There are several types of bankruptcy available to an individual. Your unique financial and personal situation will dictate whether one kind will work better than another. Most individuals will end up using either Chapter 7 or Chapter 13. Businesses, on the other hand, can use Chapter 7 bankruptcy and Chapter 11. Some small businesses (sole proprietorships) can also use Chapter 13 bankruptcy as well.
Chapter 7 bankruptcy can be an extremely helpful way to get back on your feet financially after you have been struggling. It allows you to “start fresh” and try again. In that process, most of your debts can be forgiven entirely, which means that those harassing phone calls and intimidating letters will stop coming. It results in significant freedom for many individuals and companies that are stressed financially.
It’s common that many clients surrender their real property in Chapter 7 cases, and assume that surrendering the property will alleviate any issues or obligations owed by them. Unfortunately, the term “surrender” does not automatically mean a debtor is free and clear of any responsibility concerning the real property. The act of surrendering collateral simply means that the debtor no longer intends to make the loan payments, or as stated by the First and Fourth Circuit courts “means not taking an overt act to prevent the secured creditor from foreclosing its interest in the secured property.” In re Calzadilla, 534 B.R. 216, 218 (Bankr. S.D. Fla. 2015). However, receiving a bankruptcy discharge does eliminate the debtor’s personal obligation to repay the note and mortgage.
During the course of a Chapter 7 bankruptcy proceeding, a debtor may seek to avoid a lien filed by a condominium or homeowner association against the debtor’s real property for failure to pay maintenance fees. However, it’s important to examine the classification of the lien prior to determining whether the lien can avoidable in bankruptcy.
Trustees are people, sometimes attorneys, appointed or selected to oversee a bankruptcy case. The bankruptcy trustee is responsible for administering the bankruptcy estate which consists of all of the debtor’s property and certain rights of the debtor. A chapter 7 is a liquidation proceeding so the chapter 7 trustee is usually tasked with reviewing the debtor’s property, selling the property when possible (if the property is not exempt), distributing proceeds to creditors (after challenging any of their claims), and objecting to the debtor’s discharge (if applicable). The Department of Justice oversees the functions of chapter 7 trustees. Of course, this is not an exhaustive list of chapter 7 trustee responsibilities, but the question remains, how are they paid for all of this work?
Filing Chapter 7 bankruptcy in New Jersey can be an extremely stressful and personal experience. You need to have the right person to walk you through the process. Having an experienced, compassionate, and understanding attorney will make the process easier. Your lawyer will also help you decide how you should treat specific property and which options will be the best for your family and your personal finances. However, there are so many options when it comes to lawyers. How can you tell which attorney and which firm is the right choice for you?
Sometimes businesses just fail. The debt can become overwhelming and creditors can begin exercising their rights for repossession of equipment (leased or financed), levies on bank accounts, and enforcement of personal guarantees against the business’ shareholders/members. An insolvent business has two bankruptcy options: Chapter 11 and Chapter 7.
Chapter 11 is a good option for businesses looking to restructure their debts under a plan of reorganization, while continuing to operate during that process. Chapter 7 is a good option for businesses who choose to close, liquidate their assets, and dissolve the corporate structure.
If you own a home and you are in financial turmoil, you may be wondering what will happen to your home if you file for bankruptcy. For many, the primary concern that they have when entering the bankruptcy process is that their home is protected. This blog will explore the implications of filing for personal bankruptcy in a chapter 7 or chapter 13 on an individual’s residential real property.
As an aside, in either chapter 7 or chapter 13 a debtor would need to continue to pay their mortgage and property taxes in order to avoid an eventual foreclosure.
Credit card debt is a major issue in most consumer bankruptcies. You are not alone in needing relief from overwhelming credit card debt; many people in New Jersey have benefited from the fresh start that a Chapter 7 bankruptcy provides.
Credit Cards and Chapter 7 Bankruptcy
Personal Credit Cards
A common question that many individuals contemplating bankruptcy ask during our firm’s free consultation is whether they can retain a credit card during bankruptcy. In almost all cases, once a credit card institution receives notice of the bankruptcy filing, it will almost immediately cancel the debtor’s credit card.