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Personal Bankruptcy

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Chapter 7 – Personal Bankruptcy

In a Chapter 7 bankruptcy, often individuals are able to retain their assets while obtaining a discharge or forgiveness of their debt and a fresh start. Such debts include credit card obligations, personal loans, medical bills, and even taxes in some instances. Further, individuals who own property having little or no equity value may be able to keep their property provided they have the ability to keep their mortgage or secured loan on the property current. In most states, including New Jersey, there are "exemptions" which protect some of a debtor's property from being sold. Some of these exemptions are very generous, for example, individuals can keep an unlimited amount of their retirement funds and still obtain relief from most of their debts.

Debts, such as mortgages and car loans, can survive Chapter 7 bankruptcy if an individual wants to keep those items. There are some debts which cannot be eliminated in Chapter 7, which include most tax debts, debts for most student loans, and alimony/child support obligations.

Preparation is the key to success in any legal matter. Rabinowitz, Lubetkin & Tully, LLC has the bankruptcy experience and skill necessary to prepare a client's Chapter 7 case correctly and efficiently and to guide our clients through the process to their fresh start. We also have the expertise to determine whether a Chapter 7 bankruptcy is right for you, and suggest alternate bankruptcy avenues where appropriate.

Chapter 13 – Personal Reorganization

A Chapter 13 Bankruptcy is available to individuals and couples with regular monthly income from any source, including salary, commissions, rents, pension, alimony, child support, social security, unemployment or public benefits. Chapter 13 affords individuals and/or couples the ability to retain, reorganize or consolidate their assets and pay their creditors through monthly payments to a Chapter 13 Trustee over a three to five year period. Individuals or couples must owe no more than $336,900 to unsecured creditors and $1,010,650 to secured creditors.

A Chapter 13 bankruptcy will be most helpful to you if:

In a Chapter 13 proceeding, you propose a payment plan for a period of three to five years under which you agree to make monthly payments to a Chapter 13 Trustee beginning with the month after your case is filed. These payments will be held by the Trustee and disbursed to your creditors in accordance with the terms of your Bankruptcy Court-Approved Plan. The amount you will be required to pay and the length of time over which your payments will need to be made will be determined by your Means Test results. If you have disposable income under the Means Test, you will need to pay the amount of that income for a period of sixty months. If you do not have disposable income under the Means Test, you may limit your plan payments to the amount which your actual budget shows you can afford to pay and limit the length of your plan to thirty-six months. Under any circumstances, the payments you will be required to make must be sufficient to satisfy all past-due payments owed to secured creditors whose collateral you wish to keep, i.e., mortgage arrears on home or other real property, car loan payments, past-due payments to landlords or other lease agreements you intend to assume, priority obligations due from past-due support or tax obligations and administrative costs and expenses for administering your case. Once all payments have been made, most of your debts, with the exception of those obligations that cannot be discharged under either Chapter 7 or Chapter 13, will be discharged or forgiven.