Frequently Asked Questions about New Jersey Bankruptcy

Bankruptcy FAQs

Will the recently enacted bankruptcy laws make me ineligible for a fresh start?

It’s true that Chapter 7 bankruptcy laws have made it more difficult to qualify for a fresh start, but a healthy percentage of applicants do still qualify for this type of bankruptcy. Every situation is unique, however, so the best course of action would be taking advantage of the free Chapter 7 bankruptcy consultations we offer here at Veitengruber Law. This process allows us to present you with the options that will benefit you most over the long term.

Which type of bankruptcy filing will be best for me?

If a debtor files Chapter 7 bankruptcy, the law requires that the debtor relinquish all property in excess of a set monetary limit in order that it can be liquidated through sales to creditors. However, in most of these cases, real property is exempt. This is to permit the debtor to be somewhat well positioned for a fresh start.

Chapter 11 bankruptcy is designed for business and individual debtors who have taken on immense personal debt.

Chapter 12 bankruptcy is only available to family-owned fishing businesses and family farmers.

Chapter 13 bankruptcy is usually called a “debt adjustment” since a debtor is required to file a concrete plan to repay most or all of their debts within their current income parameters.

What are New Jersey’s specific requirements for filing bankruptcy?

In order to qualify for Chapter 7 bankruptcy in New Jersey, a debtor must provide a wide array of personal information regarding their financial status. These categories include, but are not limited to: all creditors and any collection agencies, secured claims, unsecured claims, any existing debt schedules, pensions, stocks, real estate holdings, and the value of the debtor’s life insurance policy.

Once you have arranged your free consultation, the experienced team at Veitengruber Law will carefully explain the applicable filing requirements. Additionally, your bankruptcy attorney at our firm will go through this list with you to be sure you’re prepared to go forward.

Will I be permitted to keep any of my property?

When filing for Chapter 7 bankruptcy, a debtor is permitted to retain property that either state or federal law has declared exempt from the claims of creditors. The debtor is given the option to choose which set of exemptions is more advantageous, but often the federal laws are more favorable.

 

Will I be permitted to own anything once I have filed for bankruptcy?

Absolutely. It’s a common misconception that anyone who has filed for Chapter 7 bankruptcy is prohibited from owning anything. Bankruptcy is not intended to be punitive.

However, it’s important to note that if a debtor does come into an inheritance, receives a personal property settlement, or benefits from a life insurance payout within the first 180 days after filing for bankruptcy, this income or property will almost certainly be flagged as being owed to creditors unless it is specifically exempt.

Will I still be protected from discrimination despite my bankruptcy?

Federal law (No.11 U.S.C. sec. 525) protects you from discrimination from both governmental units and private employers due to your having filed for bankruptcy or failed to repay dischargeable debt.

Will I be required to appear in court?

Yes. Once you have filed your Chapter 7 petition, the court will schedule a formal Meeting of Creditors within 30 – 90 days. The Federal Court Trustee in Newark, Camden, or Trenton will conduct the meeting. Counsel will be present at your side to assist you as you answer questions intended to help the appointed trustee decide if you possess assets that should be distributed to your creditors. Additionally, the trustee will attempt to discern if you have filed your petition for Chapter 7 bankruptcy in good faith.

Will bankruptcy ruin my credit rating?

While it’s undeniable that having a bankruptcy on your credit report does damage your rating, it’s also true that over time, the bankruptcy itself can be less detrimental than a years-long history of unpaid debts and judgments against you. In fact, many people find that once they have filed for Chapter 7 bankruptcy, they receive offers for fresh credit cards and are even able to obtain them! Lenders are overall more likely to view you as less risky once you are free from your huge burden of debt. After all, they are guaranteed that you will not be permitted to file for bankruptcy for a minimum of six years.

Does bankruptcy erase my debts?

While bankruptcy will erase most of your unpaid debts, there are notable exceptions.

Bankruptcy normally does not adjust:

  • Alimony or child support obligations
  • Some unlisted debt
  • Loans obtained under false pretense
  • Fines
  • Debts resulting from willful and malicious intent
  • Student loans

Additionally, mortgages and any other liens that are not paid via the bankruptcy may be attached to the property. They will not be reattached to you personally until and unless you decide to reaccept the obligation. If the creditor sells the property, the bankruptcy completely absolves you of all obligation to repay the debt.

Are there other viable options for getting out from under my debt?

Once a debtor has been hounded by creditors and has realized that they have very little hope of paying off their debts, the promise of a fresh start through bankruptcy can seem like the only escape. While bankruptcy is the best course of option for a good portion of overwhelmed debtors, it can also greatly impact their credit rating and their ability to purchase large items such as a home or vehicle. Therefore; it is prudent for debtors to carefully consider less drastic alternatives.

This caveat is especially pertinent if the debtor’s financial problems are likely to be merely temporary, in which case creditors may accept smaller payments, or stretch payments out over longer periods of time. It helps the debtor’s credibility if they have demonstrated prompt payment habits in the past, or if they inform their creditors that they are facing potential bankruptcy. Creditors are eager to avoid bankruptcy if they may reasonably expect that the debtor will be capable of and willing to repay their debts over time; once bankruptcy proceedings have begun, they are unlikely to recover anything, or will only be able to garner a fraction of what they are truly owed. Creditors also often like to avoid court proceedings connected to bankruptcy because they are costly and time-consuming.
Veitengruber Law works with our clients to present them with every available avenue of debt relief so that they are able to make a fully informed decision. We will work together with you to get you to the other side of debt. To find out what debt relief solution is right for you, schedule your free consultation with us today.

 

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Will I Lose my Alimony if my Ex Files for Bankruptcy?

When it comes to the complexities that come with divorce, most divorced couples find that one of the most stressful aspects is – you guessed it – money. Both parties will feel the effects of their divorce in the two places it hurts most – the heart and the wallet.

Regardless of how intertwined you and your (soon to be ex) partner kept your finances when you were married, going from living on two incomes to scraping by on one is never easy. This is especially true if you are the spouse who makes less money, was a stay-at-home parent, or have been otherwise dependent on your partner financially.

If your marriage resulted in children and they’ll be living with you after the divorce, you’ll be able to benefit from child support payments from the non-custodial parent.

Children or not, you may also benefit from alimony in order to help you maintain the quality of life you enjoyed while married.

In theory, the concepts of child support and alimony can help a newly single parent stay out of debt and continue paying all of the bills on time. The reality, of course, is that not every person will come through with the payments – for a number of potential reasons. A big question on many splitting couples’ minds is:

What Happens if my Ex Files for Bankruptcy?

Prior to 2005, filing for bankruptcy in New Jersey could help lower the amount of child or alimony support an ex-spouse had to pay each month. Luckily, amendments made in 2005 to the Bankruptcy Code set stricter enforcements into place to protect individuals who are entitled to domestic support obligations.

In Section 523, the U.S. Bankruptcy Code delineates that “domestic support obligations” are not dischargeable when an individual files for bankruptcy. In addition to alimony, “domestic support obligations” also include child support and money owed to the petitioner’s former spouse, child, legal guardian, or the government.

The spouse entitled to receive support may understandably be quite nervous if the other party files for bankruptcy after their divorce. Because of the 2005 amendments, the receiving spouse doesn’t even have to file a claim with the Bankruptcy Court.

What About the Automatic Stay?

As soon an individual files for bankruptcy, all creditors are obligated to stop collecting debt money. This is known as an automatic stay. The collection of alimony or child support does not fall under the enforcement of an automatic stay; rather, it is held in higher priority under the Bankruptcy Code. In other words, before any other debts from creditors are considered, alimony and child support need to be paid.

There is no difference between Chapter 7 and Chapter 13 bankruptcy when it comes to alimony. Individuals who file for either chapter are still required to pay (in full) any alimony and/or child support obligations.

Are There any Exceptions?

There are two very specific situations in which “alimony” can be discharged in bankruptcy.

  1. Sometimes, a divorce decree states that one spouse has a monetary obligation to be paid to a spouse, and it is mis-labeled as “Alimony.” If it is determined that the obligation is not actually alimony, then it can be discharged. For example, the divorce decree may state that “Husband shall be responsible for $10,000 of a debt accrued during the marriage (often credit card debt).” At times, items like this can be labeled incorrectly as alimony, when in fact, it is completely separate from alimony. Once this monetary obligation has been legally determined as “non-alimony,” it then becomes dischargeable.
  2. The second exception occurs if an individual has a monetary obligation to a third party. For example, Bob and Mary Jones divorce, and Bob is required to pay Mary $1000.00 per month. Bob decides not to pay the alimony, so Mary assigns her father the responsibility of collecting the alimony. Mary still needs the money and her father distributes it to her, but there is no record of that. Now that Mary’s father is responsible for collecting the alimony, if Bob files for bankruptcy, the order to pay alimony can be discharged since it was assigned to a third party.

Help with a New Jersey Bankruptcy

If your ex does file for bankruptcy, they may be granted forgiveness of other debts like credit card debt, or past utility bills.


TO BE CLEAR: It is not possible for your ex to file for bankruptcy in order to get out of paying domestic support. They can file for bankruptcy, but they cannot discharge child support OR alimony.


 

Paying alimony or being entitled to receive alimony while filing for bankruptcy can be a sticky situation for all of those who are involved. Rifts between family members can occur, and they normally don’t end well.

If you are the person filing for bankruptcy, work with an experienced NJ bankruptcy attorney rather than trying to go it alone to ensure that all of your obligations are being met. In the end, it will be well worth your investment of time and money.

Getting Back on Your Feet After Bankruptcy

nj bankruptcy

You’ve finally crawled out of the deep, dark, seemingly unending hole of debt. After this exhausting journey, you’re more than ready to get back on your feet. Many people wonder how exactly how to get back to “normal” after bankruptcy. If you filed for Chapter 7 bankruptcy and your debts were discharged, or you filed for Chapter 13 bankruptcy and you developed a payment plan, you can see the light at the end of the tunnel. Now you have a fresh start, but before you get too excited, you need to be aware that it does take effort on your part to make sure you stay on the right path for good.

The state of New Jersey requires all individuals that receive a bankruptcy discharge to take a debtor education course that focuses on personal financial management. A bankruptcy discharge will not be given unless the debtor completes this class. The course must be done through a certified counseling agency and an Official Form 23 must be filed when the financial management course is finished. If a married couple files for bankruptcy, both individuals must attend counseling and submit an Official Form 23.

Here are a few post-bankruptcy steps you can take that will get you standing on two feet in no time.

1. Make a budget.

The first step is to track your spending for a few months to get an idea of how much you’re bringing in and where your money is going. Once you do this, you can come up with a monthly spending plan based on your income and the tracking results you gathered. It’s important to also become acutely aware of what exactly you’re spending your money on; if it’s mostly necessities, it’s crucial to have money set aside for that, but if you’re still spending significant amounts on unnecessary items, you’ll need to rethink your budget. Discipline in setting boundaries for yourself is vital.

2. Love cash; like credit.

Once you’ve gone through bankruptcy, it might be a good idea to develop the mindset of paying with cash more often than paying with credit. If you allow yourself to only carry a specific amount of cash in your wallet, you will be able to limit your purchases to necessities. On the other hand, there is no reason to fear credit. Following bankruptcy, it’s crucial to reestablish your credit, especially if you eventually want to purchase a house or car. Future employers, banks, and potential landlords will want to be reassured that you have been able to reestablish a decent credit score.

3. Pay bills on time.

Whether the bill is big or small, make sure you pay it on time. If you have bank fees or are bouncing checks, these will show up on your credit score, which can be detrimental to your financial health – knocking your credit score down incrementally when it needs to be moving upward.

4. Don’t fall into the scam trap.

Be aware of anyone that offers to “fix” your post-bankruptcy credit situation. You are completely capable of fixing your credit on your own, therefore you don’t need anyone else’s assistance. There are a plethora of scammers who will claim to be able to repair your credit overnight, (but for a fee – and believe us when we tell you it won’t be a small fee). Building credit requires time and patience.

If the offer from a credit repair “company” seems too good to be true or they request money upfront, be incredibly careful. When in doubt, don’t hesitate to check with the credit bureau or state regulatory agency. If you’re truly in need of help, reach back out to your NJ bankruptcy attorney – he will be the best source for reliable post-bankruptcy assistance.

Bankruptcy can be a long and trying process, but once you make it through, be assured that there is a light at the end of the tunnel. Knowing how to get back on your feet and actually “doing” it are two different sentiments. Be self-disciplined in working towards a financially healthy state. If you’re feeling unsure or a little bit lost, don’t be afraid to contact your bankruptcy lawyer who can help you after bankruptcy as well as during it.

What to do When Your Client Files for Bankruptcy

NJ collections attorney

From the perspective of a company owner doing business with a client (or company) who files for bankruptcy: how can you go about getting (even some of) the money you’re owed?

The second someone files for bankruptcy of any type, the Automatic Stay slams down like a sledgehammer – coming between the bankruptcy filer and anyone they owe money to. The Automatic Stay protects debtors during the bankruptcy process by making it illegal for any creditor to make contact asking for money.

Why can’t I contact my client?

After all, you and your client likely signed a working contract wherein you agreed to provide services and they agreed to pay you X amount of dollars for said services. Even though you continued to provide your end of the deal, your client filed for bankruptcy and now you aren’t even allowed to contact them. This can be very frustrating for a business owner who is owed payment(s) – money that may very well be making or breaking the creditor’s own business.

The reason you can’t contact a bankruptcy client is because the Automatic Stay is a protective measure put into place by the bankruptcy court to protect struggling debtors. It gives them enough time and breathing room to gather their financial information and meet with their bankruptcy attorney and/or a potential NJ credit counselor to come up with a plan that makes sense for getting them back on their feet again.

Chapter 11 and 13 bankruptcies are filed with the intention of reorganizing monies owed into a more feasible and achievable payment plan. As soon as these bankruptcy cases are complete – you will once again begin receiving payment from your client. According to their debt reorganization plan, you may not receive the full amount due, but you will get paid.

That’s the good news.

The bad news is that the vast majority of bankruptcies filed today are chapter 7, which entails debtors liquidating assets and discharging many of their debts altogether. If your client files for chapter 7 bankruptcy, you may have to write off their past due amount as a loss. In any case, remember NOT to contact them at all until you receive notice that their bankruptcy case is no longer active in the NJ Courts system.


To contact a debtor while they are actively going through the bankruptcy process (if an Automatic Stay is in place) means that you risk being sued. You will have broken the bankruptcy code if you even attempt to contact a bankruptcy client.


 

What You Can Do:

  • File a Proof of Claim – Downloadable from the USCourts online and easy to fill out.
  • Attend the Meeting of the Creditors; also known as the 341 Hearing – At this meeting, you will be able to question your client. You’ll also be permitted to object to the repayment or reorganization plan if you deem it unfair.
  • Thoroughly review any plan that is formulated by the debtor and their trustee. If less than half of their creditors do not consent with the plan, it won’t be approved by the bankruptcy court.
  • Make sure you are listed on the Creditor Matrix.
  • Wait and see. Truthfully, most of your time will be spent waiting to find out the outcome of your client’s case. If the case is dismissed, or “thrown out,” you will once again be allowed to attempt collection. If an agreement or repayment plan was formulated, you will receive a notice about how much you can collect. Be sure that all of your contact information is correct with the bankruptcy court and your client’s bankruptcy attorney to ensure you will receive any and all payments.

 

Choose a NJ Bankruptcy Attorney Who can Offer Personalized, Caring Representation

Are you hesitating to call an attorney because you are experiencing financial hardship and think you may soon be facing bankruptcy? Are you involved in a complex legal case involving a large amount of money or debt? In the case of bankruptcy, hindsight is not better than foresight, so act in a timely manner and choose a bankruptcy attorney who can provide you with personalized, compassionate representation. Taking this action is both very personal and intimidating at the same time.


At Veitengruber Law, we want to provide you with advice on your financial needs and help put your mind at ease to regain control of your life.


Financial strain can hit anyone at any time. Dedicated, hard working individuals may lose their job or get laid off. Health insurance costs may skyrocket. Divorce can affect both parties financially. A medical emergency, sudden sickness, or unexpected hospitalization may cause never-ending medical bills. You may face a complex legal action with a hefty amount of debt. Each one of these or any combination can lead to financial worries, causing great stress and making you feel as if you’re losing control of your life.

A good bankruptcy attorney will analyze your income and expenses/debts along with real estate assets to determine if bankruptcy is the path you should take, or recommend other alternatives such as loan consolidation, short sale, debt negotiations, debt forgiveness, etc. If filing for bankruptcy is the only option, you want to make sure your attorney completes the filing timely and accurately. They will guide you through the process and lead you back to financial recovery through a tailor-made plan specifically for you. They also need to ensure that in the aftermath of filing for bankruptcy, they minimize any adverse consequences for you.

Many myths surround bankruptcy, with the most common involving losing everything or losing a home to foreclosure. Many times, filing bankruptcy can ease your financial burdens by assisting with late mortgage payments, giving you the chance to catch up on payments, providing an avenue for safe wage garnishments, halting the repossession process, and erasing your debt.

Most assets are retained in Chapter 7 bankruptcy and individuals and families with a steady income can preserve their assets through a Chapter 13 payment plan. Chapter 7 bankruptcy may require you to liquidate assets to pay creditors, however all property is exempt. Chapter 13 bankruptcy allows you to adjust your debt by making regular payments based on your income.

Veitengruber Law has team members who specialize in Chapter 7 and Chapter 13 bankruptcy. Our team also expertly handles real estate law and transactions, short sales, deed in lieu of, and quit claim matters. We can provide housing and urban development (low-income) counseling and specialize in loan modifications, foreclosure defense and home retention.

At Veitengruber Law, we have confident, highly educated and qualified attorneys, paralegals and other legal aides to assist you in overcoming your financial struggles. Our professionals will translate legal jargon into “layman’s terms” so that you understand completely what you’re facing and what your recovery plan will be. We understand what you’re going through, not only because are we experts in our field, but most importantly, we are people. We want to help you be financially healthy and fiscally fit. Call us today for a free consultation to put you on the path towards financial fitnesss.

What are the Duties of a Bankruptcy Trustee?

 

A NJ bankruptcy trustee is responsible for completing the administrative tasks of a specific bankruptcy case and is typically appointed by the New Jersey bankruptcy court. These individuals are not judges, but are sometimes lawyers, though that is not a requirement. The trustee’s jobs include (but are not limited to): management of all of the petitioner’s bankruptcy paperwork and documentation, leading the meeting of creditors, and handling the liquidation of the petitioner’s assets.

When filing for bankruptcy, you need to first gather the necessary information and paperwork, either on your own or with the guidance of your New Jersey bankruptcy attorney. Based on the New Jersey exemptions, it’s also important to figure out what property (of yours) is exempt from seizure. Once you have filed for bankruptcy, the bankruptcy court will take legal control of all debts and properties that are not free from New Jersey exemptions.

The next step in a NJ bankruptcy case is when a trustee will be assigned. His or her responsibility is to review your paperwork in a detailed manner, especially any possessions and exemptions you want to claim. You may contest any decisions or rulings made by your trustee. About one month after you’ve filed, the trustee will be responsible for calling a meeting of creditors. The debtor must attend this meeting.

A trustee either deals with Chapter 7 cases, where the profit is made from liquidating (selling) the petitioner’s nonexempt property, or Chapter 13 cases, in which the profit comes in the form of a repayment plan. Because the trustee receives a portion of what he or she can collect for the filer’s creditors, the trustee has a powerful incentive to collect as much as possible for the creditors.

Regarding Chapter 7 cases, there are typically no non-exempt assets. If there are non-exempt assets, you will have to release non-exempt property, or the cash equivalent of its market value, to the trustee. This takes place following the meeting of creditors. The trustee will then split the proceeds from selling this property to the creditors. In some cases, if the property does not have a high value, the trustee may turn the property back over to you.

Regarding Chapter 13 cases, the trustee is responsible for handling the most important piece of the puzzle – the repayment plan. The trustee will work with the filer to set up a repayment plan of his or her debts. While the filer is in the process of repaying creditors, the trustee will be responsible for collecting the monthly payments and distributing them to the creditors. The trustee will also give the petititioner occasional updates on who has been paid and how much is still owed to each creditor.

Because bankruptcy trustees have a significant role and power in the bankruptcy system, it’s important to start off on the right foot with the trustee that is assigned to your case. A working relationship with your trustee will be vital, especially if you are involved in a Chapter 13 case. Be meticulous and honest when completing the bankruptcy forms and make sure you let the trustee know immediately if you’ve made a mistake. Open communication will make the bankruptcy process easier for both you and the bankruptcy trustee.

Image: “November 9th” by Kate Hiscock – licensed under CC 2.0

How to Sell Your Home Before Your Lender Forecloses

nj bankruptcy attorney

Many times here on our bankruptcy blog, we describe situations where homeowners want to save their homes. Filing for bankruptcy sets the Automatic Stay into motion, which in turn prevents a home from being foreclosed upon. The length of the bankruptcy case and the anticipated outcome of a discharge of debts allows those homeowners (who desire it) the ability to adjust their debt-to-income ratio enough to keep their home via reaffirmation.

However, sometimes, a financially distressed homeowner doesn’t want to save their home. They may wish to downsize or move into a more affordable geographical location. Foreclosure, then, is not their ideal outcome, because they’ll end up with no money from the sale of the home, their credit scores will drop, and they could end up owing a deficiency judgment.

In these situations, selling the home is the desired outcome.

What’s the problem, then? Just sell the house and get on with things, right? The dilemma arises when homeowners have fallen behind on their mortgage payments and their lender is threatening to foreclose before they have a chance to get the house listed on the market.

If you do not want to keep your current house, but you’re simply short on time due to the immediate threat of foreclosure and sheriff’s sale, you’re in luck. You came to the right place, because we can help gain you enough time to get your property sold to a proper buyer rather than through a foreclosure bidding auction.

Why not just let your home go to foreclosure sale? A sale’s a sale, right?

Actually, no. Very, very much NO. However, many homeowners who’ve found themselves face-to-face with a foreclosure don’t realize they can take action toward an end goal of selling their home even when the home is actively being foreclosed upon. That’s right – this is possible even if you’re behind on your mortgage payments – or not making them at all.

Homes that sell via foreclosure auction or “sheriff’s sale” (find out why it’s called that here) almost always sell for significantly less than their real time market value. That is the #1 reason that you should consider trying to list your home for sale before sheriff’s sale.

For those homeowners who know they cannot continue living and maintaining their current lifestyle (i.e. high mortgage payments and property taxes), the last thing needed is the possibility of a deficiency judgement.

A deficiency judgement isn’t the only reason to avoid foreclosure.

By beating your lender to the punch and selling your home before they have a chance to pull the rug out from under you, you gain the opportunity for a substantially higher sale price. This will guarantee that all of your missed payments, late fees and interest is paid back to your lender, causing a domino effect of good results:

  1. Your foreclosure will be dismissed.
  2. You may end up with some equity in your pocket.
  3. Other dischargeable debts can be eliminated or greatly reduced.

Filing for bankruptcy in New Jersey should be viewed as a valuable tool that can be used to right a financial situation gone awry. The key to getting all of your ducks in a row, however, is working with the right NJ bankruptcy attorney. Timing is everything; don’t delay making a move on what can potentially turn into a disaster. Take action now, and you can walk right into a story with a happy ending.

 

Can I Accept a Cash Gift While in Chapter 13?

chapter 13 bankruptcy

Filing for a chapter 13 bankruptcy in New Jersey means you’re taking steps to right your financial situation, which may have gotten off-kilter. Some of your debts will be reduced or eliminated through the bankruptcy process, and your remaining debts will be reorganized in such a way that makes them manageable.

After your chapter 13 case has ended, you and your bankruptcy attorney will agree to a repayment plan that is typically laid out over a 3-5 year period, making your monthly payments much lower. Once you’ve been granted a chapter 13 reorganization, you are generally not permitted to take on any new debts until you’ve successfully paid off your existing debts.

Incurring a new debt after filing for chapter 13 bankruptcy is only allowed if you get specific court permission, and this will be granted in very select circumstances only. So, if you’re contemplating buying a new car or making another relatively large purchase, be aware that court approval is needed first. If you fail to get court approval before taking on more debt during your bankruptcy repayment period, your case can be dismissed.

I need a working car; what are my options while in bankruptcy?

With all of that being said – you’ve found yourself in a pickle. While you’re exceedingly grateful for the opportunity of a chapter 13, you may now discover that your vehicle has “died,” and the best financial choice is to replace it rather than to continue making expensive repairs. This is a valid example of when you could petition the court to be able to take on an auto loan, but BE CAREFUL.

Before doing so, pour through all of your financials with a fine toothed comb. You must be absolutely certain that you will be able to make the new loan payments in addition to your debt repayment plan as laid out in your chapter 13 case.

Another question that many debtors have involves receiving a cash gift after filing for chapter 13. Let’s say that your mother, who knows your family needs a working vehicle so that you can get to work and earn money, wants to help you out by gifting you some or all of the money needed to buy that vehicle.

Can I accept cash gifts while in bankruptcy?

Yes, in short. But, before you accept any money from anyone, you are required to report it to your bankruptcy trustee. Any incoming money, above and beyond your paycheck, whether via gift or other windfall (inheritance, etc), is considered to be additional income in the eyes of the bankruptcy court.

Unless you receive only a very nominal gift (for example, $50 in a birthday card), it is of the utmost importance that you report any and all cash gifts while you are working on paying off a chapter 13 bankruptcy.

If your question has not been answered in full here, please contact your NJ bankruptcy attorney, who is best equipped to answer specific questions about your unique case details.

Fear of Filing: What’s Keeping You from Bankruptcy Relief?

Without a doubt, money incites emotion.

What emotion depends on the specifics of your financial situation. Suddenly getting a substantial raise at work gives a feeling of success and relief. Coming into an unexpected windfall of money can evoke a sense of thrill and excitement. Steadily watching the number in your bank account dwindle inevitably leads to anxiety, stress, and panic.

Realizing your debt is higher than you can handle can provoke a fear that feels like you’re drowning. Learning that you have solid options to get out of debt when you thought it was an impossibility should instill a solid sense of comfort. Unfortunately, the thought of filing for bankruptcy comes with its own set of complex and confusing emotions.

Even though you may know and logically understand how the New Jersey bankruptcy process can eradicate a large percentage of your debts, you may hesitate to take the necessary steps to file. You’re not alone. In general, those who know they need to file for bankruptcy but are afraid to do so, are afraid of one (or more) of the following:

Ridicule/social embarrassment

Yes, it is more socially acceptable today to file for bankruptcy, but this fear isn’t unfounded. You may have some naysayers and Negative Nanceys if you file for bankruptcy. While they may tsk tsk behind your back, what’s most important is getting your financial life back on track. What will the naysayers have to cluck about when all of your bills are current and you’re able to rise above your strife? Keep your eye on the prize, and kick any and all negativity to the curb.

Job loss/difficulty finding future employment

In order to assuage this particular fear, it’s always a good idea to discuss a potential bankruptcy with your current employer before filing. An informed boss is much better than one who finds himself “hoodwinked.” As long as your higher-ups and HR department give you the green light, you’ve got nothing to fret about.

As for future employment, as long as you keep your nose to the grindstone and make the most of filing for bankruptcy, chances are good that a potential future employer will look at your overall financial picture rather than zero in on just one incident. Bankruptcy discharge is your opportunity to get a strong foothold where your finances are concerned. By using bankruptcy as a tool, you can get out of (and stay out of) debt, improve your credit score, and completely turn your life around.

Inability to buy a home/fear of losing your current home

It’s true that filing for NJ bankruptcy will lower your credit score temporarily. This does mean that making large purchases that will require a loan are off the table, but only in the short-term! By remaining steadfastly dedicated to cleaning up your financial past, a lender will see that you’ve made a lasting change. In just a year or two, you will be able to make large purchases again.

Losing your home is a huge fear for almost everyone when they think about bankruptcy, although this fear is largely unfounded. Now, if you should decide that your home mortgage is out of your budget – you can decide to go forward with a short sale or foreclosure in order to downsize. However, if you would be able to successfully make your mortgage payments if your other debts were gone or significantly reduced, filing for bankruptcy in New Jersey triggers the automatic stay.

Do you have other fears about filing for bankruptcy that weren’t mentioned here? Call us; talk to us. We can walk you through what you’re afraid of and help you understand the process. We’ll give you real, honest feedback, even if that means bankruptcy isn’t right for you.

Collection Defense vs NJ Bankruptcy

If you have been sued by a collections company or “debt collector,” and the debt truly belongs to you, the most important piece of advice is: Do not ignore the lawsuit.

With that being said, people in your position naturally wonder if they have options. Being sued for a debt that perhaps you thought had been forgiven, or that had reached its statute of limitations, can come as a surprise. Many times we put these things out of our minds because it is easier than focusing on it and worrying about it.

Unfortunately, by putting a large debt that you failed to repay out of your mind, you are now faced with a lawsuit that asks you for the entire lump sum that you owe. This sum may even be larger than you remember due to late fees, attorney fees for the collections agency, and interest.

Is filing for bankruptcy your only option?

While it is impossible to give a blanket answer to this question (as everyone’s case will vary wildly) – the general answer is that no, bankruptcy is not your only option when you are being sued for an unpaid debt.

There are several things your NJ bankruptcy attorney will ask when you meet with him or her. Is this your only significant debt? What is your income? Can you repay this debt if it is broken down into payments?

If you have other debts along with the one in the lawsuit, and your income doesn’t allow you to get ahead on paying them back, it may be that bankruptcy is right for your situation.

Can you negotiate with the debt collector?

On the flip side, if the debt in this lawsuit is literally your only debt (outside of your mortgage and car payment), and your income is steady, you might want to have your bankruptcy/debt resolution attorney negotiate with the collection company.

For example, if your unpaid debt amount is $15,000, you may be able to talk the debt collector down several thousand if you pay in a lump sum. It is also possible to negotiate a payment schedule if you wish to avoid bankruptcy.

Is collection defense an option for you?

Collection defense is only appropriate if the debt in the lawsuit doesn’t belong to you, or if the lawsuit contains errors. So, if you are being sued in error, then collection defense is an option, but the reason many people opt for a different resolution is that collection defense representation can get expensive. Regardless of how much you pay your attorney, you can still end up losing the case, even if the debt collector is in the wrong. This is because NJ law doesn’t require strict proof of signed agreements when it comes to credit cards. Therefore, you may end up owing hefty attorney’s fees and still have to repay the debt in full when all is said and done if you go this route.

The only way to know for sure which direction you should go is to sit down with a NJ bankruptcy lawyer or debt resolution attorney. Often, bankruptcy attorneys also specialize in credit repair and debt resolution strategies other than bankruptcy, so look for an attorney who is well-versed in all areas in which you need assistance.