Why Is Bankruptcy Called Chapter 7?

What Is a Chapter 7 Bankruptcy?

If you have been wrestling with a large amount of debt – and you don’t see any way to pull yourself out of your financial problems – Chapter 7 could help you. Legal counsel, or a friend or family member, might have mentioned this form of bankruptcy to you, which is called ‘Chapter 7’ because it is provided for in Chapter 7 of Title 11 of the United States Code. (When Congress passes a law it become part of the United States Code. Title 11 of the United States Code provides for the country’s bankruptcy laws and is known as the Bankruptcy Code)

In a Chapter 7 filing, you are allowed to permanently discharge certain debts; that means that once the bankruptcy proceeding is finalized, you won’t ever owe that money again. However, there are some caveats:

  • You must qualify to file for protection under Chapter 7. The 2005 revisions to the bankruptcy code established what is known as the “means test.” The means test requires that, to be eligible to file for Chapter 7 protection, you must show that you lack the resources (means) to repay any money to your creditors over a three-to-five year period (as set forth in Chapter 13 of the bankruptcy laws).
  • Some debts cannot be discharged under Chapter 7. You cannot rid yourself of certain tax obligations, student loan debt, or child support or alimony in a Chapter 7 filing.

Once you file for bankruptcy under Chapter 7, you get the protection of the automatic stay, which prohibits your creditors from calling, writing or taking any other action outside of the bankruptcy proceeding to try to collect your debts.

Contact John Hargrave and Associates

We have provided comprehensive counsel to individuals in and around Barrington, New Jersey, since 1977. To schedule a free initial consultation, contact our office by e-mail or call us at 856-547-6500.

Unfair DMV Surcharges in the State of New Jersey and Bankruptcy

The department of motor vehicles in New Jersey does not seem to have much compassion for people who are in debt and who are unable to pay their DMV surcharges. These surcharges are levied against people who have accumulated six or more points on their driver’s license and against people who have a DUI.

The Surcharge System – Adding Insult to Injury

For example, for accumulating six points, you will be subjected to the surcharge system and have to pay $150 dollars each year for the next three years – even though you have already paid your ticket costs! The cost for a DUI is an eye-popping $1,000 per year for the next three years. Adding insult to injury, your insurance will probably skyrocket, too.

Unfairly Harms Low Income Earners and Those in Debt

This bad habit of assessing added fines called surcharges has been called a redundant, excessive fine that disproportionately impacts low-income people. This is because if someone of low income or who is in serious debt cannot pay the surcharge, the state of New Jersey takes serious, harsh action against the debtor.

NJ Takes Away Driver’s Privileges for Nonpayment

The state will then take away the person’s driver’s privileges; in many cases, this means taking away the means by which a person does get to his or her job. The state will also add interest to the debt and they will take action in the State Superior Court to garnish a person’s wages or secure a lien against a person’s property. It is literally like legal highway robbery!

New Jersey’s Amnesty Program for Surcharge Payments

The challenge for the state of New Jersey is that it collects a significant amount of revenue thanks to fines or surcharges imposed on moving violations in the state.

The fines can amount to thousands upon thousands of dollars if left unpaid. People sometimes were unaware of surcharges imposed, but the state of New Jersey didn’t forgive the surcharges. In fact, they added interests and penalties.

In 2010 the situation got so bad with outstanding fines owed and those suffering from suspended licenses as a result that the state established a motor vehicle amnesty surcharge program. This allowed that outstanding surcharges that had been imposed through the Motor Vehicle Violations Surcharge System could be satisfied without interest or collection costs.

This amnesty for those who owe surcharges could bring in $17 million into the New Jersey state coffers.

Websites That Call for Abolishment of the Surcharge System

There are even websites that are calling for class action lawsuits to end the surcharge system entirely.

Bankruptcy Can Eliminate Most Surcharges in New Jersey

Bankruptcy protection can resolve debt, including DMV surcharges. If you have questions or concerns about how to find debt relief, consider speaking with an experienced attorney at the law firm of John Hargrave and Associates, in Barrington, New Jersey.

Contact an Experienced Debt-Relief Attorney

Speak with an experienced debt-relief attorney at the law firm of John Hagrave and Associates. Call for a free initial consultation. 856-547-6500. You may also contact us online to schedule your appointment.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code. Our law firm focuses solely on helping people solve debt troubles and get back on the path to financial freedom.