Our South Jersey Bankruptcy Attorneys Answer Frequently Asked Questions About Bankruptcy

photo of bankruptcy forms and glassesOur South Jersey bankruptcy attorneys have compiled a list of answers to frequently asked questions about bankruptcy. If you have further questions or want to discuss your own situation in more detail, please contact us for a free consultation. We serve clients all over South Jersey from our five offices in Atlantic City, Audubon, Hamilton, New Brunswick and Vineland.

Frequently Asked Questions About Bankruptcy

Q: Do I need a lawyer to file bankruptcy?
A: Yes! While the law does not require it, you should not file bankruptcy without an attorney. Bankruptcy is complex, and if you make a mistake, you could end up in a worse situation than you were in before you filed.

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Q: Will bankruptcy ruin my credit?
A: No. While bankruptcy will reflect on your credit report, chances are that if you are considering bankruptcy, your credit is already not in great shape. Filing bankruptcy will not make it any worse. In fact, after your debts are discharged, a bankruptcy on your credit report would show that you have no debts and that you therefore are in good shape to pay back a new loan or pay rent. Bankruptcy takes your bad credit and puts it back on the right track.

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Q: Will bankruptcy pay off my debts?
A: No. Bankruptcy does not repay your debts. Rather, if you complete a successful bankruptcy, you will receive a discharge, which means that you are no longer legally obligated to repay your debts. If you file a Chapter 13 bankruptcy, you will use your own wages to repay some or all of your debts in a controlled setting and discharge the rest.

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Q: Will I lose my property if I file bankruptcy?
A: Not typically. The bankruptcy laws allow you to protect your property in bankruptcy up to a certain value amount, and most people who file bankruptcy are able to keep everything they own. If your property is worth more than you can protect, you have the option of paying that equity into a Chapter 13 plan so that you can keep the property in question.

If you own a home or a car and you are still paying on them, you can keep them if you can afford the payments and the payments are reasonable.

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Q: Can bankruptcy get rid of my student loans?
A: Unfortunately, student loans are generally nondischargeable in bankruptcy. Only those who can show an extreme hardship such that they have no hope of ever repaying the debt can discharge a student loan. However, a bankruptcy protects you from any collection efforts by your student loan creditors while the bankruptcy is ongoing.

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Q: After bankruptcy, will I have to pay back any of my debts?
A: You might. Credit cards, medical bills, personal loans, utilities and some income taxes are all dischargeable, meaning that if you receive a bankruptcy discharge, you will not have to repay them. However, some debts are nondischargeable, such as child support, alimony, most student loans, some income taxes and criminal fines. These debts survive bankruptcy, and if you get a discharge, you must still repay these debts.

If you want to keep a house or a car on which you still owe, you will have to repay the loans in order to keep these things.

Our attorneys can advise you about which debts you might have to repay if you filed bankruptcy.

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Q: If my spouse files bankruptcy, do I have to file bankruptcy?
A: No. Married individuals can file bankruptcy without their spouses.

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Q: What happens to my cosigner if I file bankruptcy?
A: Your bankruptcy discharge is personal to you. Although you will no longer be required to pay your discharged debts, the debts still exist for anyone else who is responsible for those debts, such as cosigners or joint accountholders, and they will still have to repay them.

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Q: I have already filed bankruptcy once; can I file again?
A: Yes, but you may have to wait. The answer depends on whether your previous bankruptcy was a Chapter 7 or a Chapter 13; whether you received a discharge; and whether you now want to file Chapter 7 or Chapter 13. Even if you are not eligible to receive a discharge, however, you may have other options, so call us to discuss.

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Q: Will I have to go to court if I file bankruptcy?
A: All personal bankruptcies have a meeting of creditors, which takes place about one month after filing. You will have to appear before your bankruptcy trustee and answer questions about your property and your finances. Creditors may also appear to ask you questions. Your attorney will sit with you and help you. The meeting of creditors is not a courtroom proceeding, however.

People who file Chapter 7 or Chapter 13 rarely go before a bankruptcy judge. If some type of court hearing ends up being necessary, your attorney will generally be able to appear on your behalf.

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Q: Can I use my credit cards before I file bankruptcy?
A: If you plan to file bankruptcy, we will always advise you to stop using your credit cards. If you use your credit cards to any significant extent close to the bankruptcy filing date, the credit card company can accuse you of fraud and ask the court to exclude the purchases from the discharge – meaning you will have to pay them back.

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Q: Can I keep my car or my house if I file Chapter 7?
A: Yes, if you are not behind on the payments. You must also show the court that you can afford the payment and that the payment is reasonable and necessary for your support and the support of your dependants.

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Q: Can bankruptcy help me if I owe income taxes?
A: Absolutely. Some income taxes are dischargeable in bankruptcy and you do not have to pay them back; others must be repaid, but a Chapter 13 can help you repay income taxes with a fixed interest rate and no penalties. We can look at your tax returns and tax bills to determine what you can discharge and what you must repay.

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Q: Should I file Chapter 7 or Chapter 13?
A: That depends on your circumstances. Chapter 13 is ideal for people who want to save a house or a car, or for people who have a lot of assets to protect. Chapter 7 is better for those who cannot afford to pay their debts. Your individual situation will dictate which is the best choice, and we can advise you of the best course of action.

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Q: If I owe money to relatives, do I have to include them in my bankruptcy?
A: You must list every debt in your bankruptcy paperwork, even if you owe that money to your relatives. However, once your bankruptcy is over, you are free to pay your relatives back if you so choose. A word of caution – do not pay any family members back before you file bankruptcy. Contact our South Jersey bankruptcy lawyers to discuss your situation before making any large financial transactions, especially paying back a relative – the consequences could be serious.

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