How The Bankruptcy Laws Can Help You Escape From Debt

The nation's bankruptcy laws were written not to punish people for getting into debt but to help individuals and businesses escape from dire financial situations. Many of the people we meet at Ast & Schmidt, P.C., feel overwhelmed by their credit card balances, medical bills or mortgages and see no way out of their current predicaments. They are often surprised to learn that filing a Chapter 7 or Chapter 13 bankruptcy can be a fairly straightforward process.

Take the first step toward a more secure financial future and get the information you need to climb out of spiraling debt. Visit our office in Morristown, call us at 973-984-1300 or fill out our online contact form today.

Below, we discuss Chapter 7 bankruptcy, Chapter 13 bankruptcy and the myths that prevent many from taking the steps they need to find financial relief.

Chapter 7 Bankruptcy

Chapter 7 bankruptcies are sometimes referred to as liquidations because the debtor's assets are sold to raise the funds needed to pay creditors. However, several important exemptions are in place to prevent individuals being left unable to cope financially. These exemptions may allow you to keep your home, car and personal possessions.

In order to discharge debts through Chapter 7, you need to pass a means test. Means tests were introduced when the Bankruptcy Code was revised in 2005, but about 71 percent of personal bankruptcies are still Chapter 7 petitions.

Our lawyers have helped residents of New Jersey reclaim control of their financial futures for years, and we can help you determine if you will be able to pass a means test and qualify for a Chapter 7 discharge of your debts.

Chapter 13 Bankruptcy

If your income prevents you from filing a Chapter 7 petition, you may choose to pursue debt relief by filing for Chapter 13 bankruptcy instead. You could also choose this option if you have assets that you would like to protect that are not covered by the Chapter 7 exemptions.

When you file a Chapter 13 bankruptcy, a bankruptcy court will set up a repayment plan lasting between three and five years. Your remaining debts will be discharged once these payments have been made. Our attorneys can explain the secured and unsecured debt limits for Chapter 13 filings and work to ensure that any payment plan put into place leaves you with enough money each month to make ends meet.

Common Bankruptcy Myths

Having unmanageable levels of debt and coping with daily calls from bill collectors can be extremely stressful, but the law provides individuals and families with ways to escape the debt trap and offers the possibility of a fresh financial start. However, filing for bankruptcy is shrouded in myth, so one of the first things we do when we meet with new clients is go over these misconceptions and clear them up. Do not believe these myths:

  • Filing a bankruptcy will permanently ruin my credit. It will not. Learn how to rebuild credit after bankruptcy.
  • If I file for bankruptcy, I will lose my home, car or other assets. Not true. In fact, you can stop repossession and keep many of your assets.
  • I earn too much money to file for bankruptcy. Chapter 13 does not have a means test. Bankruptcy can even help with some, though not all, tax debt.
  • I will not be able to borrow in the future if banks see a bankruptcy on my credit report. False. Creditors often prefer bankruptcy to years of missed payments.
  • My creditors will sue me if I file a Chapter 7 or Chapter 13 bankruptcy. Bankruptcy stops any creditor actions against you, including wage garnishment, harassment, repossession actions and more.

Learn whether bankruptcy is the right option for you by calling 973-984-1300.

Ast & Schmidt, P.C., is a debt relief agency. We help individuals file for bankruptcy relief under the Bankruptcy Code. The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.