If you are facing a challenging life situation that has left you with significant debt, you may be worried about how to pay off your creditors without declaring bankruptcy and potentially losing your car or your home.

Fortunately, that is not the way bankruptcy works. It is meant to give you a second chance to clear overwhelming debt, and continue living in your house, getting to work every day, and paying your taxes. Bankruptcy acts as a life preserver in a sea of debt. A Hackensack bankruptcy lawyer from Gillman, Bruton & Capone can help you navigate any Chapter of bankruptcy you are eligible for and get back on track.

When Creditors Contact Debtors

The federal Fair Debt Collection Practices Act limits the contact creditors can have with you and offers relief if creditors violate the rules. Creditors cannot harass you at all hours, berate you, or threaten underhanded tactics like telling neighbors and employers you owe money. They also cannot make false statements to get you to bring the bill current. Creditors do have the ability to:

  • Serve you with papers regarding a lawsuit
  • Garnish your wages
  • Foreclose on your home
  • Repossess the collateral for a debt, such as your vehicle
  • Put liens on your real property

To garnish wages, creditors must have a court order. If creditors threaten to sue you, the Fair Debt Act requires that they intend to sue and are not bluffing to scare you into action. One of our bankruptcy attorneys based out of the Hackensack office can take immediate steps to stop creditors from hounding you. They can then consult with you on whether bankruptcy is a viable option and which Chapter you are eligible for.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy involves an appointed trustee that disposes of your non-exempt property and pays creditors with the proceeds. However, most Chapter 7 filers can retain their assets in “no-asset” cases. If you qualify for the income restrictions under New Jersey’s means test, Chapter 7 bankruptcy may allow you to retain assets and discharge debts. More than 90 percent of Chapter 7 filers keep all their assets, according to the American Bankruptcy Institute.

Chapter 11 Bankruptcy

Chapter 11 bankruptcies are generally used by businesses, including sole proprietors and partnerships, to continue operating while reorganizing debt. Future income is used to pay down liabilities.

When debts are restructured, your attorney can negotiate with your creditors for better interest rates, principal reductions, or payment term extensions. A court-appointed trustee oversees the plan of reorganization until the debt is paid and the case is discharged.

The Small Business Reorganization Act of 2019 makes it easier for your small business to navigate Chapter 11, and you can work with a Hackensack attorney on your plan.

Chapter 13 Bankruptcy

Chapter 13 bankruptcies are like Chapter 11 bankruptcies because if you have a solid, recurring income, you can reorganize and pay down your debt while keeping sufficient income to maintain your lifestyle. Even if your home is in foreclosure, bringing the mortgage current allows you to keep it.

Your assets are not categorized as exempt or non-exempt. Instead, your attorney will negotiate with creditors and, with the trustee, develop a plan of reorganization. You will make a monthly payment, usually for five years, which the trustee distributes to creditors depending on priority and whether the debt was secured. The court usually discharges any unsecured debt remaining at the end of the term.

Bankruptcy’s Automatic Stay

The bankruptcy automatic stay stops creditors from contacting you once your bankruptcy petition is filed with the court. If you have already been sued or your home is in foreclosure, these actions are also halted for Chapters 7, 11, and 13 bankruptcies once the petition is filed. Talk to a bankruptcy attorney from our Hackensack office for personalized advice on the best course of action.

Find a Trusted Ally in a Hackensack Bankruptcy Attorney

The bankruptcy system was designed to help people who fall into a desperate situation get a foothold with their finances. However, it may be overwhelming to understand all the details involved with this process.

We are here to help you. The experienced team at Gillman, Bruton & Capone know how difficult this can be and we have a Hackensack bankruptcy lawyer who can give you reasoned, transparent advice on how to move forward. Call us and schedule a case review.