- Why should I consider filing for bankruptcy?
- Bankruptcy can be a fresh start for you. It puts
to an end to foreclosures, lawsuits, repossessions and those harassing
calls and letters from your creditors. It enables you to start over
again without debt.
- Filing for bankruptcy is not as uncommon as you
may think. In fact, there were almost 40,000 personal bankruptcies
filed in one recent year in New Jersey alone, 1,300,000 throughout the
U.S. And since many of these represent joint filings on behalf of both
spouses, the number filing is much higher.
- People from all walks of life claim bankruptcy,
for hard times fall upon just about everyone.
- If you're in a situation where your bills are
piling up, you can't see a way to pay them, and you're looking for a
solution, bankruptcy may be right for you.
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- When Should I Consider Bankruptcy?
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- Although every person's finances are different,
there are several common "symptoms" of acute financial
distress. These include:
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- - Mortgage foreclosure
- - Unable to catch up on your mortgage
- - Credit card balance which gets larger each
month
- - Difficulty in making minimum payments on credit
cards
- - "maxing out" on credit cards
- - Calls and letters from creditors because of
overdue bills
- - Being unable to get out of debt in the
foreseeable future.
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- Experience has shown that most persons whose
finances reach the levels above are unable to repay their debts in a
reasonable time. Bankruptcy may be your best alternative.
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- What happens if I can't pay my mortgage?
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- Falling behind on your home mortgage is very
serious. Once this happens, it is very difficult to catch up. The bank
will start foreclosure and your home will almost invariably be lost
without intervention.
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- What is a foreclosure?
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- Legally, it happens when your lender seeks to cut
off or foreclose your right or ownership. The process will result in a
sale of your home by the sheriff. While the foreclosure process takes
many months, your case moves slowly but surely through the Courts to
the day when your home is sold.
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- What does Chapter 13 do for me if my mortgage is
behind?
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- Chapter 13 Bankruptcy will prevent foreclosure,
or even stop foreclosure when it has begun. Simply put, it allows you
to catch up on your overdue payments by paying them over an extended
period (as long as 60 months).
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- Are there any other benefits of Chapter 13?
- Chapter 13 also gives you the following benefits
when compared to Chapter 7:
- Another benefit is the Cram Down of your
secured creditors, meaning that you can reduce your secured debt to
the value of the collateral. For example, if you owe $10,000 on a
car loan where the car is only worth $4,000 you can split up the
lender's claim to pay $4,000 as a secured debt and only a small
fraction of the remaining $6,000. There are special rules affecting
cram down of home mortgages which are very technical and also change
as the law evolves, but home mortgages may also be subject to cram
down.
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- What does "filing for Bankruptcy"
mean?
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- It means getting relief for your financial
problems under the federal bankruptcy code. First, your lawyer
prepares an extensive financial questionnaire consisting of the
Petition, Statement of Affairs, Schedules and Chapter 13 Plan. These
are then delivered to the Bankruptcy Court. Immediately an automatic
stay starts which is a federal court injunction prohibiting almost
all creditors from taking any action outside of the Bankruptcy Court
to enforce their claim. Foreclosure, no matter at what stage, stops.
Your creditors, their lawyers and collection agencies must stop
lawsuits, making written and telephone demands for payment, taking
away your assets to collect their money, garnishing your wages, or
otherwise harassing you.
- Also, upon filing, the Chapter 13 Trustee is
appointed. You will be making payments to the Trustee for the amount
of your Plan payment. The Trustee will review your petition, meet
with you, and make recommendations to the Judge when your Plan is
considered for confirmation. Your meeting with the Trustee is called
the s.341(a) hearing and your creditors are invited to attend. We
are at your side at this meeting.
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- What is the Chapter 13 Plan?
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- Chapter 13 requires us to present a Plan
showing how you will reorganize your debt. A Judge of the Bankruptcy
Court must review and confirm your Plan. Your mortgage arrears will
have to be paid through the plan. There are other payments which
must be made, such as taxes and child support obligations. Unsecured
debt (where the lender does not have a mortgage or lien) usually are
paid much on a much reduced basis, often as low as 10 cents on the
dollar.
- There are several legal tests which are applied
to your plan in order for it to be approved. While these are beyond
the purview of this pamphlet, we will be happy to explain the
confirmation process to you.
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- Why do I need a lawyer?
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- While there is no legal requirement to have a
lawyer, Chapter 13 is a complex legal process and legal counsel is
strongly recommended. The other players in bankruptcy will have
lawyers who specialize in bankruptcy. You would be at a disadvantage
to deal with them personally. In general, a lawyer is needed to
review your specific financial situation and ensure that all goes
smoothly with your claim. Our staff here at the firm of Ronald I.
LeVine has many years of experience in bankruptcy law, and will take
you through the process from start to finish.
- At your first consultation, one of our lawyers
will personally sit down with you on a one-to-one basis and analyze
your situation. We will determine if bankruptcy is right for you -
for it does not benefit everyone.
If it appears that filing for bankruptcy
protection would be of benefit to you, we will then review, research
and compile in detail the necessary facts and figures to prepare
your "bankruptcy petition" for the courts. That is what
the "trustee" (see page 4) will review to assess your
situation.
- Our responsibility also includes the
preparation of an accurate and complete creditors list for the
courts. This will be used for communications with your creditors.
And once your bankruptcy petition is filed, the court will then
order your creditors to stop the collection activity, even suits,
foreclosures and garnishment. This is called the automatic stay.
Certain debts, including alimony and child support, are not affected
by the automatic stay.
- One of our lawyers will also attend and assist
you the one time you meet with the Trustee. Chapter 13 cases require
that the Court hold a hearing to decide whether to accept you Plan.
We will review any objections from the Trustee and creditors,
attempt to meet or overcome their objections, present a revised Plan
(if necessary) and attend the hearing to argue for confirmation.
- In general, we are with you, on your side,
throughout the whole entire bankruptcy proceedings. We are
responsible for making sure that all goes well and that all of your
questions are answered.
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- How is my credit affected?
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- Your credit rating, which unfortunately was
most likely already in poor shape before you filed for bankruptcy,
will be worsened. However, lenders consider that completing a
Chapter 13 Plan shows that you can fulfill obligations.
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- How long does it take to file for bankruptcy
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- We usually take a few weeks to gather your
information to make sure that all data given to the Court is
accurate. However, in an emergency (such as a foreclosure sale) we
can file in matter of hours. In one recent case we met the client at
10:00, immediately prepared the papers, filed them at 12:00 and were
able to appear at the sheriff's office in time to prevent the 2:00
sale of our client's home.
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- How much does filing for Bankruptcy cost?
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- Most times, our flat fee is less than one
month's debt payments. For our expertise and personal service you
will be charged a moderate flat fee which covers everything in most
cases. The rare exceptions are where a significant additional
expenditure of time is necessary (more than one revision to the
Chapter 13 Plan, a motion, a non-dischargibility proceeding, or
other cause). Please feel free to ask us to further explain these
terms and the possibility of them based on your individual case.
- It should also be noted that we understand the
needs of the bankruptcy client, and have payment plans available
which may suit you.
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