When Is Filing Bankruptcy a Good Option?

Bankruptcy offers a promising solution for individuals and business owners who are overwhelmed with debts or going through financial distress to achieve debt relief. However, when considering bankruptcy, it is essential that you assess your present financial circumstance and the different bankruptcy chapters that are available to you. 

COFFYLAW, LLC has everything necessary to provide reliable advocacy to clients in bankruptcy-related matters. The knowledgeable bankruptcy attorneys at the firm can educate you about your bankruptcy options and decide the ideal choice for your specific financial situation. With offices in New Jersey and New York, Coffy Law proudly represents clients across the nation.  

Evaluate Your Current Financial Situation  

Before you file for bankruptcy, it is imperative that you evaluate your present financial condition. Here are some vital factors for you to put into consideration:  

Money Coming In vs. What is Owed 

Some individuals earn a decent income but still plunge into huge debts due to a lack of accountability. If you don’t know how you spend your money, you should consider making simple lifestyle changes that help you spend less and save more. By doing this, you can have more disposable income to repay your debts. 

How Much Debt You Have 

Also, know the portion of your earnings that is used to settle debts. If your debt load or debt-to-income (DTI) ratio is more than half of your earnings, you may find it quite difficult to keep paying these debts. This might be a good time to think through your possible debt relief options. You can also get in touch with a seasoned bankruptcy attorney in your area for detailed guidance. 

Are Collectors Calling?  

However, it can be very annoying to deal with constant calls, emails, demand letters, and text messages from creditors and collection agencies. Thankfully, filing a bankruptcy petition activates an “automatic stay” order which instructs the debt collector to stop all kinds of collection efforts and legal actions against you. 

What Bankruptcy Chapter Are You Eligible for? 

In addition, you should consider your present financial situation to know your eligibility for bankruptcy. For individuals who earn a regular income but are overwhelmed with debts, a Chapter 13 repayment plan might be the ideal option. In contrast, if the majority of your debts are unsecured debts, you may be able to get a financial fresh start by filing for Chapter 7 bankruptcy. 

Understand Your Bankruptcy Options   

Furthermore, Chapter 7 and Chapter 13 are among the most common bankruptcy options for individuals, families, and business owners facing financial hardship in New Jersey and across the United States. 

Chapter 7 Bankruptcy 

Chapter 7 bankruptcy is designed to give consumers a financial fresh start by eliminating most of their general unsecured debts. In a Chapter 7 case, the court will appoint a trustee who will oversee your bankruptcy case. The trustee will collect and sell your non-exempt assets, then pay your creditors using the net proceeds. Also, your unsecured debts – such as credit card debts, medical bills, and unsecured personal loans – will be discharged at the end of your bankruptcy case.   

Chapter 13 Bankruptcy 

In contrast, Chapter 13 bankruptcy is available to individuals who have a regular income but are overburdened with debts. In a Chapter 13 case, the consumer will propose a repayment plan structured between 3 and 5 years to pay back their outstanding debts with their potential earnings. This bankruptcy option allows you to retain most of your assets. At the end of your repayment plan, your non-priority unsecured debts will be discharged. 

Which Debts Won’t Be Forgiven? 

Unfortunately, filing for bankruptcy won’t eliminate all your debts. Here are some debts that are not forgiven in a bankruptcy case: 

• Child support 

• Alimony or spousal support 
• Tax debts 
• Student loans 
• Fraudulent debts 
• Criminal restitution 
• Penalties and fines 
• Divorce settlement debts 

Whether you file for Chapter 13 or Chapter 7 bankruptcy, you’re still under obligation to repay the aforementioned debts. A practiced attorney can guide you through the legal process involved, help you prepare for bankruptcy, and enlighten you about how some of your assets could be affected. 

Consider Your Assets that Could be Affected  

Generally, filing for bankruptcy in New Jersey might affect some of your major assets in the following ways:  

Home: In New Jersey, you may be able to keep your primary home in your bankruptcy case, provided that you can keep making your normal monthly mortgage payments. Though, there is no homestead exemption in New Jersey. However, consumers can use the federal homestead exemption, which permits up to $ 27,900 in the value of your primary home. 

Motor Vehicle: Also, consumers in New Jersey can protect about $4,000 equity in their motor vehicles under federal exemptions. As a result, you are eligible to keep your vehicle during bankruptcy – except when the car was used as collateral to get a loan. In this case, the creditor can repossess the vehicle if they can get the automatic stay order lifted.  

Pension: In addition, most retirement accounts, pension plans, and life insurance policies are protected in bankruptcy. Once your retirement accounts are valid under ERISA, your retirement funds and savings are safe in bankruptcy. 

Get the Bankruptcy Advice You Deserve  

Filing for bankruptcy often involves several complexities and may need thorough consideration. Therefore, getting detailed guidance when filing your bankruptcy petition is crucial to explore your possible legal options and make intelligent decisions. The attorneys at COFFYLAW, LLC are ready to advise clients through complicated bankruptcy procedures. 

Attorney Emmanuel Coffy and his trusted legal team will review your financial situation, help you understand your available options, and determine the best pathway for you to get debt relief. Also, the dedicated team at the firm can help file your bankruptcy petition, represent you during the court process, and help you achieve the financial fresh start you deserve. 

Contact COFFYLAW, LLC today to talk with experienced bankruptcy lawyers. Attorney Emmanuel Coffy and his reliable team have all the resources you need in your bankruptcy matters. With offices in New Jersey and New York, the firm proudly represents clients across the nation.