Are you considering filing for bankruptcy? It can be a fresh start for you.

Following are some commonly asked questions by people considering filing for bankruptcy:

Q. What do I have to do to file for bankruptcy, and how does it help and protect me? Can somebody try to collect money from me/us after I file bankruptcy?

A. We, of course, recommend that you consult with a bankruptcy lawyer/specialist concerning your qualifications to file a Chapter 7 or 13 petition. After your lawyer files your petition with the Bankruptcy Court, an automatic stay immediately goes into effect; this prohibits almost all creditors from taking any action against you outside of the Bankruptcy Court to enforce their claims. Your creditors, their lawyers and collections agencies must immediately (1) stop all lawsuits, (2) stop making written and/or telephone demands for payment, (3) cancel all wage garnishments, etc., and (4) All creditors and their agents are prohibited from contacting you, assuming you have retained a lawyer to file your petition and/or otherwise represent you. Upon filing a Chapter 7 or 13 petition, a trustee is appointed by the Bankruptcy Court. The trustee will review your petition, meet with you, and make recommendations to the Bankruptcy Judge. The meeting with the Trustee is not intimidating and usually lasts less than 10 minutes. Of course, your attorney will be by your side.

Q. What is the difference between Chapter 7, Chapter 11 and Chapter 13?

A. In a successful Chapter 7 bankruptcy case an individual’s honest debts are forgiven/discharged. The individual will have no further obligation to pay any of his or her creditors. If however, the person’s personal belongings, including real estate and other assets, exceed the exemptions allowed by law; those assets may be lost in a Chapter 7 case (this is extremely rare). On the other hand, in a Chapter 13 bankruptcy case there is a payment plan through the bankruptcy process which allows a person to keep assets that he or she otherwise might lose; monthly payments are made through a three or a five year plan. Usually, Chapter 13 allows you to get caught up on past due mortgage(s) or other amounts owed to secured creditors. A Chapter 11 bankruptcy is usually for a business reorganization and is most frequently filed by companies or individuals engaged in business.

Q. What about my assets; can I keep my house, car and/or other assets?

A. Yes, in the overwhelming, number of Chapter 7 bankruptcy cases the debtors are able to keep all of their assets. All of the assets owned by the vast majority of individuals and/or spouses filing a Chapter 7 petition will continue to fall within the exemptions allowed under the Bankruptcy Code and related New Jersey state law; neither creditors or the chapter 7 Bankruptcy Trustee can require debtors to sell these assets. A different article in this website provides specific information concerning the specific exemptions allowed under the U.S. Bankruptcy Code, and how they are applied in Chapter 7 cases.

Q. Can I keep my home if I file bankruptcy?

A. Most people who file Chapter 7 are able to keep their homes, while having their unsecured debts completely forgiven by the bankruptcy discharge, provided they continue to make their normal monthly mortgage payments. Based upon the fair market value of your home and the outstanding mortgage, your attorney can help you determine whether you will be able to keep your home in a Chapter 7 bankruptcy. In instances in which your house would be in jeopardy, you can still consider a Chapter 13 bankruptcy which would allow you to keep your home, provided you make the required payments under the plan, along with your normal mortgage payments.

Q. Can I keep my car?

A. In most cases, people are able to keep their cars in bankruptcy (should they choose), provided they continue to make the monthly payments due on their lease or financing agreements. Again, the ability to keep your car in your individual situation should be determined by your attorney.

Q. What kinds of debts are discharged (wiped out) in a bankruptcy? Are all my debts forgiven in bankruptcy?

A. Almost all unsecured debts are discharged in a bankruptcy, including credit card bills, medical bills, business and personal loans, etc… The general rule is that all unsecured debts are discharged and all secured debts are not discharged in a chapter 7 bankruptcy. Student loans that would cause an undue hardship on the debtor(s) and/or the debtors’ family in the foreseeable future are also dischargeable.

Q. Will I be able to get a guaranteed student loan after I file bankruptcy?

A. The filing of a bankruptcy cannot legally affect your ability to obtain a state or federally guaranteed student loan. Federal law prevents the government or any institution dealing in guaranteed student loans from denying a student loan or grant because of a bankruptcy filing.

Q. How is my salary affected? Will my employer be notified of my bankruptcy petition, can I be fired from my job for filing for bankruptcy protection?

A. Unless you owe your employer money, generally your employer will not find out about your bankruptcy. However, if you are applying for a job, an employer may review your credit record, which would indicate your bankruptcy filing. In any case, a private employer cannot legally terminate the employment, or discriminate with respect to the employment of any individual solely on the basis of that individual’s bankruptcy filing. (Please note, however, that the law is unsettled as to whether a prospective employer may deny you employment because of a bankruptcy filing.) Also, on a similar note, though your bankruptcy file is a matter of public record, it is not printed in any general publications.

Q. How is my credit affected?

A. Credit reporting agencies will list your Chapter 7 bankruptcy filing for 10 years. However, in most cases, the credit rating of most individuals who are considering or need to file for bankruptcy relief is already very poor. After filing for bankruptcy protection, in most cases, you will likely no longer owe any unsecured debt. You should be able to begin rebuilding your credit rating/score; some creditors will seek you out. Immediately after discharge, and sometimes before, you should be able to get secured visas or MasterCards. Our office supplies clients with a list of potential sources for procuring secured and unsecured credit after bankruptcy. The owners of several mortgage/credit companies have informed us that a discharged debtor can become creditworthy as soon as one year after discharge by paying all outstanding loans (i.e. home, car, secured and unsecured credit card obligations) on a timely basis every month. Our clients have confirmed this on numerous occasions. See the testimonials on our website and a separate article on how to rebuild your credit. www.marcgalster.com

Q. Could a judge deny my bankruptcy?

A. Under a Chapter 7 bankruptcy, a judge may deny your discharge if he or she determines that you have the ability to repay your debts based upon your current income and assets. Also, should you conceal property with an intent to hinder, delay or defraud creditors, destroy or conceal records, are guilty of perjury or other fraudulent acts, the judge could also deny you bankruptcy protection.

Most individuals and spouses will continue to qualify for to file for Chapter 7 bankruptcy protection under the new bankruptcy code. If not most people will still likely qualify for protection under 13. However, the author strongly recommends that all individuals burdened by significant debt either call my office, toll free at 1-866-883-1190, for a free consultation, or another experienced lawyer specializing in Bankruptcy law, to learn whether they still qualify for Chapter 7 protection and/or whether they should consider Chapter 13 protection.

Before making a choice of attorney, you should give this matter careful thought. The selection of an attorney is an important decision. If you feel that this letter is inaccurate or misleading, report same to the Committee on Attorney Advertising, Hughes Justice Complex, CN 037, Trenton, New Jersey 08625.

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