Reorganizing Personal Debt through Bankruptcy
As we discussed in an earlier blog, there are generally two options available to individuals who seek protection in bankruptcy—liquidation under Chapter 7 and reorganization under Chapter 13. With either filing, you will immediately have the protection of the automatic stay, which prohibits creditors from calling, writing or taking any legal action against you (other than through the bankruptcy proceeding) to collect the debt.
If you don’t qualify to file a Chapter 7 petition, your sole recourse in bankruptcy will be under Chapter 13. With a Chapter 13 filing, you will have the opportunity to restructure your debt. Typically, you’ll work with your lawyer to put together a plan for the repayment of outstanding obligations over a three-to-five year period. The plan must then be submitted to and approved by both your creditors and the court. As a part of the process, you will also be required to file a schedule of all your current assets and liabilities, a list of all current income and expenses, a schedule of executory (anticipated) contracts and unexpired leases, and a statement of your general financial affairs.
It’s not uncommon to be able to negotiate new payments that waive penalties and fees, and you may even be able to reduce a principal balance on outstanding loans. Once the plan is approved, you’ll enjoy the protection of the bankruptcy court and the automatic stay, provided you honor your commitments under the agreement.
Typically, if you have sufficient income to pay your creditors, you’ll fail the means test to file a Chapter 7 petition. Chapter 13 is customarily a better option if you are seeking to keep your property. You can stop foreclosure proceedings, keep your home and make new arrangements to pay a mortgage or other obligation.
Contact Attorney Howard N. Sobel
At the office of Howard N. Sobel, we provide comprehensive bankruptcy counsel to individuals throughout the state of New Jersey. Contact our office online or call us at 856-424-6400 to see if you qualify for a free initial consultation. Evening and weekend appointments can be arranged upon request. We accept all major credit cards.
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