Practice Areas and Legal Definitions

Every year, more than 1,000,000 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 irreperable 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. To discuss your bankruptcy options, or other areas of recourse that might be available to you, contact a qualified bankruptcy attorney who can advise you of your legal rights as stated under Bankruptcy Law and federal Bankruptcy courts.

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 a reorganization bankruptcy (Chapter 13), a claimant files a plan with the bankruptcy court proposing how to repay creditors.

As of October 17, 2005, the requirements under which a debtor may file Chapter 7 bankruptcy changed with the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act.  Debtors are now required to seek budget and credit counseling within six months of 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 New Jersey needs the assistance of an experienced Ocean County Bankruptcy Attorney, call William A. Ward today at 866-685-9486, or complete the contact form provided on this site to schedule your initial consultation.

Please note this is only a general overview of Bankruptcy. How, and if, to proceed can only be determined after a detailed consultation about your situation.

Can I still file Bankruptcy?
Yes. The much-publicized (and exaggerated) changes to the Bankruptcy Code were directed toward high income families.

What kinds of bankruptcies are available to individuals?
Chapter 7 eliminates your unsecured debt completely. Chapter 13 is a payment plan in which some or all of your debt is paid through a Trustee over 3 to 5 years.

Am I eligible for Chapter 7?
You are presumed eligible for a Chapter 7 if your family income is below the state average. For example, the cut-off for a family of 4 is now over $100,000.00. Even above the income limits you may still qualify for a Chapter 7 if your mortgage and/or car payments are high.

Under what circumstances would a Chapter 13 be appropriate?

• If you are behind on your mortgage and the lender won’t work with you, you can file a “catch-up” Chapter 13 Plan. You would have to be able to resume regular monthly payments and make monthly payments to the Trustee to catch up over 3 to 5 years.
• Your assets are worth more than you are allowed to keep in a Chapter 7. For example, a couple may claim as “exempt” equity in their home of up to $40,000.00. If your home has $50,000.00 in equity, you would have to pay $10,000.00 to unsecured creditors through a Chapter 13 Plan.
• You are a high income family.

How are car loans treated?
It’s up to you. You can keep the car so long as you make the monthly payments. If you want, you can surrender the car and eliminate your liability on the loan.

Are all debts eliminated?
Almost all types of debts are wiped out. Alimony, child support, student loans and recent taxes owed are not.

If I decide to file bankruptcy, is it OK to keep using my credit cards?
Absolutely not. Creditors are aggressive in challenging the elimination of recent credit card debt, especially cash advances. Incurring a debt without intending to repay it is considered fraud in bankruptcy.

How much does a bankruptcy cost?
I charge $1,500.00 for a Chapter 7, and the Court filing fee is $299.00. For a Chapter 13, I charge $2,500.00, and the Court’s filing fee is $274.00. (The Chapter 13 paperwork is more complicated and there is a second hearing I must attend.) In either case, you must go through a credit counseling session, on the phone or on-line, which costs $50.00 and, after filing, a personal money management session, for $17.00.

If I want to proceed, how do I get started?
I would need you to fill out a questionnaire for me. You can pick it up or we can fax, mail or e-mail it to you. We would also have to discuss your situation in detail.

If I have more questions, may I contact you?
Certainly. You are welcome to call or e-mail me with questions, or call to schedule a complimentary office consultation.

If you or someone you know in New Jersey needs the assistance of an experienced Ocean County Bankruptcy Attorney, call William A. Ward today at 866-685-9486, or complete the contact form provided on this site to schedule your initial consultation.

ADDRESS OF THE FIRM:
William A. Ward, Attorney at Law
1520 RT 37 East
Toms River, NJ 08753
Telephone: 866-685-9486
Fax: 732-288-2661

MEMBERS OF THE FIRM:

William A. Ward