The Fresh-Start Factor in Bankruptcy

Getting a Fresh Start in Bankruptcy

When you have fallen behind in your financial obligations, there are times when you can put a plan in place and bring everything current within a reasonable period of time. But there are also situations in which the weight of your debts is simply too much. There may not be enough hours in the day for you to work enough to put any kind of meaningful dent in your obligations. In principal, that’s what the bankruptcy laws were enacted for.

Under the bankruptcy laws, not only do you have the opportunity to either permanently discharge debt (under Chapter 7) or reorganize debt (under Chapter 11 or Chapter 13), but you get immediate relief from the harassing calls and/or letters from creditors and collection agencies. Once you file for bankruptcy, an automatic stay goes into effect prohibiting creditors or their representatives from calling you, writing you or taking any other action to collect a debt from you, other than through the bankruptcy court.

People who are eligible for Chapter 7 bankruptcy are usually able to get rid of their unsecured debts while keeping the things that they own. (It is a commonly believed myth that filing for bankruptcy will cause you to lose everything you own – this is simply not true!). For those who are not eligible for Chapter 7 bankruptcy (typically because they make ‘too much money’), you can use a Chapter 13 bankruptcy to impose a partial repayment plan on your creditors. Once you have completed your Chapter 13 plan payment, the balance of what is owed to your creditors is wiped out. In a Chapter 13 bankruptcy you do not need to make deals with all of your creditors individually. Instead your attorney will prepare a Chapter 13 plan and if necessary negotiate the amount of the plan payment with the Chapter 13 trustee that is appointed to your case. In all Chapter 13 cases you will end up paying less to your creditors than they are owed.

Contact John Hargrave and Associates

We have provided comprehensive bankruptcy 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.

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