Chapter 13 Bankruptcy—The Basics

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Getting a Fresh Start Through a Reorganization Plan

Chapter 13 Bankruptcy—The BasicsOne of the most devastating impacts of the pandemic has been its effect on businesses and workers. If you’ve been furloughed or permanently lost your job, and you’re struggling to make ends meet, you may be considering bankruptcy as a way to find relief from creditors and get your finances in order. To permanently discharge your debts through a Chapter 7 bankruptcy filing, you must pass a “means test.” If you don’t qualify for Chapter 7 relief, your remaining option is a reorganization or restructuring of your debt under Chapter 13. Here’s what that looks like.

An Overview of Chapter 13

When you file for protection under Chapter 13, you have the opportunity to work with your creditors to establish new payment arrangements. An automatic stay goes into effect immediately when you file your bankruptcy petition, which means you won’t receive any more phone calls or letters from debt collectors and won’t have to worry about creditors filing legal action against you.

You and your attorney will identify all your outstanding debts and put together a proposed plan for repaying your creditors over a three-to-five-year period. Often, when negotiating new payment arrangements, you can get a creditor to waive prior late fees and penalties.

The proposed plan must be submitted to and approved by your creditors and the bankruptcy court. If approved and put into action, a Chapter 13 petition provides the protection of the automatic stay for the full three-to-five-year repayment period, provided you honor your agreements. As an bonus, in a Chapter 13 filing, you don’t have to turn over any property to the bankruptcy court. You can keep everything.

Contact the Cintron Firm

At the Cintron Firm, LLC, we offer more than 14 years of experience to people in New Jersey facing a broad array of legal challenges. Attorney Mark Cintron has worked as a prosecutor and has extensive courtroom experience, so he’s always ready, willing, and able to protect your interests before a judge or jury. We are currently available to talk with you by phone, text message, or online videoconference. Contact our office online or call us at 201-791-1333 or (201) 535-0323 to set up an appointment.

Chapter 7 Bankruptcy—The Basics

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How You May Be Able to Permanently Discharge Debt in Bankruptcy

Challenging a Field Sobriety Test in New JerseyThe pandemic has had a devastating impact on many Americans. If you are one of the many who’s lost your job or seen your small business take a hit, you may be struggling to meet your day-to-day obligations. By filing bankruptcy under Chapter 7, you can permanently rid yourself of some of your debts, but there’s a trade off. Furthermore, under bankruptcy rules, you must qualify before you can liquidate debt in Chapter 7. Here’s how it works.

Under Chapter 7, you can wipe out certain debts in exchange for transferring some of your property to the bankruptcy trustee. That property is then sold, and the proceeds are distributed to your creditors. Some debts, such as alimony and child support, cannot be discharged in bankruptcy. Additionally, student loans and past-due taxes can be discharged only in rare circumstances.

You won’t lose all your property. Exemptions under both state and federal law allow you to keep some personal property and a certain amount of equity in real property. You must choose the exemptions allowed by state law or federal law—you cannot pick and choose from both.

Before you can file for Chapter 7 bankruptcy protection, you must pass a “means test”in which you show the bankruptcy court that you lack the resources to repay creditors over a three-to-five-year period. If you fail the means test, your only option for personal bankruptcy is to reorganize your debts under Chapter 13. However, whether you file under Chapter 7 or Chapter 13, you’ll immediately receive the benefit of the automatic stay, which prohibits creditors from calling, writing, or otherwise attempting to collect a debt except through the bankruptcy process

Contact the Cintron Firm

At the Cintron Firm, LLC, we offer more than 14 years of experience to people in New Jersey facing a broad array of legal challenges. Attorney Mark Cintron has worked as a prosecutor and has extensive courtroom experience, so he’s always ready, willing, and able to protect your interests before a judge or jury. We are currently available to talk with you by phone, text message, or online videoconference. Contact our office online or call us at 201-791-1333 or (201) 535-0323 to set up an appointment.

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