If you cannot afford to make payments toward your debt, Chapter 7 bankruptcy offers a path towards getting a fresh start.
In Chapter 7, the court appoints a trustee to confirm that you have no disposable income and to liquidate (sell) valuable assets. You can keep certain assets, such as vehicles, household goods, jewelry, tools, retirement savings, money, and some home equity, among others. In bankruptcy lingo, we call these protected assets “exempt”. In most Chapter 7 cases, the trustee takes no assets from the person filing bankruptcy because everything is exempt. In other words, most people who file Chapter 7 keep their cars, homes, and personal property. It’s important to consult with a New Jersey bankruptcy attorney before filing a Chapter 7 to avoid unforeseen consequences.
Benefits
- As soon as the case is filed, it becomes unlawful for creditors to collect a debt. Lawsuits, wage garnishments, bank levies, phone calls, text messages, and collection notices must stop immediately. Utility shutoffs must also be stopped once the case is filed.
- At the end of the case, a discharge order wipes out most debts permanently- discharged creditors can never collect again. The discharge order covers most debt, including credit cards, medical bills, personal loans, payday loans, overdue utility bills, and deficiencies from repossessions or foreclosures.
- Chapter 7 cases are relatively fast. The typical Chapter 7 case closes about three months after filing.
- Insurance surcharges can be discharged, clearing the way to restoring a suspended driver’s license.
- Married couples can file together to eliminate both spouses’ debts, or if only one spouse has debt problems, they can file individually.
Limitations
- The exemption process is complicated and can result in the trustee selling assets if not handled carefully. Review your assets carefully with a bankruptcy attorney before filing a Chapter 7 to avoid surprises.
- Some debts are not dischargeable in Chapter 7. Domestic support obligations (child support, alimony, property settlement in divorce), most student loans, recent taxes, and debts related to injuries caused by intoxicated driving or intentional conduct will survive the bankruptcy.
- People with disposable income are not eligible to file Chapter 7.
Call the Law Offices of Lee M. Perlman to schedule a no-cost consultation about Chapter 7 bankruptcy.