What is Bankruptcy Law?

Bankruptcy Law in the United States is Federal Law under Title 11 of the United States Code. In other words, New Jersey Bankruptcy Law is mostly guided by the United States Code. You have likely heard of Chapter 7, or Chapter 11, or Chapter 13. Those are actual chapters “in the book” of the Bankruptcy Code, and each Chapter affords unique provisions. The Bankruptcy Code was created with the specific intent to help people and businesses who can no longer pay their debt, and are suffering as a result.

A Chapter 7 bankruptcy is applicable to both corporations and individuals. In a corporate environment, a Chapter 7 bankruptcy is a liquidation.  In the simplest terms, the assets of the corporation are sold to pay creditors pursuant to a priority system.  In a personal Chapter 7 bankruptcy, there is no liquidation of the individual. In fact, an individual is allowed to keep property, by way of “exemptions,” to move forward and get a fresh start. Property including cash, household goods, tools of trade, cars, a home and other types of property are most often “exempt” from creditors and from liquidation. If an individual files for Bankruptcy yet owns personal property in excess of the allowed “exemption,” that property might be forfeited to pay creditors. If that were to happen in an individual case, it would appear reasonable to the debtor. You can’t eliminate all your credit card debt while keeping, by example,  a valuable stamp collection.  In most cases all property fits within the exemptions and can be retained.

A Chapter 13 bankruptcy is applicable to individuals who are able or required to repay all or some of their debt through an interest-free payment plan over a period of time not to exceed five years. Often individuals file a Chapter 13 bankruptcy when they have fallen behind in mortgage payments and wish to keep their house but cannot afford to make up the past-due sums in a lump sum payment. Further, a Chapter 13 bankruptcy may be required where an individual’s income exceeds expenses, or exceeds a certain amount based on a formula known as the “Means Test,” which considers the home address of the debtor and the family size to determine an individuals qualification for Chapter 7 or  Chapter 13. A Chapter 11 bankruptcy is a corporate bankruptcy procedure where a corporation reorganizes its debt structure.

The Law Office of Jay A. Weinberg has been involved in representing debtors and creditors in Bankruptcy since 1989. Jay Weinberg will provide a detailed consultation regarding whether bankruptcy is the proper avenue for you. While this is a very difficult time for you, and financial pressures cause stress and burdens on individuals and families, often the Federal Bankruptcy Law provides the solution.

Most individuals who file Bankruptcy are allowed to keep all of their current property and can obtain credit in the future. There is no minimum amount of debt required in order to be eligible to file for Bankruptcy. All debt must be listed on a Bankruptcy petition.  There are many additional questions which we can answer for you in the course of a consultation.

I have the knowledge, focus and accountability you need to determine and evaluate your options and assist you in making the best decision. I look forward to speaking with you.