Practice Areas and Legal Definitions

Every year, more than a million Americans file for protection under Federal bankruptcy laws. Although some bankruptcy claimants are deemed as credit abusers and/or considered financially irresponsible, many hardworking individuals and businesses can succumb to financial difficulty, and face irreparable economic crisis. Bankruptcy is designed as a legal option to help resolve such a crisis, and act as a financial life preserver for those drowning in debt.

New Bankruptcy Laws:
Bankruptcy is a federal court process designed to help individuals and businesses eliminate their debts or repay them under the protection of the bankruptcy court. Bankruptcies can generally be described as liquidation or reorganization. Under a liquidation bankruptcy (Chapter 7), a claimant files to eliminate debt through the bankruptcy court. Under reorganization bankruptcy (Chapters 13), a claimant files a plan with the bankruptcy court proposing how to repay creditors.

As of October 17, 2005, the requirements in which a debtor may file Chapter 7 bankruptcy changed under the Bankruptcy Abuse Prevention and Consumer Protection Act. Debtors are now required to seek budget and credit counseling six months prior to filing, financial “testing” is required to determine the debtor’s capacity for debt repayment, Chapter 7 cannot be filed if the household income is greater than the median household income as deemed by the state, and state exemptions cannot be applied unless the debtor has resided at current residence for over two years.

Due to the imposed requirements for Chapter 7 bankruptcy as set forth by the new laws, debtors who were eligible to file under Chapter 7 will now have to file under Chapter 13 bankruptcy instead, in which individuals and creditors agree to a court-imposed plan that requires some or all debts be repaid over five years, with an appointed trustee assigned to monitor the repayment process. Bankruptcy filings will continue to be recorded on an individual’s credit report for seven years in the case of Chapter 13, and up to ten years for Chapter 7.

Chapter 7:
Chapter 7 cases are commonly referred to as straight bankruptcy or liquidation cases, and may be filed by an individual, corporation, or a partnership. A Chapter 7 bankruptcy case does not involve the filing of a plan of repayment as in Chapter 13. Instead, the bankruptcy trustee gathers and sells the debtor's nonexempt assets and uses the proceeds of such assets to pay holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code. Part of the debtor's property may be subject to liens and mortgages that pledge the property to other creditors. In addition, the Bankruptcy Code will allow the debtor to keep certain "exempt" property; but a trustee will liquidate the debtor's remaining assets. Accordingly, potential debtors should realize that the filing of a petition under Chapter 7 may result in the loss of property.

Chapter 13:
A Chapter 13 bankruptcy is also called a wage earner's plan. It enables individuals with regular income to develop a plan to repay all or part of their debts. Under this chapter, debtors propose a repayment plan to make installments to creditors over three to five years. Chapter 13 permits individuals to keep their property by repaying creditors out of their future income. It is not available to corporations or partnerships. After completion of payments under the plan, Chapter 13 debtors receive a discharge of most debts.

Foreclosure:
Foreclosure is the legal proceeding in which a bank or other secured creditor sells or repossesses a parcel of real property (immovable property) due to the owner's failure to comply with an agreement between the lender and borrower called a "mortgage" or "deed of trust". Commonly, the violation of the mortgage is a default in payment of a promissory note, secured by a lien on the property. When the process is complete, it is typically said that "the lender has foreclosed its mortgage or lien."

A Foreclosure by Sale ends in the posting of a sign advertising the auction of your home on the sale date. The only ways to stop a foreclosure are full payment of the arrearage, or the filing of a Chapter 13 bankruptcy. Full Payment: If you are able to obtain and tender the full amount of your arrearage, including fees and costs, you can stop the foreclosure of a standard residential mortgage. Most people lack the money to make full payment. This process stops the foreclosure and allows you to repay your arrearage over a three-to-five year period. The arrearage is paid through a court-appointed official, while you resume your regular monthly payments to the bank in order to keep your home. A Chapter 13 can be filed at any time prior to the law day or sale date, and it is often the only avenue to save your home.

Bankruptcy Fraud:
Bankruptcy fraud is a business crime of filing for bankruptcy with criminal intent, that is with the intention of evading payment for goods even though the buyer has funds that could be used to pay for them, or accepting payment for goods or services but not supplying them. Common types of bankruptcy fraud include petition mills, false oath, concealment of assets, and fraudulent conveyance. Multiple filings are not per se fraudulent; as with all things in the law, it depends on the circumstances. Bankruptcy fraud should be distinguished from strategic bankruptcy, which is not a criminal act (but may prejudice a judge against the filer if there is evidence that bankruptcy is being used strategically).

Debt Consolidation:
Contrary to popular belief, debt consolidation is not a loan. Debt consolidation is a process in which debt is restructured into one low monthly payment. It further enables a consumer to reduce the amount owed and thereby eliminate interest. Very often a consumer can detect warning signs of being in too much debt long before any collection notices are received. If more than two of the following signs apply to you, you are probably in too much debt:

• You have begun charging to your credit card essential expenses like food and daily expenditures
• You are making only the minimum payments on your credit cards each month
• You are near the limit of your credit cards
• You have too many credit cards
• You are unsure how much money you owe creditors

Chapter 11:
Chapter 11 is typically used for business bankruptcies and restructuring. It is not commonly used by individual consumers since it is far more complex and expensive to pursue. It allows businesses to reorganize themselves, giving them an opportunity to restructure debt and get out from under certain burdensome leases and contracts. Typically a business is allowed to continue to operate while it is in Chapter 11, although it does so under the supervision of the Bankruptcy Court and its appointees.

If you or someone you know in Morris County, including the communities of Parsippany, Dover, Randolph, East Hanover, Whippany, Chatham, Cedar Knolls and Madison, or throughout New Jersey, needs the assistance of an experienced bankruptcy lawyer, contact Attorney David Ast today at 866-435-2729, or use the contact form provided on this site to schedule your free consultation.

Frequently Asked Questions

The following information includes frequently asked bankruptcy questions. The answers stated are general in nature and are not intended to apply to every situation. Each case is different and carries its own set of circumstances which must be taken into consideration by competent legal counsel. For a personal consultation regarding your specific case, please contact Morristown, New Jersey bankruptcy lawyer David Ast today at 866-435-2729.

Will I lose my house, car, and other personal property?
Not necessarily; each state has laws that determine which items or property are exempt from being taken away. For example, many states exempt personal items such as furniture and clothing. In addition, other kinds of property are exempt up to a limit. These exemption limits mean that any equity that you have in the property above the limit is not exempt. The Bankruptcy Court can take the property and sell it, pay off any creditors, give to you the exemption amount, and keep the rest for other creditors.

How long will a bankruptcy show on my credit reports?
The Bankruptcy Court has no jurisdiction over credit reporting agencies. The Fair Credit Reporting Act, 6 U.S.C. Section 605, is the law that controls credit reporting agencies. The law states that credit reporting agencies may not report a bankruptcy case on a person`s credit report after ten years from the date the bankruptcy case is filed. Other bad credit information is removed after seven years. The larger credit reporting agencies belong to an organization called the Associated Credit Bureaus. The policy of the Associated Credit Bureaus is to remove Chapter 11 and Chapter 13 cases from the credit report after seven years to encourage debtors to file under these chapters.

Can I file for bankruptcy every few years?
No. Once a discharge is granted, a debtor who filed under chapter 7 or 11 is prohibited from filing for another 8 years.

What debts are dischargeable?
11 U.S.C. §523 lists exceptions to discharge. In general, all other debts are dischargeable. Some debts listed in 11 U.S.C. §523, such as those based on fraudulent conduct, embezzlement or willful and malicious injury to another, are discharged unless a complaint to deny discharge of that debt is timely filed with the bankruptcy court. Ordinarily, these complaints must be filed within sixty (60) days of the first date set for the meeting of creditors. Additionally, debts that were not listed on your bankruptcy schedules or that were incurred after you filed bankruptcy are generally not discharged. Denial of a discharge goes to the debtor`s entire proceeding, while determination of non-dischargeability goes to a particular debt only. A request for denial of discharge is usually granted because the debtor has defrauded a creditor, concealed property of the estate, made a false oath, presented or used a false claim, refused to obey any lawful order of the court and other reasons contained in the Bankruptcy Code. A non-dischargeability of a debt excepts a particular debt from the discharge. This means that if the debt is determined non-dischargeable the debtor is still obligated to that creditor.

What is a priority debt?
A priority debt is a debt entitled to priority in payment in a bankruptcy case. A general listing of priority debts is given in 11 U.S.C.  §507 of the Bankruptcy Code. Examples of priority debts are some taxes, wage claims of employees, debts related to goods and services provided to a debtor`s estate during the pendency of a bankruptcy case. In addition, alimony, maintenance or support of a spouse, former spouse, or child is considered a priority debt.

What is a Plan of Reorganization?
The Plan of Reorganization is a document that sets out how a debtor-in-possession will repay creditors. The plan divides creditors into classes. It specifies the treatment of claims for each class of creditor and provides a means for the plan`s implementation. The debtor-in-possession has the exclusive right to file a plan for up to 120 days after the filing of the petition. After this exclusivity period has expired, creditors may file a plan.

What is the creditor`s meeting?
A meeting of creditors is the single hearing all debtors must attend in any bankruptcy proceeding. It is held outside the presence of the judge and usually occurs between twenty (20) and forty (40) days from the date the original petition is filed with the court. In Chapter 7, Chapter 12, and Chapter 13 cases, the trustee assigned by the court on behalf of the United States Trustee conducts the hearing. In Chapter 11 cases where the debtor is in possession and no trustee is assigned, a representative of the United States Trustee`s office conducts the hearing.

The hearing permits the trustee or representative of the United States Trustee`s Office to review the debtor`s petition and schedules with the debtor face-to-face. The debtor is required to answer questions under penalty of perjury concerning the debtor`s acts, conduct, property, liabilities, financial condition and any matter that may affect administration of the estate or the debtor`s right to discharge. This information enables the trustee or representative of the United States Trustee`s Office to understand the debtor`s circumstances and facilitates efficient administration of the case. Additionally, the trustee or representative of the United States Trustee`s Office will ask questions to ensure that the debtor understand the positive and negative aspects of filing for bankruptcy.

The hearing is referred to as the meeting of creditors because creditors are notified that they may attend and question the debtor about the location and disposition of assets and any other matter relevant to the administration of the case. However, creditors need not attend these hearings and, in general, are not considered to have waived any of their rights by failing to appear. The hearing usually lasts only a few minutes and may be continued if the trustee or representative of the United States Trustee`s Office is not satisfied with the information provided by the debtor. The trustee or representative of the United States Trustee`s Office may request that the bankruptcy case be dismissed if the debtor fails to appear and provide the information requested at the hearing. The United States Trustee may also request that the debtor be ordered by the court to cooperate or be held in contempt of court for failing to cooperate.

What can I do if a creditor keeps trying to collect money after I have filed for bankruptcy?
If a creditor continues to attempt to collect a debt after the bankruptcy is filed in violation of the automatic stay, you should immediately notify the creditor in writing that you have filed bankruptcy. In addition, you should provide them with either the case name, number and filing date, or a copy of the petition that shows it was filed. If the creditor still continues to try to collect, the debtor may be entitled to take legal action against the creditor to obtain a specific order from the court prohibiting the creditor from taking further collection action. Further, if the creditor is willfully violating the automatic stay, the court can hold the creditor in contempt of court and punish the creditor by fine or incarceration. Any legal action brought against the creditor will be complex and will normally require representation by a qualified bankruptcy attorney.

Professional Profile

David Alan Ast, P.C. is a small New Jersey law firm committed to providing exceptional bankruptcy, debt consolidation and negotiation services. Personal attention and communication with clients are top priorities.

If you or someone you know in Morris County, including the communities of Parsippany, Dover, Randolph, East Hanover, Whippany, Chatham, Cedar Knolls and Madison, or throughout New Jersey, needs the assistance of an experienced bankruptcy lawyer, contact Attorney David Ast today at 866-435-2729, or use the contact form provided on this site to schedule your free consultation.

FIRM ADDRESS:
David Alan Ast, P.C.
222 Ridgedale Ave.
Morristown, NJ 07962
Phone: 866-435-2729
Hours: M-F, 8:00AM-5:00PM

MEMBERS OF THE FIRM:
David A. Ast, Esq.

EDUCATION:

• Cornell University Law School, J.D., 1972
• Rutgers University, B.A., 1969

COURTS ADMITTED:

• New Jersey
• U.S. District Court, District of New Jersey
• U.S. Supreme Court
• U.S. Court of Appeals for the Third Circuit
• U.S. Court of Appeals for the Federal Circuit
• U.S. District Court for the Northern District of New York
• Court of Appeals of New York
• U.S. Court of International Trade

PROFESSIONAL MEMBERSHIPS:

• New Jersey State Bar Association, Bankruptcy Law Section
• Morris County Bar Association, Chairman of Bankruptcy Law Committee, former trustee
• American Bar Association
• National Association of Consumer Bankruptcy Attorneys (NACBA)

LECTURES:

Frequent lecturer and panelist on bankruptcy topics to professional groups including:

Morris County Bar Association:

• Bankruptcy - Nuts and Bolts of Chapter 7 Bankruptcy
• Bankruptcy Reform Act of 1994
• Bankruptcy Aspects of Divorce, Fundamental of Consumer Bankruptcy

New Jersey State Bar Association:

• Bankruptcy Considerations for Security Interests in Intellectual Property Rights
• Bankruptcy Considerations for People with HIV/AIDS

N.J. Association of Public Accountants; Morris, Sussex & Warren Chapter:

• The Accountant's Role in Bankruptcy
  

PRACTICE AREAS:

• Chapter 7 Bankruptcy
• Chapter 11 Bankruptcy
• Chapter 13 Bankruptcy
• Foreclosures and Loan Workouts
• Settlements with Creditors
• Commercial Litigation