Bankruptcy Attorneys in Middlesex County, New Jersey

The financial curveballs of life can strike unexpectedly and sideline you from paying your bills and debts. When going through financial difficulties, filing for bankruptcy may be an available legal option through which you can achieve debt relief and a clean financial slate.

Filing for bankruptcy is a common occurrence in New Jersey. According to the American Bankruptcy Institute, there were 14,728 total bankruptcy filings in New Jersey in 2019. If you're considering filing for bankruptcy, consulting with a knowledgeable attorney is crucial for reviewing your options with proper guidance.

With over 80 years of combined experience, our attorneys at Schwartz, Hanna, Olsen & Taus, P.C. have the knowledge and resources to assist and guide clients through the complexities of bankruptcy proceedings. Our dedicated team is available to discuss your unique financial situation and help you understand your possible bankruptcy options.

If you're located in the New Jersey areas of Middlesex, Somerset, Essex, Morris, Passaic, and Bergen Counties, or anywhere else in the state, contact Schwartz, Hanna, Olsen & Taus, P.C. today for a one-on-one case assessment.

Understanding Bankruptcy

Bankruptcy can be described as a legal proceeding involving an individual or business entity facing financial distress that is unable to pay back its outstanding debts. Declaring bankruptcy is not something you should be ashamed of. Rather, it is a tool designed to help people achieve debt relief. Filing for bankruptcy can be a realistic option to remedy your financial situation and get back on track.

Chapter 7, Chapter 13, and Chapter 11 are the most common bankruptcy options available to individuals and business owners in New Jersey.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy, also referred to as "liquidation" bankruptcy, is designed to help individuals and business owners eliminate most of their general unsecured debts. The New Jersey court will appoint a trustee (independent contractor) to oversee your bankruptcy case. The trustee has the legal authority to collect and sell your non-exempt assets. The net proceeds from the sale will be used to pay some or all your creditors.

Non-exempt assets are properties and assets that can be sold by the trustee in a Chapter 7 case. These include your second vehicles, second homes, bonds, vacation homes, bank accounts, stocks, cash, family heirlooms, and other investments.

Chapter 11 Bankruptcy

Chapter 11 bankruptcy or "reorganization" bankruptcy is designed to give business owners the needed time to restructure their business affairs, assets, and debt obligations, while staying in business. In a Chapter 11 case, the debtor (business owner) will propose a payment plan to pay back the creditors while continuing to do business. The proposed debt reorganization plan must be in the best interest of the creditors. Also, it must be approved by both the court and the creditor. However, filing for Chapter 11 can be costly and time-consuming.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy or "wage earner's" bankruptcy is designed to help individuals who earn a stable income but are overwhelmed with debt achieve debt relief. In a Chapter 13 case, the debtor will set up a structured repayment plan to repay both secured and unsecured debts while holding on to their assets, including the home, cars, and other belongings.

Through Chapter 13, the debtor can repay all of their debts, or a significant portion, within 3 to 5 years under a court-ordered plan, using their potential income. However, Chapter 13 is only available to individuals who earn a "regular income."

Which Bankruptcy Chapter Is Right for You?

Your assets, income, or business structure (for business owners) will be put into consideration to determine the ideal bankruptcy option that best fits your personal situation. Here are some key takeaways:

• Chapter 7 will eliminate most of your general unsecured debt. Chapter 13 requires that you pay back part or all of your secured and unsecured debts, whereas Chapter 11 is a business organization plan.

• In a Chapter 7 case, some of your assets (non-exempt assets) will be sold. Conversely, no property is sold or liquidated under Chapter 13 and Chapter 11.

• In a Chapter 7 or Chapter 13 case, the court will appoint a trustee to oversee your bankruptcy case. Whereas, trustee appointment is optional in Chapter 11.

• Both Chapter 13 and Chapter 11 require you to propose a repayment plan to pay back your creditors. In contrast, there is no repayment plan needed under Chapter 7. Rather, the trustee will gather and sell your non-exempt assets to repay creditors.

• All bankruptcies, including Chapter 7, Chapter 11, and Chapter 13, will affect your credit but can help rebuild your credit score gradually over time.

• Chapter 13 is only reserved for people earning a stable or regular income.