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Questions and Answers About Bankrutpcy
 

   Patrick Moscatello, Attorney at Law 

Debt Solutions - Foreclosure Prevention - Bankruptcy


 

What Kinds of Bankruptcy are there?
There are a number of different kinds of Bankruptcy.  Most individuals file either a Chapter 7 Bankruptcy or a Chapter 13 Bankruptcy.
 

Can I still file Bankruptcy?
As you probably already know, changes to the Bankruptcy law went into effect on October 17, 2005.  Many people have the mistaken belief that Bankruptcy has been abolished or outlawed by the New Bankruptcy Law.  In fact, most people who qualified under the old law to discharge their debts in Bankruptcy can still discharge all or most of their debts under the New Bankruptcy law.

What is the difference between the old Bankruptcy law and the New Bankruptcy law?
Perhaps the most important difference between the old law and the New Bankruptcy Law is the means test.  The means test sets income limits for consumers who want to file a Bankruptcy to get out of their debts. 

Generally, if your household income is below a certain level, you can file a Chapter 7 Bankruptcy to discharge your debts.  

The income limits vary from state to state.  In New Jersey, the income limits are relatively high. Income limits are based on the size of your family.  Your family income is based on your last six months gross income and then annualized.  For example, if your gross family income for the past six months is $27,000.00, your annualized income would be $54,000.000.  The income limits change periodically.  Contact my office for the current figures. The approximate income limits to qualify for a Chapter 7 are as follows:

  Household Size    Income Limit

                  1                     $60,000.00

                  2                     $70,000.00

                  3                     $85,000.00

                  4                   $100,000.00 

If your household income is below the current limits, it is likely that you will qualify for a Chapter 7 Bankruptcy.

What if my income is higher than New Jersey Income Limits?Even if your income is above the threshold limits, you may still qualify for a Chapter 7 Bankruptcy.  My office will calculate your eligibility based on the means test to determine if you qualify for a Chapter 7 Bankruptcy.

What if I do not qualify for a Chapter 7? 
Even if you do not qualify to discharge all of your debts in a Chapter 7 Bankruptcy, you may still qualify for a Chapter 13 Bankruptcy.

  
What is the difference between a Chapter 7 and a Chapter 13 Bankruptcy?  
Generally a Chapter 7 Bankruptcy is used to wipe out (“discharge”) as many debts as possible and to give you a fresh start.  If your income is too high the New Bankruptcy Law requires you to pay part or all of your debts through a Chapter 13 Bankruptcy plan.  The amount that you pay depends on your income level.  If your income is only slightly above the limit set by the New Bankruptcy Law, is likely that your monthly payment would be comparatively small.  If your income greatly exceeds the income limit you might have to pay all of your debts though your Chapter 13 plan.

A Chapter 13 Bankruptcy is also used if you are behind on payments on a secured debt (for example, your home mortgage) and you want a chance to catch up with the overdue payments, or if you have too much property to file a Chapter 7 Bankruptcy.  We will go over your options with you in a free office consultation.

Will I Lose My Possessions if I file Bankruptcy?
The Bankruptcy laws include “exemption” rules which permit you to keep a certain amount of property - including your personal property - even if you are wiping out your debt.  There are limits to the amount  of property you can keep, but most individuals keep all of their possessions.

Can Bankruptcy stop a wage garnishment? 
Once you have filed a Bankruptcy, all lawsuits are automatically stopped and all garnishments must immediately cease.  Our office will make sure that your garnishment is stopped promptly


Will my employer be notified that I have filed a Bankruptcy?
Unless you owe your employer money or there is a garnishment already in effect, there is no need to notify your employer that you have filed Bankruptcy.

Do I have to go to Court? 
In both Chapter 7 Bankruptcy and Chapter 13 Bankruptcy you need to attend a “meeting of creditors” conducted by the Bankruptcy Trustee.  This meeting  is like a Court hearing except that there is no judge present.  Instead, the Bankruptcy Trustee  conducts a short meeting which you must attend.  Your attorney will accompany you, and the Trustee will ask you a few questions about your Bankruptcy petition.  Typically, the meeting of creditors is held about one month after you file your Bankruptcy.


Are there other requirements for filing a Bankruptcy under the new law?
 

In addition to the means test, there are a number of other requirements that may apply to you under the New Bankruptcy Law.  Everyone who files a Bankruptcy must complete a credit counseling briefing before filing.  This briefing can be done in person, by phone or over the Internet.  In addition, each person who files a Bankruptcy must complete a Credit Education Course, which may also be completed in person, by phone or via the Internet.  Our office will direct you to a qualified credit-counseling agency.

 
Will I lose my home if I file Bankruptcy?
In a Chapter 7 Bankruptcy a couple can keep their home if the mortgage is current and their equity in the home is approximately $43,250.00 or less.  A couple with more equity or who are behind on their mortgage can still keep their home by filing a Chapter 13.   A Chapter 13 Bankruptcy permits you to keep your home and pay back your overdue mortgage payments which are paid over a period of time though the Bankruptcy Trustee.  You must also continue to make your regular monthly mortgage payments to your mortgage company.  In many cases, other debts, such as credit cards and medical bills, can be wiped out while you pay back your past due mortgage payments.   After your plan is completed, you simply keep paying your regular monthly payment to your mortgage company.   I will design a Chapter 13 Plan tailored to your situation and calculate your approximate monthly payments needed in a Chapter 13 Plan so that you can keep your home.


What can I do if my home is in foreclosure?

Once you file a Chapter 13 Bankruptcy, any Foreclosure proceeding against your home is automatically stopped and remains stopped as long as you remain current on your payments to the Trustee and your regular monthly mortgage payments.  Once you make all the payments required under your plan, your home will no longer be in foreclosure.


Will I lose my Car if I file Bankruptcy?
If you are current on your car payments, your automobile finance company cannot repossess your car, even if you are in Bankruptcy and even if you are wiping out other debts.  If you are behind on your car payments you can pay those overdue payments back through a Chapter 13 plan.

Are there some debts which I cannot get out of by filing Bankruptcy?
There are some kinds of debts which cannot be discharged in  Bankruptcy.  These include child support and alimony.  Under the New Bankruptcy Law, child support and alimony must be paid.  Child support arrearages and Alimony arrearages may be paid through your Chapter 13 Plan.  There are also special rules for discharging other kinds of debts such as student loans, income taxes and motor vehicle surcharges.  If you have these kinds of debts I will go over them with you and determine which ones can be discharged.

How long is Bankruptcy on my Credit record? 
Bankruptcy stays on your credit record for a period of 10 years.  That doesn’t mean you cannot get credit for 10 years.  You may begin rebuilding your credit as soon as 6 months after your Bankruptcy is completed. For more information on Credit After Bankruptcy click Here.


Contact us for a free case evaluation.





Patrick Moscatello, Attorney at Law

Long Branch Office
90 Washington Street
Long Branch, NJ 07740
Toms River Office
189 Rt. 37 West
Toms River, NJ 08753
Phone: (888) 332-8247
moscatellolaw@gmail.com

 

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