Bankruptcy is a federal court process designed to help consumers and businesses eliminate their debts (liquidation) or repay them (reorganization) under the protection of the bankruptcy court. Once a Bankruptcy petition is filed, creditors are prohibited from contacting you regarding collection of the debts listed in your bankruptcy petition.
The most common form of bankruptcy filed by individuals or consumers is Chapter 7. Under a Chapter 7 filing, consumers are entitled to certain exemptions with respect to their property so that their property is not taken and sold to pay back some of their debt. Typically, under Chapter 7, individuals or consumers are commonly able to retain all of their property and achieve the elimination of all of their unsecured debts. Conversely, under a Chapter 13, consumers usually also get to keep all of their property but they must make monthly payments over 3 to 5 years to repay all or some of their debt.
Not everyone is eligible to file for Chapter 7. Changes to the bankruptcy laws passed in 2005 prohibit some filers with higher incomes from using Chapter 7 bankruptcy. In order to figure out whether you qualify for Chapter 7, you must measure your "current monthly income" against the median income for a household of your size in your state. If your income is less than or equal to the median, you can file for Chapter 7 bankruptcy.
If it is more than the median, however, you must pass "the means test" in order to file for Chapter 7. The new law also requires individuals to get credit counseling before they can file a bankruptcy petition and additional counseling on budgeting and debt management before their debts can be wiped out.
If you are interested in discussing your eligibility for bankruptcy, please feel free to contact our office at the following numbers for a free consultation:
Elizabeth office :- (908) 351-8700
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