What Is A Chapter 13 Bankruptcy
Chapter 13 is a reorganization or repayment plan-type bankruptcy that allows the debtor to enter into an interest-free debt repayment plan. Typically a debtor will pay a smaller percentage of the debts over a 3 to 5 year period in the bankruptcy plan. The amount paid and the duration of the plan depends on the debtor’s property, median income and expenses. Creditors are not allowed to pursue or maintain any collection activities or lawsuits during the case. If successful, these creditors will be wiped out or discharged. A Chapter 13 bankruptcy is very powerful because it provides a mechanism for debtors to prevent foreclosures and sheriff sales and stop repossessions and utility shutoffs while catching up on their secured debt.
In a Chapter 13 bankruptcy case, the debtor puts forward a plan, following the rules set forth in the bankruptcy laws, to repay all creditors over a period of time, usually from future income. A Chapter 13 case may be advantageous in that the debtor is allowed to get caught up on mortgages or car loans without the threat of foreclosure or repossession and is allowed to keep both exempt and nonexempt property. The debtor’s plan is a document outlining to the bankruptcy court how the debtor proposes to pay current expenses while paying off all the old debt balances. By filing Chapter 13, you may be able to:
Which Type Of Bankruptcy Is Available To You
A mathematical formulacalled the means testestablishes the kind of bankruptcy you qualify for. of the bankruptcy code.) The means test considers:
- how your monthly income compares to the New Jersey median income
- the amount and types of your debts, and
- other aspects of your financial situation.
If your annual income is less than the New Jersey median income for your household size, then you can choose whether to file for Chapter 7 or Chapter 13, assuming you meet other qualifications. On the other hand, if your income is higher than the state median, you must first calculate your expense deductions to estimate your disposable income for the next five years. The result of this calculation determines whether you can file for Chapter 7 bankruptcy or are left with Chapter 13 as your only option.
Accountants Special Counsel Auctioneers And Other Professionals
In considering the cost of filing bankruptcy, individual and business debtors frequently require the services of professionals to assist in their liquidation or reorganization. The most common types of professionals retained by debtors are accountants, appraisers, auctioneers, brokers, and special counsel. In a reorganization bankruptcy, such as Chapter 11 and Chapter 13, the bankruptcy court must pre-authorize a debtors retention of these professionals. In addition, before these professionals are paid by a debtor, the bankruptcy court must approve the professionals fees through a process called a fee application.
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How Valuable Is A Free Consultation
One thing that wont cost money, however, is your first free consultation with Scura. At Scura, we want to make sure your first consultation to discuss your bankruptcy options is completely free. We can discuss which bankruptcy chapter is right for you, as well as what is best suited for your needs.Ultimately, the choice between Chapter 7 and Chapter 13 Bankruptcy is not one that you should make lightly. You need to take into consideration all your assets and property before making a decision, as well as consulting a Bankruptcy Attorney. You need someone on your side to help you through the complicated process of filing for relief. This is where we come in. The attorneys at Scura, Wigfield, Heyer, Stevens & Cammarota LLP can help. Please call our offices to schedule a free consultation and hear your options.
How Much Does It Cost To File Bankruptcy In New Jersey
When you file for bankruptcy, you are often struggling to overcome the fees and debts that have smothered your financial status, so when you are offered a solution to escape that debt, your first question is Well, how much will it cost me?
Ultimately, bankruptcy will probably save you more than it will cost you. If your debts are piling up and you stand to lose your house, your car, your property then filing for bankruptcy is a small price to pay. However, there are fees along the way that you will need to make to push the process along.
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What Type Of Bankruptcy Is Best For You
We help individuals and businesses get a fresh start from overwhelming debt obligations. Bankruptcy may or may not be the best option and our New Jersey Lawyers will take the time and advise you if bankruptcy is right for your situation. An attorney in our office will take the time to explain to you the differences between Chapter 7 Bankruptcy, Chapter 13 Bankruptcy and Chapter 11 Bankruptcy and the best option for you. Sometimes it is better to avoid bankruptcy and settle with creditors out of court. New Jersey also has an alternative to bankruptcy for businesses called an Assignment for the Benefit of Creditors and our law firm will go over this option if it fits as a potential strategy for your business. Correct advice from the very beginning is the most important factor in leading to a successful bankruptcy or out of court settlement with creditors. We have created a tool that helps you choose what chapter your file is most likely to be filed under. Click here to use ScuraSmart and find out a possible solution for your debt.
List Of Documents Required For Bankruptcy
The attorney should ask for a list of documents related to your financial condition. For example, your last two years tax returns 6 months worth of paystubs or evidence of income from whatever source an appraisal or valuation on any property or real estate that you own list of the name and address with approximate amount owed to any creditors statements from bank accounts, stock accounts or other investment accounts statements on 401K, pension or retirement plans spouse’s paystubs or evidence of income life insurance statements and mortgage payment statements or car payment statements. These are a general listing of items that should be provided, but everyone’s situation varies so more information may be needed depending on the individual situation.
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Us Trustee Program Extends Telephonic Or Video Section 341 Meetings
The U.S. Trustee Program has extended the requirement that section 341 meetings be conducted by telephone or video appearance to all cases filed during the period of the Presidents Proclamation on Declaring a National Emergency Concerning the Novel Coronavirus Disease Outbreak issued March 13, 2020, and ending on the date that is 60 days after such declaration terminates. However, the U.S. Trustee may approve a request by a trustee in a particular case to continue the section 341 meeting to an in-person meeting in a manner that complies with local public health guidance, if the U.S. Trustee determines that an in-person examination of the debtor is required to ensure the completeness of the meeting or the protection of estate property. This policy may be revised at the discretion of the Director of the United States Trustee Program.
Contact A Cherry Hill Nj Bankruptcy Attorney
If you believe that your financial situation calls for bankruptcy, it is important to discuss this matter with an effective and experienced attorney. Underwood & Micklin provides quality legal services to clients in New Jersey who need a helping hand through tough times. If you need to file for Chapter 7 bankruptcy, contact Underwood & Micklin for a consultation today.
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Your Total Bankruptcy Cost
Adding up all of our costs, youre looking at $350-$450 if you file pro se. Of course, its overwhelmingly likely that your case will be dismissed and youll be left on your own to face your creditors. With an attorney, an average Chapter 7 case can cost anywhere from $1,500 to $3,000. An average Chapter 13 case will run you from $3,000 to $4,000.
Consider that the average indebted household carries over $15,000 in alone, not to mention medical debt, personal loans, second mortgages on underwater homes, and other types of unsecured debt. In bankruptcy, youd pay pennies on the dollar toward that debt.
With that in mind, a few thousand dollars seems like a small price to pay.
Can You File For Bankruptcy And Keep Your House
A lot of people ask us the question, Can you file for bankruptcy and keep your house? The answer depends on how much equity you have in your home . Most of the time, we think of equity as how much of our house we own after our mortgage is subtracted. For example, if your home is valued at $250,000 and your mortgage is $200,000, then you have $50,000 of equity in your home.
The amount of equity a licensed insolvency trustee will work with when determining if you can go bankrupt and still keep your home or not, is a net equity calculation. They will take the value of your home, subtract what you owe, deduct all of the costs that would come with selling your home, and then use that net equity amount to determine where you stand.
If the net equity amount is above the provincial exemption maximum, you have the choice of either selling your home or buying back the amount above the exemption limit. If you can afford to buy back the excess amount, you pay it to your trustee in addition to any surplus income amount . Your buy back amount becomes part of your bankruptcy estate and it is eventually distributed to your creditors.
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New Jersey Bankruptcy Forms
New Jersey Chapter 7 bankruptcy forms are available, for free, on the court’s website. The majority of the forms are national forms, which are the same all across the country. The court does have some mandatory local forms, but none of them are needed to file a Chapter 7 bankruptcy in New Jersey. If you move while your case is pending, it’s important to amend the necessary online bankruptcy forms to provide the court and your trustee with your updated address.
Preparing And Assembling Your Bankruptcy Papers
$0 to $1,800
To file for bankruptcy, you must complete dozens of pages of forms detailing your current debts, property, income, and expenses, as well as your intentions regarding loans that are secured by collateral, such as a car loan. The cost of this phase depends on whether you hire professional help.
Free legal aid. If you qualify for legal aid or have a legal plan through your union or employer, this part may cost you nothing.
Doing it yourself. Its possible to prepare your own bankruptcy forms. But if you’re not the careful, diligent type, think twice about taking this path. Bankruptcy rules and judges can be unforgiving. If you want to go it alone, you must be willing to do careful research and follow instructions to the letter. We recommend that you get a good step-by-step instruction manual, which will cost around $30.
Hiring a professional. If you prefer not to handle it yourself, you can find listings of local bankruptcy lawyers on this website. In a few areas you may also find businesses run by non-lawyers, known as bankruptcy petition preparers , who arent allowed to give legal advice but can help you fill out your forms correctly. Depending on who you choose and how much help you need, hiring a professional may cost between $200 and $1800.
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How Trustees Can Increase The Size Of The Bankruptcy Estate
The whole point of bankruptcy is to make sure that everyone gets their rightful share of the “pie” when there’s not enough pie to go around. Or to put it an more legal way: to provide an orderly distribution of available assets to all creditors, based on the priority outlined in federal bankruptcy law.
The job of the trustee is to make that “pie” as large as legally possible.
Making The Decision: Should You File For Bankruptcy
Bankruptcy Self-Help Resources
For about $30, you can purchase one of Nolo’s books: How to File for Chapter 7 Bankruptcy or Chapter 13 Bankruptcy: Keep Your Property & Repay Debts Over Time. Either book will walk you through a self-analysis of your situation and explain your options in plain English. These books offer step-by-step discussions of Chapter 7 and Chapter 13 bankruptcy, including exempt property, keeping your home, and how to prepare and file your bankruptcy forms. They also alert you to situations that are particularly troublesome and should not be handled without an attorney.
This website supplements the information in Nolos bankruptcy books by providing quick access to bankruptcy services and information for your county.
Getting Professional Help
If you just need help with preparing the forms, you can hire a bankruptcy petition preparer. If you want legal advice and analysis of the details of your specific situation, you can hire a New Jersey bankruptcy lawyer to advise you. You’ll find listings in the Lawyers section of this site. These listings are not endorsements. They are simply designed to help you quickly connect with service providers in your area.
Whether you decide to do it yourself or hire professional help, our goal is to help you become a smarter, better-informed legal consumer and help you steer clear of shoddy services.
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The Meeting Of Creditors
The Meeting of Creditors, also called a 341 hearing, is where you and your attorney, the creditors that wish to attend, and the trustee will discuss the bankruptcy. They will discuss your financial situation and establish a clear picture of the matter for all involved, allowing creditors to collect information to support a rejection of the case. This is often your only visit to a courthouse.
The Two Kinds Of Bankruptcy Most Consumers Use
This website focuses on the two most common types of bankruptcy filed by individuals: Chapter 7 and Chapter 13. But heres a quick summary of the six types of bankruptcy most commonly filed under the bankruptcy code they get their names from the chapters where they appear in the code.
Chapter 7 Bankruptcy
- Chapter 7 lets individuals wipe out most kinds of debt in just a few months.
- You get to keep certain kinds of propertyfor example, at least some of the equity in your home, your car, clothing, personal items, and property that is essential to your profession. This type of property is called exempt property, and many Chapter 7 filers find that exemptions cover most of what they own.
- If you have nonexempt property, the bankruptcy trustee will sell it to repay your creditors as much as possible.
- To qualify for Chapter 7, you must pass the means test, showing that your income is less than the state median income for your family size.
- Most bankruptcies filed in the U.S. are Chapter 7 bankruptcies.
Chapter 13 Bankruptcy
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Go To Court To File Your Forms
Your place of residence will determine where you will have to go to file your forms, so check this guide from the court, to make sure you are headed to the right place. Once you know where to go, find out where to park once you get there. Since you don’t know how long it will take once you get inside , avoid the additional stress that comes with short-term parking around the courthouse. Finally, you are going to have to enter a federal courthouse to file your Chapter 7 bankruptcy in New Jersey. This means making sure you have your picture ID handy and be prepared to pass through security on your way in. The actual act of filing Chapter 7 in New Jersey is done in the clerk’s office which is only open to the public until 4 PM, so make sure you plan your day accordingly.
How Much Does It Cost To File Chapter 11 Bankruptcy For My Business
Chapter 11 Bankruptcy tends to be more expensive of a process than either Chapter 7 or Chapter 13 Bankruptcy, in part because Chapter 11 Bankruptcy, also known as Business Bankruptcy, centers around debt reorganization for larger businesses.Once the bankruptcy reorganization plan is approved and underway, the debtor requires the bankruptcy court’s approval of business transactions that are not ordinary. They must comply with the U.S. trustee’s monthly reporting requirements. A committee of creditors will be assembled and have the power to appoint professionals to perform tasks through the bankruptcy process. However, despite the creditors hiring these professionals, the debtor must pay for said professionals. Several smaller businesses cannot afford the costs of Chapter 11 Bankruptcy, nor might they be able to effectively conduct business with so many limitations.Thankfully, now there is Subchapter V Bankruptcy. Subchapter V is also referred to as the Small Business Reorganization Act . The SBRA was first approved in February 2020. As the name suggests, this simplified process for bankruptcy is designed for small businesses to reorganize following financial hardships. This process reduces many of the more expensive costs of Chapter 11 Bankruptcy for smaller businesses.
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Working With The Bankruptcy Trustee
When you file for bankruptcy, a person called a “Trustee” is appointed to your case.
It’s important to understand the role of the trustee and who he or she “works” for. Although the trustee is appointed by the court, the trustee’s job is to get as much property as possible to be sold and the proceeds distributed equitably to your your unsecured creditors, according to fixed rules established by law.
Almost all of your dealings with the bankruptcy court will be with the trustee assigned to your administering your case, not the bankruptcy judge, who is only there to rule on legal issues and issue your “discharge” order that officially cancels your debts upon completion of a successful filing — which is the ultimate goal of bankruptcy.