I'm Thinking About Filing For Bankruptcy. What Can I Expect?
When you retain the Rokicki Law Firm, you will have an experienced Morris County bankruptcy attorney fighting to eliminate all of your dischargeable debt while simultaneously maximizing your possible exemptions so that you get to keep as much of your property as possible. Read on for a step-by-step guide on the New Jersey bankruptcy filing process, and call the Rokicki Law Firm today for a free consultation!
1. Preparation and Review of Petition
Before filing your bankruptcy petition, your attorney will need to conduct a thorough investigation of your particular financial circumstances to be sure that a bankruptcy filing is right for you. This will entail questions about your debts, assets, income, and past payments to creditors. Once you have decided to file for bankruptcy, you must choose which type of bankruptcy you will file. There are two main types of consumer bankruptcies: Chapter 7 Bankruptcy and Chapter 13 Bankruptcy.
A Chapter 7 Bankruptcy is the most common type of bankruptcy, in which the Debtor surrenders all of his non-exempt assets to the Bankruptcy Court in order to receive a discharge on his applicable debts. However, not everyone qualifies for a Chapter 7 Bankruptcy. In order to be eligible to file a Chapter 7 petition, the Bankruptcy Code requires a Debtor to pass a Means Test. The Means Test determines whether there is a presumption of abuse based on the Debtor's ability to repay his debts. For example, a Debtor with debts of $50,000 but who lives alone and earns $250,000 a year would likely not pass the Means Test, as the Court would probably rule that such an income would allow him an opportunity to repay his debt.
A Chapter 13 Bankruptcy differs from a Chapter 7 Bankruptcy in that it usually involves payment of debts out of future income. The Debtor is allowed to keep and use his property and to pay a percentage of his debts through a 3 to 5-year Chapter 13 Plan approved by the Court. After the Debtor has successfully completed all of his plan payments, he will receive a discharge on his remaining dischargeable debt. Be very careful about maintaining Plan payments- if even one Plan payment is late or missed, the Chapter 13 Trustee (who oversees confirmation and maintenance of the Plan) can petition to the Court to dismiss your case.
Once you have decided with your attorney which type of bankruptcy you will file, your attorney will prepare the applicable bankrupty petition. Your attorney will generally need 6 months of paystubs and bank statements, your last 3 federal tax returns, and documentation of your debts and assets. Make sure that you provide your attorney with up-to-date information on everything he asks for to minimize the possibility of a mistake. After the petition is prepared, take care in reviewing it for any errors or omissions. Remember, you must list all of your property and all of your debts- intentionally leaving something out is bankruptcy fraud.
2. Mandatory Credit Counseling
Every Debtor must take a mandatory credit counseling course in the 180 days prior to filing their bankruptcy petition. Failure to do so will usually result in the Bankruptcy Court dismissing your bankruptcy case. Typically, a credit counseling course will assess your monthly budget to look at areas in which you might be able to save money. A list of accredited credit counseling providers can be found here. Note that a second counseling course, the financial management course, must be completed before a Debtor can receive his bankruptcy discharge.
3. Filing the Bankruptcy Petition | Automatic Stay
Once your attorney has filed your bankruptcy petition, you instantly receive the benefit of the Bankruptcy Code's Automatic Stay. The Automatic Stay places you and your property under the protection of the Bankruptcy Court. Creditors can no longer sue you for unpaid debts or contact you in an attempt to collect a debt. Should creditors persist on doing so, contact your attorney immediately so that he may take appropriate measures with the Court.
4. Section 341(a) Meeting of Creditors
About a month after filing a bankruptcy petition, every Debtor must attend a Court proceeding known as the Section 341(a) Meeting of Creditors. During this meeting, the Bankruptcy Trustee assigned to your bankruptcy case will take your sworn testimony as to your financial circumstances and your bankruptcy petition. If you have noticed any discrepancies or mistakes made in your petition, you must disclose them to the Trustee. Generally, these meetings are only 5-10 minutes long. However, in some cases, a Trustee may have particular questions about certain aspects of your bankruptcy case and will engage in a more lengthy discussion. 341(a) meetings are open to the public and creditors are allowed to appear and ask questions of you regarding your debt to them. However, creditors rarely show up absent extraordinary circumstances. At the conclusion of the meeting, the Trustee and his staff will advise you and your attorney of any additional documentation they need and if they will be making any applications to the Court.
Chapter 13 Debtors face an additional step in the bankruptcy process known as the Confirmation Hearing. Within 45 days of the 341(a) Meeting of Creditors, the Bankruptcy Judge must hold a Confirmation Hearing and determine whether the Debtor's proposed Chapter 13 Plan is feasible and if it meets the standards set forth in the Bankruptcy Code. Creditors are given 28 days' notice of the Confirmation Hearing and may object to confirmation of the Plan. Note that the Debtor must start paying Plan payments to the Trustee within 30 days of filing his bankruptcy case even if the Chapter 13 Plan has not yet been approved by the Court.
5. Financial Management Course and Discharge
After the 341(a) Meeting of Creditors, the Debtor has 45 days to file a certificate with the Court showing that he has taken the mandatory Financial Management Course which will allow him to receive a discharge. The Bankruptcy Court will not grant a discharge without the completion of this course- if the Debtor does not complete it in time, the Court may close the Debtor's case without granting a discharge.
Absent any objections by the Trustee, the Debtor will then receive a discharge of his applicable debts. Dischargeable debt generally includes credit card debt, medical bills, and personal loans; debt that is generally not dischargeable includes student loans, certain types of unpaid taxes, alimony and child support, and debts for personal injury cased by driving while intoxicated.