How To File For Bankruptcy at Managing Bankruptcy

Bankruptcy Overview

Bankruptcy, when you come right down to it, is the procedure that enables those who are incapable to pay their debts get a clean slate. It allows for some or all of these debts to be discharged or reorganized. Individuals or businesses may file bankruptcy. This enables you to clear the slate and get a second chance with your finances. In most cases, bankruptcy provides a fair method for paying off your creditors as well. The bankruptcy procedure need not be your worst nightmare. However, there are certain prerequisites that must be met. You will be asked to file a list of all of your outstanding debts and a complete list of your assets. This is arranged with the help of your lawyer thru the Federal Courts.

To make this process easier to understand, your "Assets" fall into two categories. They are Exempt and Non-Exempt Assets. Exempt assets are the property or belongings that you do not have to use to pay off the debts you have incurred. In other words, exempt assets are off the table, and may not be touched by your creditors. In most instances this includes a certain amount of equity in your home, and some of the equity in a vehicle. For the most part, your clothing, and other personal items are deemed excused. This does not include the high-ticket jewelry, furs and the big boys toys. Next, you will be designated a "trustee" by the Federal Bankruptcy Court to administer the payment of your debts.

Your debts also fall into two categories. They are: Secured debts and Unsecured debts. A Secured debt is one in which the creditor retains a "security interest." Just about often it is the same property that was purchased with the credit that creditor extended. Secured debts occupy the first position. This means they enjoy priority over non-secured debts, and must be satisfied first. If you are not able to pay off secured debts, the creditor has the option to repossess that property and sell it. If there is any "short fall", that remaining debt is now considered unsecured. It does not go away, it has only switched from secured to unsecured.

Once you have filed for protection, the court will issue an "automatic stay". This blocks your creditors in their tracks. They may not take extra action against you beyond the bankruptcy. This allows you to fend off impending repossessions and foreclosures.

Chapter 7
In Chapter 7 Bankruptcy you are in fact liquidating your assets. This means that you are only allowed to keep "exempt" property. The remaining non-exempt property will be sold to the highest bidder. The proceeds of the sale are applied to the outstanding debt. The deficit or amount left unpaid by the sale is then discharged. In Chapter 7 Bankruptcy there are a few debts that are not dischargeable. They include taxes, back child support, DWI fines and student loans.

Chapter 13
In Chapter 13 Bankruptcy you are trying to regroup, recover and get back on track. It is typically known as the "reorganization bankruptcy for individuals." Individuals who want to liquidate their debt over a period of three to five years file Chapter 13 bankruptcy.

Chapter 11
Chapter 11 Bankruptcy is normally used as the reorganization tool for businesses. This kind of bankruptcy is attractive if you own "non-exempt" property that you would like to protect. Chapter 11 will also aid you to catch up on bills that have fallen into arrears. It effectively blocks an imminent repossession or foreclosure.

Not everyone is eligible for a Chapter 13 bankruptcy. You must have a reliable source of income that is sufficient to pay your reasonable everyday expenses and still have an amount of positive cash flow with which you begin paying off past due bills. If you file a Chapter 13 you are required to submit a plan to repay your debts that includes a set timeframe and set amounts to be repaid. Upon approval of the bankruptcy court, both parties (debtors & creditors) are obliged to accept the terms of the order

What To Do Now
Choosing your bankruptcy lawyer is an crucial decision. This commencing process allows you to evaluate and determine your best course of action. This discussion is also your opportunity to satisfy yourself that the Jersey Justice sponsoring lawyers fees are reasonable for your type of case.
Am I Making The Right Decision?
In all likelihood you are strained and feeling the pressure to seek professional help with your finances. Your decision to look for an experienced bankruptcy attorney may be the best financial decision you have made for years. Even taking the beginning steps to consult with an attorney takes enormous courage. You may even be thinking about scrambling through all the mess on your own. That could be a very lonely course.

Before you make the conclusion to go it alone, ask yourself a few questions. If two or more of these are you, then it could be the perfect time to seek the services of a bankruptcy professional. Are You: receiving harassing or ominous phone calls from people you owe? paying the minimum payment possible on your credit cards? taking out Payday Loans? (which by the way are illegal in NJ) soliciting for loans from friends and family? about to lose your occupation? behind in your taxes? receiving foreclosure notices? behind in child support or alimony? gambling to try and make ends meet? sick and unable to even go to work? If your answers indicate that you are in financial deep water, bankruptcy may be your best solution, but you will never know for sure until you get the advice of an attorney.

How Will Bankruptcy Effect My Life? Your Bankruptcy Attorney will be able to explain some other crucial considerations. What happens after bankruptcy? What will my life be like? Will I ever be able to get credit again? How do I live within a budget? How do I start all over? How do I rebuild my credit? If these nagging questions are on your mind, then a bankruptcy attorney is right for you. It is true. A bankruptcy can be a persistent source of blemishes on your credit report for up to 10 years. The good news is you are able to start re-establishing your credit the moment your case is closed.

How good is your present report? It is probably already suffering the consequences of late payments, delinquencies and every other known credit report disorder. Think about this. Your credit score could actually improve due to the elimination of most of your debt. Lenders actually believe that you are a better credit risk now since they know that you may not file bankruptcy again for another six years. At about 18 months to 24 months into your bankruptcy you will even be able to qualify for a new home loan if you are able to come up with a minimum down payment backed up with proof of income that supports the debt service. Auto loans are available to individuals upon discharge of your existing debt. And believe it or not you will start receiving offers for credit almost immediately. But "caution" is the watchword at this critical point in time. The offers of credit could have been what got you into trouble in the first place.

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