Joseph M. Ghabour, Attorney At Law, LLC
New Jersey Bankruptcy Lawyers
Giving You A "Fresh Start"

Are you drowning in debt? If so, contact a bankruptcy attorney today. Bankruptcy filings provide several options for individuals looking to regain control of there financial situation. By filing for bankruptcy, an “automatic-stay” takes effect. An automatic-stay is an injunction issued by the bankruptcy court which will stop collection calls, foreclosures and any other harassment by creditors. Bankruptcy attorneys will discuss with you possible options and help you choose the best one for you. 

Chapter 7 and Chapter 13 are the two main chapters under which individuals can file personal bankruptcy. Chapter 7 bankruptcy is a liquidation of assets while Chapter 13 bankruptcy is a reorganization where the debtor creates a three to five year payment plan.

The primary reasons for filing personal bankruptcy are unforeseen medical expenses, excessive credit card debt, loss of employment, and divorce. Needless to say many of these events create not only financial difficulty but also a tremendous amount of disruption and distress in and of themselves. This makes it especially important that individuals consider all available options and bankruptcy alternatives to make sure whatever action they settle upon is in their long term interest.

If one determines that personal bankruptcy is the best option available then one should learn more about the federal bankruptcy law. Bankruptcy is a important decision and the law and it application to one's particular situation can be very complicated. It is generally recommend that one consult with an attorney with experience in the personal bankruptcy field. If one feels comfortable with attempting the bankruptcy process without an attorney there are online bankruptcy services that can be of assistance. It is also possible to proceed by completing the bankruptcy forms on one's own but this could be very confusing and one should proceed with caution.

Chapter 7 Bankruptcy

Chapter 7 is designed as an orderly, court-supervised procedure by which a trustee collects the assets of the debtor’s estate, reduces them to cash, and makes distributions to creditors, subject to the debtor’s right to retain certain exempt property and the rights of secured creditors. (Visit your state bankruptcy page listed below to learn your specific exemptions.) Because there is usually little or no nonexempt property in most chapter 7 cases, there may not be an actual liquidation of the debtor’s assets. These cases are called “no-asset cases.” Usually a debtors with assets that they wish to keep and that are not covered by exemptions file chapter 13 bankruptcy.

A creditor holding an unsecured claim will get a distribution from the bankruptcy estate only if the case is an asset case and the creditor files a proof of claim with the bankruptcy court. In most chapter 7 cases, the debtor receives a discharge that releases the debtor from personal liability for certain dischargeable debts. The debtor normally receives a discharge three to four months after the petition is filed.

Chapter 13 Bankruptcy

Chapter 13 is usually preferred by debtors who have a valuable asset, such as a home, that is not completely covered by exemptions and that they wish to keep. This is possible because under Chapter 13 a debtor proposes a plan to repay creditors over a three to five year period during which the debtor can make up overdue payments on any assets and pay into the plan the equivalent value of any assets not covered by exemptions. Since the debtors plan will require regular monthly or biweekly payments, Chapter 13 is usually only appropriate for an individual debtor who has a regular source of income.
At a confirmation hearing, the court either approves or disapproves the plan, depending on whether the plan meets the Bankruptcy Code’s requirements for confirmation. Chapter 13 is very different from chapter 7, since the chapter 13 debtor usually remains in possession of the property of the estate and makes payments to creditors, through the trustee, based on the debtor’s anticipated income over the life of the plan. Unlike chapter 7, the debtor does not receive an immediate discharge of debts. The debtor must complete the payments required under the plan before the discharge is received. The debtor is protected from lawsuits, garnishments, and other creditor action while the plan is in effect. The discharge is also considerably broader (i.e., more debts are eliminated) under chapter 13 than the discharge under chapter 7.

Alternatives to Bankruptcy

There are several possible alternatives to bankruptcy for those in financial trouble. It is important that when debtors consider these options they investigate the organizations they are dealing with and make sure they do not do anything that places them in a worse situation. Some attempts to avoid bankruptcy might have a negative impact if you latter decide to file bankruptcy.
The main alternatives for avoiding bankruptcy are out-of-court settlement with creditors, debt counseling services, and debt consolidation loans.

Out-of-Court Settlement

Rather than file bankruptcy, one may consider settling your unsecured debt at a reduced amount. It is unlikely that an individual could do this independently but there are companies that will help you negotiate with your creditors. Is is important that these negotiations are handled properly and the consumer should seek professional help. As in all these actions there can be a negative effect on one's credit rating.

Debt Counseling Service

Debt counseling services can be a good start in helping you deal with your financial difficulty. They can consolidate your monthly payments and obtain payment or interest reductions on your unsecured debts. The only problem with debt counseling is that many people are in such financial trouble that they will not qualify for debt counseling because they will not be able to repay their debt even under the better terms. And again this option could have a significant negative impact on your credit rating.

Debt Consolidation Loans

Another option is borrowing against the equity in one's home to pay down credit card debt. This of course requires home equity and a careful consideration to make sure you are not putting yourself in a worse position. Not being able to pay your home equity loan could put your home in danger leave you in a worse position than not being able to pay your credit card debts.

Contact the Law Offices of Joseph M. Ghabour for advise on what is your best option.  Bankruptcy is never an easy choice.  We will give you the information and the guidance you need to make an informed decision.  You do not have to navigate the murky waters of bankruptcy alone.  Contact us today!