical part of the bankruptcy process, whether you are filing for Chapter 7 or Chapter 13 in New Jersey. By understanding how these exemptions work, you can better protect your assets and make informed decisions about your financial future. If you are considering bankruptcy, consulting with a knowledgeable bankruptcy attorney can provide valuable guidance tailored to your specific situation.

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

Understanding Bankruptcy Options: Why Chapter 7 May Not Be Available for High-Income Earners in New Jersey and the Viable Alternative of Chapter 13

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Filing for bankruptcy is a significant decision that many individuals facing financial difficulties consider. In New Jersey, like in other states, the type of bankruptcy one can file depends on several factors, including income level. If you are a consumer with a gross income above the median income for your state and household size, you might be ineligible to file for Chapter 7 bankruptcy. Instead, Chapter 13 bankruptcy could be a more suitable option. This post will explore why higher-income earners might not qualify for Chapter 7 and how Chapter 13 serves as an alternative.

Understanding Chapter 7 Bankruptcy

Chapter 7 bankruptcy, often referred to as “liquidation bankruptcy,” allows individuals to discharge most of their unsecured debts. This means debts like credit card balances, medical bills, and personal loans can be wiped out. However, to qualify for Chapter 7, you must pass the “means test,” which evaluates your income, expenses, and overall financial situation.

The Means Test: A Gatekeeper for Chapter 7 Eligibility

The means test is designed to limit the availability of Chapter 7 bankruptcy to those who genuinely cannot repay their debts. Here’s how it works:

Median Income Comparison: First, your gross income is compared to the median income for your state and household size. If your gross income exceeds this median, you move to the next step of the means test.
Disposable Income Calculation: The next step involves calculating your disposable income by subtracting allowable living expenses and secured debt payments from your gross income. If your disposable income is above a certain threshold, you fail the means test and cannot file for Chapter 7 bankruptcy.

Why High-Income Earners Might Fail the Means Test

If your gross income is higher than the median income in New Jersey for your household size, it’s likely that you will not qualify for Chapter 7 bankruptcy. This is because the means test assumes that individuals with higher incomes have the financial capacity to repay at least a portion of their debts. Therefore, high-income earners are often steered towards Chapter 13 bankruptcy instead.

Chapter 13 Bankruptcy: A Structured Repayment Plan

For those who cannot qualify for Chapter 7, Chapter 13 bankruptcy offers a structured way to manage and repay debts. Here’s how Chapter 13 differs and why it might be a better option:

Repayment Plan: Unlike Chapter 7, Chapter 13 does not discharge all debts immediately. Instead, it involves creating a repayment plan that spans three to five years (5 years if your income is over median), allowing you to pay off your debts over time based on your disposable income.
Protection of Assets: Chapter 13 allows you to keep your property, as long as you adhere to the repayment plan. This can be particularly beneficial if you have significant assets or secured debts, such as a home mortgage or car loan, that you wish to retain.
Debt Consolidation: Under Chapter 13, your debts are consolidated into one monthly payment made to a bankruptcy trustee, who then distributes the funds to your creditors. This can simplify the repayment process and make it easier to manage your finances.

Advantages of Chapter 13 for High-Income Earners

For individuals with incomes above the state median, Chapter 13 offers several advantages:

Debt Management: Chapter 13 provides a manageable way to pay off debts without the pressure of immediate liquidation; it can protect you from the lawsuits of your creditors, unlike debt settlement.
Credit Impact: While bankruptcy will impact your credit, Chapter 13 may be seen as less severe than Chapter 7 since it involves repaying your creditors over time.
Legal Protection: Filing for Chapter 13 triggers an automatic stay, which halts all collection actions, including foreclosure, repossession, and wage garnishment, giving you time to reorganize your finances.

Conclusion

If you are a higher-income earner in New Jersey struggling with debt, understanding your bankruptcy options is crucial. While Chapter 7 might seem appealing due to its debt discharge feature, failing the means test because your income is above the median could disqualify you. However, Chapter 13 bankruptcy offers a viable alternative, providing a structured repayment plan that allows you to manage your debts effectively while protecting your assets. Consulting with a bankruptcy attorney can help you navigate the complexities of the bankruptcy process and choose the best option for your financial situation.

By exploring Chapter 13 as an alternative to Chapter 7, high-income earners can find relief from debt while maintaining a path toward financial stability. Schedule a free bankruptcy consultation with Jennifer Weil, a New Jersey bankruptcy attorney, to discuss your options.

Understanding Chapter 13 Bankruptcy: Safeguarding Co-Signers and Their Assets

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Are you facing the daunting prospect of bankruptcy, but worried about how it might affect your co-signers? Bankruptcy can be a complex and stressful process, especially when considering the potential impact on those who have co-signed loans or debts with you. However, there’s a solution that provides significant protection not just for you, but also for your co-signers: Chapter 13 bankruptcy.

While Chapter 7 bankruptcy offers valuable protection through the automatic stay, Chapter 13 takes it a step further by extending this protection to include co-signers. Let’s take a closer look at how Chapter 13 bankruptcy can safeguard the interests of both primary debtors and their co-signers:

The Automatic Stay: Much like Chapter 7, Chapter 13 initiates an automatic stay upon filing. This legal provision halts creditor actions such as foreclosure, wage garnishment, and debt collection efforts. However, what sets Chapter 13 apart is that this stay also extends to cover co-signers. This means that not only are you protected from creditor harassment and legal actions, but your co-signers are as well.
Co-Signer Stay: Chapter 13 introduces a concept known as the “co-signer stay.” This provision prevents creditors from pursuing co-signers for repayment of consumer debts included in the bankruptcy filing. As a result, your co-signers are shielded from potential financial repercussions arising from your bankruptcy proceedings, providing them with much-needed relief and protection.
Debt Repayment Plan: Unlike Chapter 7, which typically involves the liquidation of assets to repay debts, Chapter 13 allows debtors to restructure their debts through a court-approved repayment plan. This plan, which typically spans three to five years, prioritizes the repayment of secured debts, such as mortgages and car loans, while also addressing unsecured debts like credit card balances and medical bills. By entering into a Chapter 13 repayment plan, you can alleviate the financial burden on your co-signers, as the plan aims to repay debts over time in a manageable manner.
Co-Signer Liability: By adhering to the terms of the repayment plan and fulfilling your obligations under the bankruptcy process, you can protect your co-signers from potential legal actions by creditors seeking repayment. This offers peace of mind to both you and your co-signers, knowing that their financial well-being is safeguarded throughout the bankruptcy process.
Preserving Co-Signer Assets: In addition to protecting co-signers from creditor actions, Chapter 13 also safeguards their assets from being liquidated to satisfy debts. This ensures that your co-signers retain ownership of their property and assets, providing them with greater financial security and stability during the bankruptcy process.

In summary, Chapter 13 bankruptcy offers a comprehensive solution for individuals seeking debt relief while also protecting their co-signers and their assets. By initiating an automatic stay and implementing a structured repayment plan, Chapter 13 enables debtors to address their financial challenges while minimizing the impact on their co-signers.

If you’re considering bankruptcy and have co-signers on your debts, Chapter 13 may offer the protection and relief you need while preserving the financial well-being of your co-signers. It’s essential to consult with a qualified bankruptcy attorney to explore your options fully and determine the best course of action for your financial situation. With the right guidance and support, you can navigate Chapter 13 bankruptcy with confidence and take steps towards a brighter financial future for both yourself and your co-signers.

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

Demystifying Chapter 13 Bankruptcy: Understanding the Repayment Plan

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Introduction

Facing financial difficulties can be overwhelming, but for many individuals, Chapter 13 bankruptcy offers a lifeline towards regaining control of their finances. Central to the Chapter 13 process is the formulation of a repayment plan, meticulously crafted by a consumer bankruptcy attorney. In this blog post, we’ll delve into the intricacies of how a Chapter 13 repayment plan is constructed, providing insight into this essential aspect of the bankruptcy journey.

Understanding Chapter 13 Bankruptcy

Chapter 13 bankruptcy, often referred to as “reorganization bankruptcy,” differs from Chapter 7 in that it involves creating a structured repayment plan to settle debts over a period of three to five years. This option is suitable for individuals with a regular income who wish to retain their assets and repay debts in a manageable manner.

Initial Assessment

The process of constructing a Chapter 13 repayment plan begins with an initial assessment of the individual’s financial situation. A consumer bankruptcy attorney will gather information about the individual’s income, expenses, assets, and debts to gain a comprehensive understanding of their financial landscape.

Creating a Feasible Plan

Once the attorney has gathered all necessary financial information, they work closely with the individual to craft a repayment plan tailored to their specific circumstances. The goal is to create a plan that allows the individual to repay creditors while still meeting essential living expenses.

Prioritizing Debts

In constructing the repayment plan, certain debts may be prioritized over others. For example, secured debts such as mortgage or car payments may take precedence, ensuring that the individual retains ownership of these assets. Delinquent payments on secured debts and priority debts, such as taxes or child support, are also addressed within the plan.

Calculating Disposable Income

A crucial aspect of constructing a Chapter 13 repayment plan is determining the individual’s disposable income – the amount of money available after deducting essential living expenses. This disposable income is then allocated towards repaying creditors as outlined in the plan.

The Role of the Trustee

Once the repayment plan is drafted and filed, the consumer bankruptcy attorney may discuss it with the trustee to obtain their approval. This may involve discussions regarding the terms of repayment, including the total amount to be repaid and the timeline for repayment.

Submitting the Plan to the Court

Once the terms of the repayment plan are worked out, the consumer bankruptcy attorney submits the plan to the bankruptcy court for approval. The court reviews the plan to ensure it complies with bankruptcy laws and is feasible given the individual’s financial situation.

Implementing the Plan

Upon approval by the court, the Chapter 13 repayment plan goes into effect. The individual makes regular payments to a trustee, who then distributes the funds to creditors according to the terms of the plan. Throughout the repayment period, the consumer bankruptcy attorney provides guidance and support to ensure the plan is adhered to.

Conclusion

Constructing a Chapter 13 repayment plan is a collaborative effort between the individual and their consumer bankruptcy attorney, aimed at achieving financial stability and debt relief. By understanding the process and working closely with a knowledgeable attorney, individuals can navigate the complexities of Chapter 13 bankruptcy with confidence, paving the way towards a brighter financial future.

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

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.

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.
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.
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.
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.
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.
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.
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.
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.

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.

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.
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.
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.
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.
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.
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.
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:

Eligibility: Individuals with limited disposable income and who pass the means test can qualify for Chapter 7 bankruptcy.
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.
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:

Eligibility: Chapter 13 bankruptcy suits individuals with a regular income who can afford a repayment plan.
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.
Debt Adjustment: Chapter 13 bankruptcy consolidates debts and establishes a court-approved repayment plan, often reducing interest rates and eliminating penalties.

Key Differences:

Debt Discharge: Chapter 7 bankruptcy typically results in a discharge within a few months, while Chapter 13 involves a repayment plan lasting several years.
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.
Income Requirements: Chapter 7 focuses on income limitations, while Chapter 13 evaluates the debtor’s ability to make regular payments.
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.

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.