If you feel you are drowning in debt, declaring bankruptcy is a viable option for many individuals and businesses. Declaring bankruptcy is not an easy out, but it could make life easier to manage and help you get back on your feet. Consult with the experienced advocates at Gillman Bruton & Capone as soon as you recognize that your finances are unmanageable. Debt-relief alternatives could be available to you but your options narrow as you fall further behind on your obligations. A Toms River bankruptcy lawyer can help you find a solution that aligns with your goals.
People who have accumulated more debt than they can afford to pay will often find themselves faced with a constant barrage of calls, threatening letters, and aggressive actions from creditors. You might experience wage garnishment, repossession, or home foreclosure proceedings. When things become this uncertain and stressful, bankruptcy could be an option.
Bankruptcy does not allow you to walk away from your debts without consequence; each form of bankruptcy demands something from you. Whatever path you choose will shield you from creditors’ demands, stop any collection proceedings, including lawsuits, and provide space to figure out your next step. However, the bankruptcy will stay on your credit report for at least ten years and could affect your options as you put your financial life back together.
If you are considering bankruptcy, you (and your spouse, if you are filing jointly) must take a credit counseling course, which will describe some alternatives to bankruptcy, such as a debt management plan. Our Toms River bankruptcy attorney can explore these alternatives with you and help you set up a plan that works for your circumstances. If bankruptcy is your only option, we can help you determine the form of bankruptcy that best suits your needs.
If you are low- or middle-income and your possessions do not hold significant financial value, or if you have high living expenses, then Chapter 7 bankruptcy might be a good option for you. A Chapter 7 bankruptcy filing technically allows a trustee to liquidate some of your most valuable possessions, other than those that come within the New Jersey or federal bankruptcy exemptions. However, many clients are able to exit bankruptcy retaining all of their assets, including their home and car, if they work carefully with a lawyer.
It is important to note that some debts—student loans, child support, spousal support, and recent tax liabilities—are not dischargeable in bankruptcy. However, it should be easier to meet these obligations once your other debts are erased.
Some people do not qualify for Chapter 7 bankruptcy. The law imposes a means test and requires people who can afford to file Chapter 13 bankruptcy to do so. A bankruptcy attorney in Toms River can help you qualify for Chapter 7 by diligently including all your living expenses into the means test calculation.
People who do not qualify for Chapter 7 usually file for Chapter 13 bankruptcy. A person with significant debts might file for Chapter 11. Both forms of bankruptcy – Chapter 11 or Chapter 13 – require debt restructuring and repayment. If the debtor complies with the plan of reorganization, the bankruptcy court discharges the remaining debt at the end of the repayment period.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is usually the best option for people who do not qualify for Chapter 7 bankruptcy. Chapter 13 can forestall foreclosures and repossession actions, which Chapter 7 cannot do. Filing under Chapter 13 requires the debtor to develop a plan of reorganization that pays their priority debts in full. Other creditors receive partial payments. If the debtor wants to keep their home, they must bring their mortgage payments up to date in the plan or reorganization, which will last for three to five years.
Most individuals and couples – as well as large businesses – use Chapter 13 to restructure their debts. However, some very high-income people, like performers and professional athletes, might have too much debt to qualify for Chapter 13, which limits total debt to $2,750,000. In addition, anyone who recently discharged a Chapter 7 or Chapter 13 bankruptcy cannot use the Chapter 13 process – but could file for Chapter 11 instead.
Chapter 11 bankruptcy also requires a structured repayment over time and offers other benefits that might make it a desirable option in a specific case. However, it will ultimately be the far more expensive option. Our Toms River attorney could work with you to determine which bankruptcy option will ultimately put you in the best position.
When debt becomes overwhelming, you have legal options to ease the pressure. We know it is a difficult and emotional topic, but we can help you make the best decision for your future. Our Toms River bankruptcy lawyer can explain the advantages and disadvantages of various alternatives, and help you select the one that is right for you. Reach out to us to schedule a free case evaluation.