Primary Benefits of Filing for Bankruptcy Protection
The primary benefits of filing for bankruptcy protection are four-fold.
1) Upon the filing of a bankruptcy case, creditors are generally barred
from commencing or continuing with any/all legal action against you as
result of what is called the
"Automatic Stay" of the U.S. Bankruptcy Code going into effect. All debt collection including, creditors' telephone
calls, car repossessions, mortgage foreclosures and other lawsuits are
stayed, i.e., must immediately stop.
2) All legal action by creditors to try to collect discharged debts are,
for the most part, stopped permanently when the Bankruptcy Court issues
its Discharge Order, which discharges all “dischargeable debts”.
However, some types of legal action are only stopped temporarily, i.e.
only for as long as the debtor(s) bankruptcy case remains open or until
the creditor files an Application and successfully procures an Order from
the Bankruptcy Court lifting the Automatic Stay. Mr. Alster can tell you
which types of debts, if you have any, which would not be permanently
discharged by your prospective discharge order. Even if you have a debt
which is not dischargeable, it is not likely that the creditor will seek
relief from the Bankruptcy Court’s automatic stay and therefore
would not be able to continue any legal action against you while your
bankruptcy case remains open.
3) Most consumer bankruptcy cases successfully end with the issuance of
the Bankruptcy Courts Discharge Order, which forever discharges all the
debtor(s) dischargeable (general unsecured) debts. The Bankruptcy Court's
discharge extinguishes most credit card and medical debts, as well as
many other types of general unsecured debt.
Creditors with dischargeable debts that may have procured a money judgment
against a debtor prior to the filing of the debtors’ bankruptcy
are for the most part considered unsecured and, as such, are forever barred
from taking any affirmative action to attach the debtors’ property,
garnish the debtors’ wages or take any other action to satisfy their
judgment against a debtor’s property. However, if the judgment creditor
dockets their judgment as a lien with the Clerk of the Superior Court
in New Jersey and the Supreme Court in New York State, the judgment creditor
is considered to be a secured creditor only with respect to real property
owned by the debtor. Accordingly, if the debtor is being sued it is beneficial
for Debtor, who otherwise qualifies for bankruptcy protection, to file
for protection prior to any of his/her creditors’ ability to procure
a judgment against the debtor. While judgment liens can be removed by
the debtor as long as the debtor(s) assets fall within the
Bankruptcy Exemptions allowed by the U.S. Bankruptcy Code, this costs additional legal fees
and naturally should be avoided if possible.
4) Available in a reorganization type of bankruptcy only, such as
Chapter 13, is a bankruptcy repayment plan will allow debtor(s) to payoff unpaid
taxes or mortgage arrearages over a period of up to five (5) years. In
a Chapter 13 case, debtor(s) may also be allowed to reclassify a secured
creditors debt from secured to completely or partially unsecured, depending
on whether there exists any equity in the collateral used to secure the
debt, i.e., a second or third mortgage lien on debtor(s) residence may
be completely reclassified from secured to completely unsecured, and thereafter
discharged at the end of the bankruptcy case when there is no equity in
the real property securing the mortgage (i.e. when the mortgage obligation
is completely underwater).
Searching for a lawyer for a bankruptcy case in Hackensack, NJ? To learn
more about the benefits of bankruptcy and to get started on the road to
a financial freedom
contact our Hackensack bankruptcy firm today.
Speak with a
Teaneck bankruptcy lawyer at the firm today to learn the primary benefits of filing for bankruptcy.