Bankruptcy FAQs and Myths

DO I REALLY NEED TO HIRE A BANKRUPTCY ATTORNEY?

While no one can force you to hire an attorney for any legal matter. Bankruptcy laws and court proceedings are confusing, lengthy and complex. If you are considering filing alone or hiring a nonlicensed attorney or service to file for you, we urge you to re-think your decision. Please bear in mind that ONLY an experienced bankruptcy attorney can personally advise you about your case and help you properly list your debts; make sure you can keep all of the assets to which you are entitled; and maximize the amount and number of debts that are "discharged" (eliminated) in the proceedings.

Improperly listed debts may not be discharged and some improper filings may even cause your entire case to be dismissed. This could result in having to file your case all over again, and repay all filing fees. Some dismissals may even prevent you from re-filing altogether, due to the strict requirements of the law. Don't go it alone. You've got enough to worry about. Let us handle everything for you.

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CAN I KEEP MY HOME AND VEHICLE?

Many people believe filing for bankruptcy will result in the loss of their home and motor vehicle, even if they are paying those debts. However, the truth is, you can usually keep your home or vehicle, provided you are relatively current with your monthly payments, and the home's (or vehicle's) value does not greatly exceed the outstanding loan balance. In the bankruptcy world, home and car loans are known as "secured" debt, because the creditor has collateral which he can take back if you do not pay. Hence, if you are not current, the creditor may take back your home (by foreclosure) or your vehicle (by repossession).

Even if you are seriously behind or in foreclosure with respect to your mortgage, you may be able to save your home through the use of a Chapter 13 bankruptcy. Find out how today.

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WILL CREDITORS KEEP CALLING AND SENDING ME BILLS?

Once we file your bankruptcy petition, federal law provides for an "automatic stay", which prohibits any creditor from contacting you directly, in any way. They can only contact the court or our office. So, upon filing, you enjoy instant relief from any creditor's collection attempts. In fact, filing even stops all active wage garnishments; lawsuits; or other legal collection attempts.

At Mariano & Coiro, P.C., once you have retained us to represent you, you can direct all creditors to our office, even before your case is officially filed with the court. Imagine your life without the endless embarrassing telephone calls and threatening letters, both at home and at work.

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IF I AM MARRIED, MUST MY SPOUSE FILE WITH ME?

Another bankruptcy myth is that both spouses must file if one does. This is NOT true. But if only one of you files, the nonfiling spouse will remain fully liable for all debts in both of your names, or in his/her name alone. If a good number of debts are in both names, it makes sense for both of you to file together. A joint filing also allows you to double the exemption amount allowed for each asset. However, if your debts are all, or almost all, in only one name, then there is no need for both to file. Court filing fees are exactly the same for either joint or individually filed petitions.

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DO I HAVE TO LIST ALL OF MY DEBTS AND ASSETS?

Yes. Fraudulently concealing assets or debts is punishable by a $5,000 fine, 5 years in prison, or both. Most importantly, the court can deny a discharge of your debts, or even rescind a discharge AFTER it has been granted. The law is there to protect you from your creditors, but only if you are completely honest with the court.

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WHAT IS "EXEMPT PROPERTY" AND WHAT IS AN "EXEMPTION"?

Exempt property is any property (real estate or personal), which cannot be taken from you and sold by the court to satisfy your creditors. All types of property are described in the bankruptcy code and assigned a numerical exemption amount, which is doubled, if you are filing with a spouse. Hence, if you own property whose value does not exceed the legal exemption amount, the court cannot take it from you, provided it is properly listed and the exemption correctly scheduled. For example, if the exemption amount in your motor vehicle is $2,400, and its value is $2,000, the vehicle is "exempt".

In determining whether or not an asset is exempt, you must always deduct from its value, any amount owed against it. Hence, if your car is worth $10,000, but you owe $7,600 on it, your car is still exempt, because after deducting the $7,600 loan, its value is $2,400, which does not exceed the exemption amount in this example.

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HOW LONG BEFORE THE BANKRUPTCY IS COMPLETE?

This depends greatly upon court schedules and other factors. However, a Chapter 7 case is usually closed within 4 to 6 months after filing. Chapter 13 cases usually last at least as long, but are not officially concluded until your repayment plan is complete (3 to 5 years).

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WILL MY EMPLOYER LEARN OF MY BANKRUPTCY AND CAN I BE FIRED?

Bankruptcy filings are public records. However, your employer is NOT notified of your filing, unless your employer is one of your creditors.

Even if your filing does come to the attention of your employer, it is against the law to fire or discriminate against anyone because they have filed bankruptcy.

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WHAT KINDS OF DEBTS WILL I HAVE TO REPAY?

Generally, you cannot discharge student loans; taxes or other governmental debts; municipal court fines and penalties; New Jersey insurance surcharges; child support; most alimony awards; and any debt incurred within a certain period of time before filing for bankruptcy. Also, "secured" debt is NOT dischargeable, up to the value of the asset securing the debt. An example of secured debt is the mortgage on your home or the lien on your car. If you don't pay, the lender has collateral it can take back or repossess. However, most "unsecured" debt (credit cards; personal loans; medical bills, etc.) is dischargeable.

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WHAT WILL HAPPEN TO MY PENSION, IRA, 401(K) OR SIMILAR ACCOUNT?

In general, these types of accounts are fully EXEMPT, which means you will be allowed to keep them. Let us examine the accounts for you to confirm their protected status.

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CAN I FILE FOR BANKRUPTCY EVEN IF I HAVE A VERY GOOD JOB OR MAKE GREAT MONEY?

The answer is YES. Typically, the amount of money you make will help determine which type of bankruptcy you can file (e.g., Chapter 7 or Chapter 13). Chapter 7 has stringent income limits, based upon the region of the country you live in, number of people in your household and various other factors. If you do not qualify to file a Chapter 7, you can always file a Chapter 13, which may require you to repay some of your debts, while discharging others, but still affords you the same legal protections from your creditors.

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WON'T FILING FOR BANKRUPTCY RUIN MY CREDIT FOR GOOD?

By law, your bankruptcy filing will appear on your credit report for a period of 10 years. However, you can instantly start repairing your credit by making timely payments on your car, rent, home or other bills. There are many people who are able to purchase a car or even a home within a year or so after filing bankruptcy.

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We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.