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Dedicated New Jersey and Pennsylvania Chapter 7, Chapter 11 and Chapter 13 Bankruptcy Attorneys

Bankruptcy is designed to give people who are in financial difficulty a "fresh start." The law recognizes that people can get into economic trouble for many reasons, and when you get to the point that your financial problems become more than you can bear, you should have the opportunity to discharge certain types of debts and start over.

At McDowell | Riga | Posternock, PC, we have over 60 years of combined experience advising individuals and businesses concerning their options relating to bankruptcy and debt restructuring. Whether you are an individual who is eligible to discharge your debts in a Chapter 7 or restructure in a Chapter 13 or a business that needs to reorganize under a Chapter 11, the experienced, caring attorneys at McDowell | Riga | Posternock, PC, have the tools to help you address your debt repayment issues.

A Chapter 7 bankruptcy is known as a liquidation proceeding, because a debtor filing under this chapter subjects his or her non-exempt assets to the control of a bankruptcy trustee whose job it is to sell those assets to pay creditors. If there are no non-exempt assets, unsecured debts are typically "discharged," meaning that they are legally non-existent. In the majority of Chapter 7 cases, our clients' bankruptcy trustees do not end up selling any property because the Bankruptcy Code allows Chapter 7 debtors to "exempt" most personal property from sale. For example, your equity in a home owned by you and used as your personal residence is exempt up to $20,250, and your equity in an automobile is exempt to the extent of $3,125. If your equity in your home or car does not exceed the amount of your exemption, and if you keep your payments current, then you may be able to keep those assets without fear of losing them to the trustee or your creditors.

In a Chapter 13 bankruptcy, the debtor can force his or her mortgage company to accept a work-out plan to pay back payments that are in arrears. The debtor must make payments to the Chapter 13 trustee for the benefit of his or her creditors for a minimum of three years and a maximum of five years.

Chapter 11 is usually used by businesses that need to restructure their debt, but individuals sometimes file Chapter 11 bankruptcies, too, depending on the complexity of their financial issues or the amount of assets and debts they have. Chapter 11 bankruptcy is more expensive than the other types, but allows a great deal of flexibility and creativity in financial problem-solving.

Whatever your financial situation, if your debts are causing you undue stress, you should call us for a free initial consultation to discuss whether bankruptcy is the right option for you.

FREQUENTLY ASKED QUESTIONS

Will I lose my house if I file a bankruptcy?

A Chapter 13 bankruptcy is designed to allow you to keep your home as long as you maintain your monthly mortgage payments, so debtors who file this type of bankruptcy do not have to worry about losing their homes as long as they can keep up with their monthly bills. In a Chapter 7, the trustee will only try to sell your home if there is equity over and above anticipated costs of sale and your exemption ($20,250 for a single debtor and $40,500 for a married couple filing a joint bankruptcy). A comparative market analysis from a Realtor is required to determine the value of your home.

Will my credit be ruined forever if I file a bankruptcy?

There is no question that filing a bankruptcy reflects negatively on your credit score. However, many people facing bankruptcy already have financial problems that have caused their credit scores to suffer. Additionally, there are ways to restore your credit score after you file bankruptcy. Our experienced attorneys can help you plan to rebuild your credit after your bankruptcy filing.

Will my friends and neighbors find out that I filed a bankruptcy?

Bankruptcy filings are public documents, but they are not published in the newspaper and generally are not considered news unless they involve businesses. Therefore, they only people who typically find out about our clients' bankruptcy filings are the people they owe money, as creditors receive notices about the case from the Bankruptcy Court.

I have money in a 401(k) or IRA. Will I have to give this to the Bankruptcy Trustee?

In New Jersey and Pennsylvania, retirement funds that are recognized by the Internal Revenue Code as protected, such as IRA's and 401(k)'s, are exempt from your creditors, so the Trustee may not liquidate these funds. This is a benefit to people filing bankruptcy, because these savings can be retained for your future, helping you to rebuild your life.

Should I try to negotiate with my creditors to reduce my payments?

Some people considering bankruptcy want to try to negotiate with their creditors and see if they can get them to take lower payments in exchange for being paid in full (by using retirement funds or borrowing from family). Unfortunately, these people sometimes get an unwelcome surprise at the end of the year when they do this, because debt that is "forgiven" in exchange for payment at a reduced price can be reported to the Internal
Revenue Service as taxable income. For example, if your creditor accepts payment of $10,000 on a $30,000 credit card balance, you might be forced to pay taxes on the $20,000 debt that is forgiven. People who wish to negotiate with their creditors should be aware of this unwelcome and little known consequence of debt work-outs.

What happens to my student loans if I file for bankruptcy?

Government backed student loans, like other debts payable to a governmental unit, such as most taxes, are generally not dischargeable, although there are some limited exceptions. Ask your bankruptcy professional about your circumstances.

How does the court decide whether to accept my bankruptcy filing?

Under the Bankruptcy Code, your bankruptcy is considered filed the moment your attorney submits it to the Bankruptcy Court. There is no review by the Court to determine whether it is accepted, provided that your attorney has included all of the information required. Consequently, as soon as your petition is filed, you are under the protection of the Bankruptcy Court and all collection activity against you, including lawsuits, must immediately stop.

How long does the bankruptcy process take?

A typical Chapter 7 bankruptcy takes around four months to complete, although some cases take longer, such as those that involve litigation over a debtor's right to a discharge or those that involve non-exempt property. A Chapter 13 bankruptcy lasts as long as the debtor's plan, anywhere from three to five years.

How many times will I have to go to court if I file a bankruptcy?

Most people who file bankruptcy do not have to appear in court, but just about all debtors, with very limited exceptions, must attend a meeting of creditors, also known as a "341 meeting." This is where a debtor, accompanied by his or her lawyer, meets with the trustee and testifies under oath as to his or her assets and debts. Creditors have the right to attend 341 meetings and ask questions, but few creditors exercise this right.

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