Deciding to file bankruptcy is a big decision in itself, but the decision-making does not stop there. Timing and how you should submit your petition require a great deal of attention and consideration. Even after you file bankruptcy, you will need to make some significant decisions that will likely affect your financial future. Allowing yourself plenty of time to make these decisions by addressing them before you file and having good advice will help you in this process.
Decisions You Must Make Before Filing Bankruptcy
Your petition for bankruptcy is often considered one of the most important documents you file in your bankruptcy. It describes your assets, liabilities, and income. It also indicates whether you are claiming any property as exempt. A significant amount of time and effort should go into filing your bankruptcy petition. Below is a short list of decisions you will have to make before your petition is ever filed with the court.
1. Which Property Should You Claim as Exempt?
New Jersey allows you to choose whether you want to use the state exemptions or the federal exemptions for your bankruptcy case. You cannot pick and choose which exemptions from each set of exemptions you wish to use; you must decide on one or the other. It can be tough decision to determine which set of exemptions is right for your situation.
The state exemptions may provide you with specific benefits that you may not have based on the federal exemptions. Ideally, you will pick the exemptions that work for you based on your assets at the time of filing. That requires taking a hard look at your current assets and, in some cases, deciding which exemptions will allow you to keep the most substantial value in your assets. For some debtors, however, it may be vital to keep one asset because it has personal significance. Emotions and sentiment can often play a role in this type of decision.
2. Should You File with a Spouse?
Many spouses choose to file bankruptcy together, but not always. Sometimes it makes more sense for one spouse to file because he or she may have significant “single” debt that should be addressed in the bankruptcy process. You may want to protect the other spouse’s assets as well.
On the other hand, many spouses obtain credit together, which means that they likely have many of the same debt obligations. In most situations, if both spouses have the liabilities, the debt obligation will remain against the other spouse if both parties do not file bankruptcy. Filing together can dispose of some of these more complicated issues.
Filing together also allows both spouses to benefit from the automatic stay. If only one spouse files, then the stay does not apply to the other spouse. That means that creditors can still attempt to collect debts against the spouse that has not filed for bankruptcy.
3. When is the Right Time to File?
The timing of your petition is critical. Some debts can only be discharged if they are older, including income taxes, for example. If you have pressing issues, like foreclosure or garnishment, you may want to file right away to get the benefits of the automatic stay. Your individual personal and financial situation will play a huge role in determining when the right time to file may be.
Decisions You Must Make After Filing Bankruptcy
The important decision-making does not stop after you file your bankruptcy petition. Although you may have considered the below decisions before you filed, you must take action to put these determinations in motion after you file bankruptcy.
1. Should You Reaffirm Certain Debts?
You have the option to “reaffirm” certain debt obligations in bankruptcy. The debts that you decide to reaffirm are essentially taken out of the bankruptcy process, and your financial responsibilities continue regarding that debt as if you did not file bankruptcy at all. The most common debts that filers will reaffirm are their homes and vehicles.
Reaffirming a debt commits to continuing to pay that debt without alteration despite the bankruptcy. You need to consider whether you can afford to maintain these payments based on your current financial circumstances. You also need to think about what life will be like if you do not reaffirm that debt. For example, if you do not reaffirm your vehicle, it may be taken and sold. How will you get to work? What other means of transportation do you have? Deciding to reaffirm a debt obligation requires considering the realities of your situation and your ability to keep paying on the outstanding debt.
2. Should You Object to Creditor Claims?
Assuming you file bankruptcy when you have at least some non-exempt assets, you will likely see several creditor claims filed. These proofs of claim will set out how much the creditor believes it is owed based on your prior relationship with that business or individual. If you do not think that the amount listed is accurate, you have the option to object to the creditor’s proof of claim. If you do not object, then the proof of claim is automatically assumed valid by the trustee and the bankruptcy court.
You may want to object if you think other creditors should be getting money that a particular creditor has claimed it has a right to access. On the other hand, you may not really care which creditors get what if everything will be discharged regardless. You can work with your bankruptcy attorney to determine whether it is worth the time and effort to object to claims filed by creditors.
Finding the Right Bankruptcy Attorney
One of the most important decisions you make in your bankruptcy process is choosing which attorney will help you through your filing. You need someone who knows the bankruptcy law well and who can give you advice on all of the other major decisions in your case. Having someone beside you to provide guidance and help you weigh the pros and cons of each choice will be an invaluable resource.
Contact our team today to schedule a free bankruptcy consultation. You will be able to meet our attorneys and make one of the most important decisions for your financial future. Call (973) 870-0434 to schedule an appointment.
Whether you need to completely eliminate your debt through Chapter 7 bankruptcy, or need to reorganize your credit payments through Chapter 13 or Chapter 11, we are well qualified as a full-service bankruptcy law firm for people in these and other New Jersey counties: Passaic County, Hudson County, Essex County, Bergen County, Morris County, and Sussex County. Call us today at 973-870-0434 or toll free 888-412-5091.