Benefits of Bankruptcy
Primary Benefits of Filing for Bankruptcy Protection
The Primary Benefits of Filing for Bankruptcy Protection Are Four-Fold
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Upon the filing of a bankruptcy case, creditors are generally barred from commencing or continuing with any/all legal action against you as a 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 have stayed, i.e., must immediately stop.
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.
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 against the debtors’ property, such as garnishing 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 or 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 in the respective state in which the judgment is docketed as a lien with the Court Clerk.
Accordingly, if debtors are being sued it is beneficial for Debtors, who otherwise qualify for bankruptcy protection, to file for bankruptcy protection prior to their creditors’ ability to procure a judgment. While judgment liens can be removed by debtors as long as the debtor(s) assets fall within the Bankruptcy Exemptions allowed by the U.S. Bankruptcy Code, this would require incurring additional legal fees and naturally should be avoided if possible.
Non- dischargeable debts, such as certain unpaid taxes, mortgage arrearages, etc. can be dealt with in a Chapter 13 reorganization, where the Ch. 13 repayment plan will allow debtor(s) to catch up and/or payoff these debts over a period of up to five (5) years.
In a Chapter 13 case, debtors may also be allowed to reclassify a secured 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 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 left 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 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.
From his office in Hackensack, New Jersey, Attorney Alster's services extend throughout the state of New Jersey, as well as New York. Some areas he serves in New Jersey are Passaic County, Bergen County, Hudson County, Essex County, and more; in New York, he serves Rockland County, Queens, and the Bronx.