Chapter 7 Bankruptcy
In a Chapter 7 bankruptcy you wipe out your debts and get a “Fresh Start”. Chapter 7 bankruptcy is a liquidation where the trustee collects all of your assets and sells any assets which are not exempt. (Click here for Exemptions) The trustee sells the assets and allows you, the debtor, to keep any amount exempted. The net proceeds of the liquidation are then distributed to your creditors with a commission taken by the trustee overseeing the distribution.
Certain debts cannot be discharged in a Chapter 7 bankruptcy, such as alimony, child support, fraudulent debts, certain taxes, student loans, and certain items charged. (see New Jersey Non-Dischargeable Debts below) In most Chapter 7 cases, the debtor has large credit card debt and other unsecured bills and very few assets. In the vast majority of cases a Chapter 7 bankruptcy is able to completely eliminate all of these debts.
You may keep certain secured debts such as your car or your furniture or house by reaffirming those debts. To do so, you must sign a voluntary “Reaffirmation Agreement”. If you decide that you want to keep your house or your car or your furniture, and you reaffirm the debt, you cannot bankrupt (or wipe-out) that debt again for eight years. You will still owe that debt and you must continue to pay it just as you were obligated to continue to pay it before you filed bankruptcy. In order to reaffirm the debt, you must also bring it current. In other words, if you are three or four months behind, then you must pay the back payments which are due in order to reaffirm it. You can selectively reaffirm your debts – you can state that you wish to keep the house and the furniture, but that you want the car and the jewelry to go back to the respective Creditors.
Reaffirmation agreements can be set aside during the earlier of 60 days after the agreement is filed with the Court, or upon the Court’s issuance of an Order of Discharge.
To set up a free consultation about bankruptcy, please call us at (201) 380-1050.
New Jersey Non-Dischargeable Debts
The following debts cannot be discharged in either Chapter 7 or Chapter 13 New Jersey bankruptcies. If you file for Chapter 7, you will still be responsible for repaying these debts after your discharge. If you file for Chapter 13, these debts will have to be paid in full in your plan. If they are not, the balance will remain at the end of your case. Remember that you will also have to continue to pay secured debts (such as a house or car payment) if you to intend to keep the secured property. [see statute 11 523(a)]
The following debts may be declared non-dischargeable by a bankruptcy judge in Chapter 7 if the creditor challenges your request to discharge them.
Certain debts cannot be discharged in a Chapter 7 bankruptcy, such as alimony, child support, fraudulent debts, certain taxes, student loans, and certain items charged. (see New Jersey Non-Dischargeable Debts below) In most Chapter 7 cases, the debtor has large credit card debt and other unsecured bills and very few assets. In the vast majority of cases a Chapter 7 bankruptcy is able to completely eliminate all of these debts.
You may keep certain secured debts such as your car or your furniture or house by reaffirming those debts. To do so, you must sign a voluntary “Reaffirmation Agreement”. If you decide that you want to keep your house or your car or your furniture, and you reaffirm the debt, you cannot bankrupt (or wipe-out) that debt again for eight years. You will still owe that debt and you must continue to pay it just as you were obligated to continue to pay it before you filed bankruptcy. In order to reaffirm the debt, you must also bring it current. In other words, if you are three or four months behind, then you must pay the back payments which are due in order to reaffirm it. You can selectively reaffirm your debts – you can state that you wish to keep the house and the furniture, but that you want the car and the jewelry to go back to the respective Creditors.
Reaffirmation agreements can be set aside during the earlier of 60 days after the agreement is filed with the Court, or upon the Court’s issuance of an Order of Discharge.
To set up a free consultation about bankruptcy, please call us at (201) 380-1050.
New Jersey Non-Dischargeable Debts
The following debts cannot be discharged in either Chapter 7 or Chapter 13 New Jersey bankruptcies. If you file for Chapter 7, you will still be responsible for repaying these debts after your discharge. If you file for Chapter 13, these debts will have to be paid in full in your plan. If they are not, the balance will remain at the end of your case. Remember that you will also have to continue to pay secured debts (such as a house or car payment) if you to intend to keep the secured property. [see statute 11 523(a)]
- Back child support, alimony obligations and other debts dedicated to family support.
- Debts for personal injury or death caused by driving while intoxicated.
- Student loans, unless it would be an undue hardship for you to repay.
- Fines and penalties for violating the law, including traffic tickets and criminal restitution.
- Recent income tax debts (within 3 years) and all other tax debts.
- Debts you forget to list in your bankruptcy papers, unless the creditor learns of your bankruptcy case.
The following debts may be declared non-dischargeable by a bankruptcy judge in Chapter 7 if the creditor challenges your request to discharge them.
- Debts you incurred on the basis of fraud.
- Credit purchases of $1,150 or more for luxury goods or services made within 60 days of filing.
- Loans or cash advances of $1,150 or more taken within 60 days of filing.
- Debts from willful or malicious injury to another person or another person’s property.
- Debts from embezzlement, larceny or breach of trust.
- Debts you owe under a divorce decree or settlement unless after bankruptcy you would still not be able to afford to pay them or the benefit you’d receive by the discharge outweighs any detriment to your ex-spouse (who would have to pay them if you discharge them in bankruptcy).