Does Bankruptcy Conclude Following a Discharge?

March 20, 2019 by Steven Neuner Esq.

What Occurs After Debts Are Discharged?

When a person successfully files for bankruptcy, his or her debts will eventually be discharged, which typically occurs at the very end of the process. In the final three months of 2018, more than 175,000 individuals and companies filed for bankruptcy, which shows just how common it is for people to take this step. If you’re thinking about filing for bankruptcy but are unsure of what the process involves, our New Jersey bankruptcy lawyer can help.

To What Does a Bankruptcy Discharge Refer?

When a bankruptcy court decides to order a discharge, there are a couple of things that occur. The main aspect of a bankruptcy discharge is that the debtor will no longer be required to pay some of his or her debts. However, not all debts are discharged. Some of the main debts that can’t be discharged when filing for a Chapter 7 bankruptcy include:

Debts incurred from student loans
Income tax debt in most cases
Spousal support and child support
Money that was gained via fraud
Any debt that’s not listed on your initial bankruptcy paperwork

Along with the discharged debts, this order will stop creditors from attempting to collect any of the debts that have been discharged, which means that these individuals are unable to contact you through telephone calls or demand letters that attempt to obtain these debts.

When a Bankruptcy Discharge Typically Occurs

The timing for a bankruptcy discharge can depend on which chapter of bankruptcy is filed. When a Chapter 7 bankruptcy has been filed, it’s common for the discharge to occur once the time expires for filing a complaint relating to a specific debt that’s about to be discharged. Creditors will usually have a certain amount of time to object to the discharging of a debt. This expiration date is oftentimes several months after the individual filed for bankruptcy. In Chapter 11 and 13 bankruptcies, debts will usually be discharged once the affected individual or company provides any and all payments relating to the plan that was made after the bankruptcy was filed. A bankruptcy plan is typically created soon after a person files for bankruptcy in an attempt to eventually pay back some of the debts that are owed. Once the plan has been fulfilled, it’s possible for some or any of the remaining debts to be discharged. There are times when this discharge could be denied if a person did not complete an educational course for financial management in the time that was allotted for him or her to do so.

Reasons That a Bankruptcy Case Could Be Reopened

In many instances, a bankruptcy case will officially end when a discharge has been ordered. However, it’s possible for a bankruptcy case to be reopened in certain situations. Knowing what these situations are may be able to help you avoid having your case reopened in the future. For one, a bankruptcy case could be reopened if the debtor would like to add a debt that he or she initially forgot to list. When a debt isn’t listed in the initial bankruptcy filing, it won’t be discharged. Adding debt to the list allows the debtor to correct the problem while also notifying the creditor about the bankruptcy case in question. It’s also possible for a bankruptcy case to be reopened by a creditor or trustee if he or she finds a debt that wasn’t listed in the initial paperwork. There are times when the liquidation of certain debts would be more beneficial to a creditor or trustee, which could cause him or her to ask the court to reopen the case. If you’re in the midst of bankruptcy but you would like some legal assistance on the matter, our bankruptcy lawyers at Neuner & Ventura can provide you with the assistance you require. When you’re about to file for bankruptcy, call our New Jersey bankruptcy lawyers at (856) 596-2828 at our office in Marlton so that we can guide you through your case and help answer any questions that could arise.

You Can Pay Debts Even During a Bankruptcy

February 24, 2019 by Steven Neuner Esq.

Reaffirming Debts During a Bankruptcy

Between March 2017 and March 2018, the number of bankruptcy cases filed in the United States dropped by 1.8 percent. Although the number of filings may be going down overall, there is still a chance that you will need protection from creditors. If you desire, it may be possible to reaffirm some debts and keep them out of your bankruptcy case.

What Is Reaffirmation?

Reaffirmation of a debt is a process during which you agree to repay a debt according to its current terms. You may choose to reaffirm a debt even if it is eligible to be discharged in a Chapter 7, 11 or 13 case. In order to commit to paying a lender as agreed upon initially, you will have to file form B240A with the bankruptcy court.

Does the Court Have to Approve a Reaffirmation?

In most cases, the bankruptcy judge in your case will need to approve the reaffirmation. Approval may not be granted if you owe more than an asset is worth. For example, if a vehicle is only worth $5,000, you may not be able to agree to pay a lender $10,000. Generally, there is no need to obtain court approval to reaffirm any debt secured by a home or other real property.

Why Would You Want to Reaffirm a Debt?

There are a couple of reasons why it may make sense to reaffirm a debt. First, it allows you to keep an asset during the course of the bankruptcy. For instance, by agreeing to make payments in a timely manner, you could avoid losing a car in a liquidation bankruptcy. Another good reason to continue to pay a debt is that it could help rebuild your credit after other debts have been discharged. Instead of having to take out a secured credit card or other token credit account, you can make payments to a lender with which you already have a history.

Can You Rescind the Reaffirmation?

It is generally possible to rescind the reaffirmation for up to 60 days after filing the proper paperwork with the court. If you do choose to rescind the reaffirmation, the asset could be liquidated or otherwise worked into a repayment plan.

A creditor could also move to have a debt included in a bankruptcy case if you fail to make payments as agreed. Your bankruptcy attorney may be able to explain the process of changing your mind after agreeing to pay a lender under the current terms of a loan.

Can You Sell Assets Held Outside the Bankruptcy Estate?

As long as the deal with your creditor allows you to sell an asset, you generally have the right to do so. This can help you raise funds to keep up with a repayment plan or let you get rid of an asset without losing equity that has accrued. Selling a home may be far preferable to having it foreclosed. Trading or selling a vehicle could also be beneficial in the event that you can’t get the court to agree to a cram down.

Debts Can Be Repaid After a Discharge

Whether you choose to reaffirm a debt or not, it is always possible to pay an outstanding debt in full. This is true even if you had it discharged in a bankruptcy case. Doing so could be helpful in preserving relationships with vendors, friends or family members. It can also be an ideal option for those who feel that they have a moral obligation to repay money that they borrowed from any source.

If you are in need of a bankruptcy attorney, reach out to the legal representatives from Neuner & Ventura LLP. You can contact our law office in Marlton, New Jersey, by calling (856) 596-2828. You can also use the contact form on this site or visit us at our practice at the Willow Ridge Executive Office Park.

What a Chapter 11 Bankruptcy Reorganization Plan Entails

February 21, 2019 by Steven Neuner Esq.

How a Chapter 11 Reorganization Plan Is Created

While filing for bankruptcy comes with a number of consequences that can be difficult to manage, doing so can provide you with an opportunity to save your business. There are more than 7,000 Chapter 11 bankruptcies filed every year, which shows how common this type of filing is. Here at Neuner & Ventura LLP, our bankruptcy lawyers have handled a large number of cases pertaining to this type of bankruptcy, which you should know more about when you’re getting ready to file.

What Reorganization Plans Typically Include

When a business has filed for Chapter 11 bankruptcy, they will have a certain amount of time to restructure their debts and reorganize their business in a manner that may allow for future success. While there are typically limits placed on how long a business can take to create a reorganization plan, these limits aren’t usually strict and can be extended by the bankruptcy court. The initial time limit is around four months, during which time a business will need to reorganize their financial affairs. Once these four months have passed, the creditors that are owed money by the business in question will be able to file competing reorganization plans if they wish to do so.

However, competing plans are rare because of how much work goes into creating such a plan. Instead, the creditors can recommend changing the filing to a Chapter 7 bankruptcy if they are dissatisfied with the plan that was sent in by the company in question. In most cases, business operations will need to be downsized somewhat to open up assets that can be used to cover a portion of the debts that are still owed. Though rare, it’s also possible that the restructuring may allow the company to pay back all of the debts they owe.

How a Chapter 11 Plan Is Confirmed

Once you’ve created a plan that reduces expenses, frees up assets, and provides a way for your business to move forward, the plan will then need to be confirmed by impaired creditors as well as the court that oversees the case. The plan will need to meet a variety of requirements before confirmation occurs. For one, the plan must be a feasible one, which means that the court must determine that the company’s plan for the next five or 10 years is likely to be a successful one. The plan must also be deemed by the courts to have been made in good faith, which essentially means that success can’t be obtained through illegal means.

For the plan to be confirmed, it will also need to be in the best interests of all creditors, which means that the creditors will need to receive as much or more than they otherwise would have if a Chapter 7 bankruptcy had been filed instead. Finally, the plan will need to be fair and equitable. This term means a couple of things. For one, the creditors that are owed will need to receive repayment that at least matches the value of the collateral. Equity owners will also not retain any form of ownership once the plan has been confirmed if the creditors have not been paid in full.

How Our New Jersey Bankruptcy Attorneys Can Provide Assistance

If you believe that the only way for your business to survive is by filing a Chapter 11 bankruptcy, our experienced bankruptcy attorneys are here to help. Creating a reorganization plan following the filing of bankruptcy oftentimes makes for a lengthy and complicated process. Obligations will need to be met, and the plan will likely need to be created in a certain time frame. Our bankruptcy lawyers can help you file any of the necessary paperwork while also making sure that your plan meets all of the legal requirements and is likely to be confirmed.

If you’re getting ready to file for Chapter 11 bankruptcy but you want to obtain some legal assistance to help guide you through the extensive process, call our New Jersey bankruptcy lawyers today at (856) 596-2828 to schedule your first consultation at our office in Marlton.

How to Add Debt During a Chapter 13 Case

January 21, 2019 by Steven Neuner Esq.

Taking on Additional Debt in Chapter 13 Bankruptcy

Roughly 800,000 people filed for bankruptcy in 2016. In a Chapter 13 case, you are allowed to reorganize both secured and unsecured debts and pay them back over a period of three or five years. In some cases, you are allowed to incur a post-petition debt if a trustee approves. Contact a Burlington County bankruptcy attorney for help with your Chapter 13 bankruptcy case.

The Debt Must Be for a Legitimate Purpose

To be approved for a new loan or to accrue new debt after filing for Chapter 13 bankruptcy, the money must be used for a legitimate need. For instance, it may be possible to borrow money to buy a car to get to work. The loan would likely be approved if not having reliable transportation led to a job loss and an inability to make plan payments.

The Balance Must Not Be Excessive

Generally speaking, you won’t be allowed to borrow more than necessary to complete a transaction. For example, if you are looking to buy a new car, you probably won’t be allowed to buy a luxury vehicle to get to work. Instead, you will likely be restricted to buying the least expensive vehicle that provides safe and reliable transportation.

The Creditor Must Consent to Being Part of a Payment Plan

A creditor must file a proof of claim that acts as its consent to being part of a reorganization repayment plan. Secured creditors are likely to give their consent as it can take steps to foreclose or repossess property after the bankruptcy ends. Unsecured creditors are likely to consent because they won’t have to wait as long to start receiving payments.

However, this may not be the case if the creditor believes that a remaining debt balance would be discharged at the conclusion of the repayment period. In most cases, priority creditors will consent to the addition of new debt as they will get paid first in any scenario. A bankruptcy attorney may provide more insight into how creditor approval could impact your quest to obtain a loan during an ongoing case.

Trustee Approval May Not Always Be Necessary

In most cases, a bankruptcy court will not approve a new debt unless the trustee has issued his or her approval. However, there may be times when you can’t get trustee approval in a timely manner. For instance, you may need to pay a tax bill or an emergency medical expense. In such a scenario, a judge may agree to allow you to borrow money to cover those and similar bills.

Some Lenders Specialize in Working With Debtors in Bankruptcy

To improve your chances of getting a loan, it may be best to work with lenders who have experience with borrowers subject to a repayment plan. These lenders may be able to guide you through the process of obtaining an offer sheet that is detailed as possible.

This is important as the trustee and the judge will want to see the loan’s term, balance and interest rate before making an approval decision. Working with subprime lenders can also be helpful as they can craft repayment terms that can be tailored to your needs.

The Final Step Is to Amend Your Current Repayment Plan

If a judge does give approval to take on a new debt in a Chapter 13 case, the payment plan will need to be changed to reflect your new liability. It will also be amended to show your new monthly plan payment and how it is distributed to your creditors. Once the amended plan has been put in place, you will be required to follow it until completion unless further modifications are made.

If you need a bankruptcy attorney to represent your interests, don’t hesitate to contact the legal representatives at Neuner & Ventura LLP. You can contact us about post-petition debt by calling our office in Marlton, NJ, at (856) 596-2828. You can also use the contact form on our website or see us personally at Willow Ridge Executive Office Park.

How Filing for Bankruptcy Damages a Credit Score

January 16, 2019 by Steven Neuner Esq.

How Your Credit Score Is Affected by Filing for Bankruptcy

If you’ve weighed all your options and found that filing for bankruptcy is the only one left open for you, you may want to know how your credit score is going to be affected by the act. While the number of bankruptcies has declined over the past decade or so, there were still around 800,000 business and personal bankruptcy filings in 2017. Call a bankruptcy lawyer at Neuner & Ventura LLP today if you’d like to discuss the process or get it started.

Main Problems Affecting a Credit Score After Bankruptcy

Filing for any type of bankruptcy will invariably cause your credit score to lower substantially. The exact amount will largely depend on how high your score was to begin with. A higher initial score also means that the drop will be greater. Individuals with a credit score of over 700 have seen their numbers go down by more than 200 points following a bankruptcy filing. Knowing how your credit score is going to be impacted once you file for bankruptcy may help you plan on how you’re going to eventually rebuild that credit.

Filing for a Chapter 7 or Chapter 13 bankruptcy will also adversely affect your credit report in a similar manner as it does your overall score. The actual information from your bankruptcy is kept on your credit report for quite some time. For instance, public records from a standard Chapter 7 bankruptcy will be kept on your credit report for a period of 10 years. On the other hand, the details of a Chapter 13 bankruptcy will be kept on your credit report for around seven years. Some of the additional bankruptcy details that are listed on your report for seven years include:

Any accounts that were included in the bankruptcy
Third-party judgments
Collection debts
Tax liens

Lessening the Negative Impact on Your Credit Score

filing for bankruptcy The negative impact of a bankruptcy filing will automatically lessen as the years go by, causing your credit score to slowly increase. While a bankruptcy filing has a substantial influence on a credit report and the score associated with it, the debts are already discharged, which means that the weight of the bankruptcy is most keenly felt immediately after it has been filed.

As long as additional problems don’t occur, credit scores usually start to increase slightly very soon after the bankruptcy has been filed. Once the information has been fully removed from your report after 7-10 years, it will no longer cause issues with your credit score.

How Credit Is Rebuilt Following a Bankruptcy Filing

There are several steps people commonly take when rebuilding their credit score following a bankruptcy. Most individuals get a new line of credit, which is usually available via a secured credit card. A secured card works by having the individual pay a deposit that acts as the monthly credit limit until a certain amount of time has passed. Making monthly payments and keeping debt at a low level helps with the rebuilding of a credit score. It’s also possible that the credit report still contains debt that should have been discharged with the bankruptcy filing. This can be cleared up with a simple phone call.

How a New Jersey Bankruptcy Attorney Can Help

Regarding filing for bankruptcy, at Neuner & Ventura LLP, our bankruptcy attorneys want to make sure that all your needs are met. Whether you want to know more about how your debts will be discharged and your credit score will be affected or you still need time to ponder your various options, we are here to help. We have extensive experience with handling both types of bankruptcies, and we’ll assist you in any hearings that occur throughout the filing process.

If you’re seriously considering filing for bankruptcy in New Jersey, contact us at our Marlton office today by calling (856) 596-2828. A Marlton bankruptcy lawyer at our firm can determine which form of bankruptcy is best for your situation.

Dealing With Your Credit Score After Bankruptcy

December 17, 2018 by Steven Neuner Esq.

Understanding Your Credit Score After Bankruptcy

One of the biggest issues that prevents New Jersey residents from filing for bankruptcy despite facing mountains of debt is the potential credit score ramifications. When you file for bankruptcy, your credit score can sometimes drop by as much as 200 points. At the same time, however, this effect is not permanent; you can take steps to rebuild your credit after bankruptcy and the debt relief that accompanies it. A bankruptcy attorney can help you understand the impact on your credit score after bankruptcy.

Bankruptcy and Your Credit Score

Some people may expect that they will have a higher post-bankruptcy credit score if they have avoided negative entries on their credit report before filing. Of course, many people file for bankruptcy after late fees, escalating interest rates and collector calls have already made their lives extremely difficult. In general, however, a positive payment history before bankruptcy does not significantly lower the effect of bankruptcy. Instead, the presence of the bankruptcy itself is the most significant factor in evaluating your post-bankruptcy credit, especially in the immediate period after filing.

A bankruptcy attorney can provide more information about how bankruptcy will affect your credit. It is well known that Chapter 7 bankruptcy information remains on your credit report for 10 years. However, not all entries related to bankruptcy remain on file for that long. The following items remain on your report for seven years:

Chapter 13 bankruptcy filings and related public records
Judgments, tax liens and third-party collections discharged in the bankruptcy
Credit cards and other lines of credit discharged in bankruptcy

Where Your Credit Score Comes From

credit score after bankruptcy FICO credit scores, calculated by the Fair Isaac Company, are used in making credit decisions about car loans, home mortgages and credit cards. These scores can range from 300 to 850, and a score around 720 is considered to be a good credit risk. There are three main credit agencies, Trans Union, Equifax and Experian, that report information for the calculation of this score. These agencies will look at your outstanding debt, bankruptcies, payment history, new credit and the length of your credit history.

Even though bankruptcy information is quite persistent on a credit record, filers won’t be consigned to poor credit throughout that period. A low credit score can have an impact on many areas of life, so it can be in your interest to elevate that rating as soon as possible. Within four or five years after bankruptcy, you may be able to achieve a “good” credit score.

You Can Rebuild Your Credit After Bankruptcy

There are several ways people can begin the process of rebuilding their credit scores after filing for bankruptcy. One of the most common is opening a secured credit card. These credit cards are backed by a cash deposit that you made with the card issuer, so they are in some ways similar to a prepaid or debit card. However, rather than simply depleting the balance, you will be expected to pay the bill each month for your purchases. Because of this, secured credit cards report your payment behavior to credit reporting agencies. This means that they are one of the most effective methods to begin establishing a positive credit history.

Once you begin establishing more positive credit, you could also apply for small personal installment loans. Be sure to always choose options that report to the credit bureaus. Adding positive credit items to your report will begin to bolster your score. Of course, once you begin to open new lines of credit, it’s important to make your payments on time to establish a positive payment history. You should also aim to keep your cards well below your limits as lower balance utilization can be a positive factor when evaluating your credit.

Contact Neuner & Ventura, LLP

If you’re facing mounting debt from credit cards, medical bills, car loans or lines of credit, you may be looking for a solution that can provide some relief. The experienced New Jersey bankruptcy lawyers at Neuner & Ventura offer free consultations to help you better understand your options. Call our Marlton office at 856-596-2828 or use our online form to contact us today.

What Happens to Unsecured Debt in a Chapter 13 Bankruptcy?

December 14, 2018 by Steven Neuner Esq.

The Fate of Unsecured Debt Balances in Chapter 13 Bankruptcy

If you have $394,725 or less in unsecured debt, you may be eligible to file for Chapter 13 bankruptcy. While creditors must be paid in a Chapter 13 case, you may not necessarily pay off the entire balance. In such a scenario, these balances may be discharged when the repayment period ends. Your bankruptcy lawyer can answer questions about your unsecured debt balances.

How Much Are You Required to Pay to Creditors?

The amount of unsecured debt that you are required to pay depends on the terms of your repayment plan. Generally speaking, unsecured creditors must receive at least what they would have received if you had filed for Chapter 7 bankruptcy. Of course, the amount that you have to pay each month to all creditors depends on the amount of disposable income that you have. Your disposable income is what is left over after paying for necessities like food, shelter and other basic needs.

What Is Considered to Be Unsecured Debt?

Any debt that is not labeled as secured or priority debt is considered to be unsecured in a Chapter 13 case. Priority debts include child support payments owed now or those owed in the future, back tax debt and student loan debt. Secured debts include home or auto loans where there is collateral attached to the loan that a lender has an interest in. It is important to know that secured debts may be converted to unsecured debts when filing for Chapter 13 bankruptcy.

Converting Secured Debts to Unsecured Debts

Your bankruptcy attorney may talk about the process of turning a portion of your secured debt into an unsecured one. For example, if you owe $5,000 on a car that is only worth $4,000, that extra $1,000 could be reclassified as unsecured in nature. If you have a second mortgage, the difference between the amount owed on the loan and the value of the home could be reclassified as unsecured debt. In some cases, the lien held by the second mortgage lender could be stripped entirely. Your bankruptcy attorney may be able to further explain this process and how it may be beneficial to your case.

You Must Adhere to Your Payment Plan

While unsecured debt balances will generally be discharged at the end of a Chapter 13 case, it is important to make payments to creditors in a good faith manner. This means that you must first propose a payment plan that strives to take all creditors into consideration. Once the plan has been proposed and approved by creditors, the trustee and the bankruptcy judge, you must make payments according to that proposal.

Failing to proceed with payments could get your case dismissed, which may open yourself up to foreclosure, repossession or other negative consequences. The length of the payment plan will be based on your income and assets at the time of filing. If you have relatively few assets or a low income, the repayment plan will cover three years.

What Happens After Unsecured Debts Are Discharged?

When an unsecured debt is discharged after a Chapter 13 case, creditors cannot come after you for payment. This is true whether the lender was a national bank, your employer or a family friend. However, you may still voluntarily make payments on the debt in an effort to retain relationships with friends, family members and business partners.

If you receive calls or letters from creditors or debt collectors about a debt that has been discharged, contact your bankruptcy lawyer or the court that oversaw your case. It is also a good idea to check your credit report to ensure that creditors have accurately reported information about your bankruptcy and the status of a debt.

Generally speaking, it may be easier to go through a bankruptcy proceeding with a bankruptcy lawyer. For assistance, you can contact the office of Neuner & Ventura LLP in Marlton, NJ, by calling (856) 596-2828. You can also use the contact form on our website to learn more.

An Overview of Priority Debts

November 24, 2018 by Steven Neuner Esq.

Debts That Cannot Be Discharged in Bankruptcy

Collectively, Americans owe more than $1 trillion in student loan debt. Unfortunately, that debt generally cannot be discharged in a bankruptcy case. The same is true for:

Child support
Back taxes owed
Other balances that are considered to be priority debts

Debts that cannot be discharged in bankruptcy are known as priority debts. Contact a New Jersey bankruptcy lawyer for more information.

What Is a Priority Debt?

A priority debt is one that is given top billing in a bankruptcy case because it involves owing money to a state or federal government agency. In some cases, a priority debt cannot be discharged because it wouldn’t be good public policy to allow this to happen. For instance, child support and alimony payments are generally considered to be priority debts.

This is because failing to provide for your spouse or your child after a divorce may result in that person unnecessarily relying on public assistance to meet his or her basic needs. Your bankruptcy legal counsel could explain further why such debts may not be discharged and what you can do to get these debt balances under control.

Examples of Priority Debts

Personal Injury Judgments

If you were found to be liable for the injury or death of another person, you could be responsible for paying damages even after filing for bankruptcy. This is generally true in the event that you caused the injury or death while impaired on drugs or alcohol. However, it is possible that filing for bankruptcy could put a temporary end to wage garnishment or otherwise provide more time to work out a suitable payment plan.

Back Taxes Owed
If you owe any type of back taxes to the government, these will generally be collected even if other debts are discharged in bankruptcy. The government may be able to garnish wages, take possession of state or federal tax refunds or deny public benefits until the debt is repaid. If you owe income, business or sales taxes, you could also have your bank accounts or other assets seized and liquidated for nonpayment.

Student Loan Balances
As a general rule, you can only have your student loan balances discharged if paying them off constitutes a hardship. Having a low annual income is generally not enough. However, a hardship may occur if you are disabled and unable to find work in your chosen field or at all. It may also happen if you can show that paying a student loan would prohibit you from paying for necessities such as food or shelter. Generally speaking, a court may order you to look into forbearance programs or to enroll in an income-based repayment program before granting a discharge.

Does It Matter What Type of Bankruptcy You File For?

In cases involving priority debts, you will likely still be required to make payments on those balances even after a bankruptcy case ends. This is generally true whether you file for Chapter 7 or Chapter 13 protection. It is also generally true whether the bankruptcy is the result of personal or business debts. By speaking with a bankruptcy attorney, you can learn more about priority debts and your obligation to repay them after seeking protection from creditors.

Bankruptcy May Still Eliminate Other Debts

Although it can’t wipe out priority debts, filing for bankruptcy can get rid of credit card or other similar types of balances owed to creditors. Therefore, you may still benefit from filing as it can free up cash to pay alimony or student loans. In some cases, interest will no longer accrue while a bankruptcy case is open, and filing may be enough to get some leniency or flexibility from your creditors. For instance, you may be put on an extended payment plan or have penalties and interest waived.

If you are in need of bankruptcy help, contact the New Jersey bankruptcy attorneys at Neuner and Ventura. We can be reached at (856) 596-2828 during normal business hours. You can also visit us at the Willow Ridge Executive Office Park in Marlton, New Jersey.

Why You Shouldn’t Wait to Declare Bankruptcy

November 21, 2018 by Steven Neuner Esq.

The Benefits of a Timely Bankruptcy Filing

An individual may spend two years or more in what is called the financial sweatbox. This is a time in which you try to pay your bills without the financial resources to do so effectively. Spending too much time in that sweatbox could result in financial instability even after filing for bankruptcy. Contact a New Jersey bankruptcy lawyer with questions if you need to declare bankruptcy.

When Should You File for Bankruptcy?

Ideally, you will strongly consider filing for bankruptcy the first time that you receive a call from a collection agency. When a debt collector calls, it means that your original creditor has charged off the balance you owe. Generally, this doesn’t happen until a debt balance is 90 days or more past due.

At this point, there may be few benefits to your bank account or your credit score if you decide to negotiate with the debt collector. Instead, it may be easier to file for bankruptcy and attempt to get that past-due balance discharged.

Retirement Assets Can Be Protected in Bankruptcy

For the most part, funds that are in an IRA or a 401(k) are exempt from creditors in a bankruptcy case. Therefore, it may be best for you to file for bankruptcy as opposed to taking a loan from a 401(k) or a withdrawal from an IRA to pay any past-due debt balances. It is also important to note that taking funds out of a retirement account means that you lose out on the future compounding of your current balance.

This means that you could harm yourself financially today and later in life when it comes time to retire. A New Jersey bankruptcy attorney may be able to help you learn more about what could happen to your retirement assets in a bankruptcy case.

Can You Put Food on the Table?

declare bankruptcy If you have to choose between putting food on the table and making a debt payment, it is time to consider filing for bankruptcy. As a general rule, you should look into the bankruptcy process if more than half of your income is going toward debt payments. You should also consider protection from creditors if you can’t buy food, pay for medicine or meet any other basic needs. In cases where you are experiencing an extreme hardship, a bankruptcy court may allow you to discharge priority debts such as student loan balances.

Do You Have Savings or Other Tangible Assets?

In the event that you don’t own a home, car or other significant asset, it may be in your best interest to file for bankruptcy to get rid of your current debt load. The same may be true if you don’t have any significant savings. This is because you likely qualify for Chapter 7 bankruptcy, which allows unsecured debts to be discharged without paying creditors anything. In some cases, you will be allowed to retain equity in your home even if you ultimately forfeit the property to creditors. Typically, Chapter 7 cases can be resolved in a matter of weeks or months.

Do You Have Any Other Options?

It should be noted that bankruptcy is generally seen as an option of last resort when it comes to seeking debt relief. In other words, it may be a good idea to look into debt consolidation or renegotiating the terms of a secured loan prior to filing. However, the second that you think creditors won’t renegotiate the terms of a loan, it may be best to file for bankruptcy protection. At that point, you may be throwing money at a loan balance that won’t be repaid for many years to come.

If you are need of a New Jersey bankruptcy attorney, contact the firm of Neuner & Ventura LLP today. Our law office is located in the Willow Ridge Executive Office Park in Marlton, New Jersey. You can also choose to give us a call at (856) 596-2828 during normal business hours to learn more about how we can be of assistance to you.

How Bankruptcy Impacts Your Ability to Get a Mortgage

October 28, 2018 by Steven Neuner Esq.

The Challenges of Buying a Home After a Bankruptcy

In 2011, there were 240,151 bankruptcy filings in the state of California alone. Therefore, you should not feel alone or ashamed to have to file for bankruptcy protection. However, it could have an impact on your plans to become a homeowner in the near future. Contact a bankruptcy attorney about buying a home after a bankruptcy.

When Can I Buy a Home After a Chapter 7 Bankruptcy?

If you are looking to buy a home through an FHA, USDA or VA loan, you may have to wait for up to two years after filing for bankruptcy to get approved for a mortgage. However, those who have extenuating circumstances may be approved in as little as a year after they have filed. If you want to get a conventional loan after a Chapter 7 filing, it may take anywhere from two to four years before a lender will work with you.

When Can I Buy a Home After a Chapter 13 Bankruptcy?

In a Chapter 13 bankruptcy, you repay your debts based on a plan that you propose that is approved by creditors. Payments are made over a period of three or five years, but you can get a mortgage sooner than that. Generally, you have to wait a year after filing to get a government loan. That may increase to two years or longer if you are looking for a conventional mortgage.
buying a home after a bankruptcy

Why Are the Standards Tougher in Chapter 7 Cases?

In a Chapter 7 bankruptcy proceeding, you may get away with paying creditors less than what you owe. In some cases, you won’t pay creditors anything if you have few assets to liquidate. Since you are paying creditors back in a reorganization bankruptcy, lenders may feel better about your ability to handle debt going forward. A bankruptcy attorney may be able to answer any further questions that you may have about securing a home loan after filing for bankruptcy.

Rebuilding Your Credit

Generally speaking, your ability to get a loan will depend largely on your credit score as well as your credit history since filing for bankruptcy. In a Chapter 7 case, you can start rebuilding your credit in a matter of weeks or months. This is because most liquidation cases are resolved rather quickly.

However, there are steps that you can take to rebuild credit in a Chapter 13 case, such as getting approved for a car loan or a credit card during the repayment period. For some, it may be easier to get a mortgage after a Chapter 13 filing because you can retain property. In a Chapter 7 proceeding, most items of value are sold, which may make it harder for a lender to take a chance on you.

In most cases, you will need a credit score of at least 640 to qualify for an FHA or USDA loan with minimum down payment requirements. If you have a score of less than 640, you may need to make a larger down payment or otherwise subject yourself to tougher loan standards.

Lenders Can Add Their Own Requirements

It is important to know that lenders can add their own requirements on top of any standards imposed by a government agency. For instance, a lender can say that it won’t accept FHA loan applications from those with a credit score below 670. It could also require a down payment of 10 percent even if the FHA says a person qualifies for a down payment of 3.5 percent. Finally, a lender could choose to not allow a person to borrow funds for a home loan for three years after filing for bankruptcy regardless of which type it was.

If you are curious about how a bankruptcy may impact your ability to become a homeowner in the future, contact the bankruptcy attorneys at Neuner & Ventura LLP. Our phone number is (856) 596-2828, and our office is located at the corner of corner of Ardsley Drive and Route 73.