This article is intended to give general information only. It is not intended to give legal advice to any person on a specific case or controversy, and does not create an attorney-client relationship. If you are considering filing bankruptcy you should consult an experienced bankruptcy attorney.
Bankruptcy Frequently Asked Questions
Q. How do I know if I should consider filing for bankruptcy?
A. Every person is different. But, there are a few tell-tale signs that you can consider before filing for bankruptcy.
· Do your monthly expenses exceed your monthly income?
· Do you only pay the minimum monthly payment on your credit cards each month?
· Are any of your bills more than 30 days past due?
· Do you have more than $10,000.00 of unsecured debt (credit cards, medical bills, personal loans, etc)?
· Is your home worth less than what you owe on your mortgage(s)?
· Do you have any repossessions or foreclosures?
· Are you being sued?
· Do you have any civil judgments?
· Do you have any wage garnishments or bank levies?
· Are you receiving any calls or letters from any collection agencies or attorneys?
You should only file bankruptcy after consulting with an experienced bankruptcy attorney.
Q. Do I need to have a certain amount of debt to file bankruptcy?
A. No. There is no minimum amount of debt you need to have in order to file bankruptcy. But, as a practical matter, you should have enough debt that it makes economic sense to file bankruptcy. Every person is different. For some people, it would not make sense to file bankruptcy merely to wipe out $5,000.00 of credit card debt. But, for other people, wiping out $5,000.00 of debt might have a huge impact on their monthly budget.
Q. Will bankruptcy affect my credit score?
A. Bankruptcy can be listed on your credit history for up to 10 years. After 10 years, the bankruptcy filing will be completely removed from your credit history. During that 10 year period, bankruptcy will have a negative impact on your credit score, but for most people thinking about bankruptcy, their credit score is already low. In my experience, people who file bankruptcy will generally improve their credit score faster than people who struggle to pay off the debt.
For example, if
a person has $20,000.00 of credit card debt and files bankruptcy, that person's
credit report will show the bankruptcy filing, but will also show the person is
debt-free. If the same person chooses not to file bankruptcy, the
likelihood is that person will still have a substantial amount of debt after 5
years. Under these circumstances, the person who files
bankruptcy will usually be in a much better position to obtain credit in 5
years than the person who tries to pay off the debt.
Q. If I choose to file bankruptcy, will it be published in the newspaper?
A. A bankruptcy filing is a public record. If someone wanted to know whether you filed bankruptcy, they could find out. Newspapers occasionally publish bankruptcy notices of large corporations or other bankruptcy filings of public interest. But, as a general rule, newspapers do not regularly publish bankruptcy filings in the newspaper. In 2012, there were 38,669 bankruptcy filings in the State of New Jersey. Newspapers simply do not have the space or the desire to publish a notice of every bankruptcy filing.
Q. How much does it cost to file bankruptcy?
A. Most attorneys charge a flat fee to handle a bankruptcy case. Our firm currently charges $1,500.00 for a basic Chapter 7 case ($1,165.00 attorney fee + $335.00 court filing fee), and $3,500.00 for a basic Chapter 13 case ($3,190.00 attorney fee + $310.00 court filing fee). Chapter 11 cases are generally done on an hourly rate basis. Fees may vary depending on the complexity of your case. Also, there may be additional fees for amendments, motions, and other non-standard legal work. All fees will be discussed with you in advance and confirmed in writing.
Q. What bankruptcy Chapter should I file under?
A. There are three main Chapters under the United States Bankruptcy Code: Chapters 7, 11, and 13.
· Chapter 7 is the most basic form of bankruptcy. Both individuals and businesses may file under Chapter 7. It is designed to discharge or wipe out unsecured debt. The process generally takes about 4 months. At the end of your case (assuming no objections are filed), you will receive a bankruptcy discharge. The discharge is a court order relieving you of the legal responsibility to pay back certain debts.
· Chapter 13 is a reorganization for individual debtors with regular income. Business entities are not eligible to file under Chapter 13. There are several reasons you may consider filing under Chapter 13: (1) You have too much income to file Chapter 7, (2) The value of your assets exceed your exemptions under Chapter 7, or (3) You are delinquent on your mortgage payments and need time to catch up. Other advantages to filing under Chapter 13 will be discussed in a separate article.
· Chapter 11 is a reorganization for individuals or business entities. Generally, only large corporations file bankruptcy under Chapter 11. The advantages to filing under Chapter 11 will be discussed in a separate article.
Q. If I file bankruptcy, will I lose all of my property?
A. No. The bankruptcy code provides certain exemptions which you can use to protect your property. Most filers may keep all of their property. You should review your assets and liabilities with an experienced bankruptcy attorney before filing bankruptcy. Even if all of your assets do not fit within the bankruptcy exemptions, you may still qualify to file a Chapter 13 bankruptcy to protect your property.
Q. If I file bankruptcy, will my job be affected?
A. No. Section 525 of the bankruptcy code prohibits your employer from discriminating against you merely because you filed bankruptcy. The code also prohibits any governmental entity from denying any license, permit, franchise or other grant based on your bankruptcy filing. Accordingly, the Casino Control Commission may not deny a license to work in a casino based on your bankruptcy filing.
Before making your choice of attorney, you should give this matter careful thought. The selection of an attorney is an important decision.
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