Filing for bankruptcy in New Jersey can be a traumatic experience, but the greatest source of anxiety is often the unknown. What happens once the bankruptcy process is complete? How will you possibly be able to get back on your feet again? These are tough questions, and just the sort of issues people wrestle with every day across the nation in times of financial difficulty. The good news is that millions of people have been down this road before in New Jersey and elsewhere. Also, today, there is no shortage of valuable and substantial advice about what to do the day after your debt has been discharged.

First things first. There are certain things you should NOT expect in the wake of a New Jersey bankruptcy filing, and they will be welcome to anyone in your circumstances: you will no longer receive any calls, letters, or further contact from creditors of any kind. Once you file bankruptcy in New Jersey, creditors cannot take anything from you.

Understanding Chapter 7 and Chapter 13 Bankruptcy Filing

Bankruptcy is completed in a chapter 7 and 13 after the entry of the order of discharge. In a New Jersey Chapter 7 bankruptcy case, the order is entered after approximately four to five months. In a chapter 13 bankruptcy case in NJ, the order is entered about two months after the completion of the plan payments. After the completion, believe it or not, you will likely receive numerous credit card solicitations. The solicitations are from non mainstream lenders that provide extremely unfavorable credit terms. Typically, the charges and interest rates are exorbitant, with very low limits. Generally, this type of credit will not necessarily enhance your credit.

Bankruptcy’s Effect on Credit Scores

Typically an individual who is filing for bankruptcy has a low credit score and high debt. Bankruptcy reduces the credit score. However, the lower the score at the time of filing, the less bankruptcy will affect the score. Also, a high credit score is insignificant if the person has substantial debt. Would you provide a personal loan to someone who has a high credit score, but makes a $2,000.00 monthly payment towards credit cards, with a total credit debt of $70,000.00? Therefore, even with a high credit score, it will be difficult to obtain credit with substantial debt. Bankruptcy permits a person to eliminate or reduce their debt and start reestablishing their credit.

Reestablishing Credit

Initially, the only available credit will be low credit limits with higher interest rates. It will take time to reestablish your credit in New Jersey and obtain higher limits and lower rates. The individual must focus on saving money and reestablishing credit.

The present recession and the changing economy result in difficulty predicting the future of lenders’ habits regarding not only NJ bankruptcy debtors, but all of society. However, in general, clients are surprised as to how relatively easy it is to obtain credit after bankruptcy in New Jersey.

Remember, there are numerous lenders competing for your business. Creditors may contact you hoping to extend new lines of credit right away, although you should be weary of anyone who is hoping to rope you into an unreasonable APR simply because of the bankruptcy. An individual, who wishes to obtain an auto loan or mortgage, prior to substantially raising their credit score, will likely pay a higher interest rate. There are lenders that pursue people with less than excellent credit for the purpose of charging more in interest rates.

Financial advisers generally recommend beginning with one or two small, secured credit lines and building good habits and faith from there. You can also begin the process of repairing your credit manually by getting a copy of your report and correcting any lingering errors.

NJ Consumer Law Bankruptcy Lawyer

Bankruptcy in New Jersey is neither a dead end nor a badge of shame. Even in the world of FICO scores and credit reports, nothing lasts forever. Get your budget straight and you could find your score rising steadily in months. Give it a few years, and the bankruptcy itself may soon seem like a distant and irrelevant blemish. One of the surest ways to get started on the right foot is to speak with an experienced New Jersey bankruptcy attorney. If you have any questions regarding what to expect after filing bankruptcy, please contact the New Jersey bankruptcy lawyers at The Law Offices of Robert Manchel today for a free consultation on your case.

A chapter 13 and a chapter 7 bankruptcy debtor must include on their petition all creditors and debt. After the filing, a debtor may no longer use their credit cards. Generally, even though a creditor is not notified of the bankruptcy filing, every creditor is noticed of the debtor’s filing from the creditor’s own automated computer investigation. In other words, even though the creditor is not listed on the petition or provided with direct notice, typically the debtor is denied use of the credit card.

Typically, the bankruptcy case provides no protection to a debtor regarding debt that is incurred after the bankruptcy filing. For example, if a debtor uses a credit card after the filing, in connection with a pre-filing account, the creditor is permitted to take action against the debtor, as if there is no bankruptcy filing. This is true for all debt that is incurred after the filing, including auto financing.

Debt Incurred After Chapter 13 Filing

Typically, in a chapter 13, the rules regarding after filing debt are similar to a chapter 7. However, under certain circumstances, a creditor of after filing debt may file a Proof of Claim that must be paid through the bankruptcy plan. The State of New Jersey, Division of Taxation, and the Internal Revenue Service may require after filing tax debt, to be paid through the bankruptcy plan.

A creditor that extends credit to the debtor after the filing may be paid through the bankruptcy plan and trustee payment, if the debt relates to property or services that are necessary for the debtor’s performance under the plan and the creditor obtained the trustee’s approval. This may possibly relate to post filing auto financing. Typically, New Jersey auto finance companies obtain the trustee’s approval, prior to providing the financing.

Debt After Bankruptcy is Completed

Any debt incurred after the bankruptcy is complete or discharged, is not included and not effected by the bankruptcy filing in connection with a chapter 13 or chapter 7. This means that any debt that is charged after discharge is due and owed to the a creditor. Also, any contract entered into after the bankruptcy discharge is not effected by the bankruptcy filing. The following contracts entered into after the discharge, is due and owing to the creditor, as if no bankruptcy was filed: auto financing; auto lease; mortgage agreement; apartment lease; etc.

A pre-bankruptcy lien will not attach to any property acquired after the bankruptcy discharge or completion. If a person did not file a bankruptcy case, a prior lien attaches to subsequently purchased New Jersey real estate. Consequently, the individual purchasing the real property must pay the creditor the total amount of the lien, prior to settling on the new house. However, after discharge, an individual that purchases a house, will not be required to pay the lien, in connection with the new house, as the lien does not transfer as a lien on the new house.

Contact a New Jersey Bankruptcy Attorney

If you have questions or concerns about your debt or finances after your bankruptcy case is completed, you should consult with a NJ bankruptcy lawyer. The bankruptcy lawyers at The Law Offices of Robert Manchel will examine your situation and give you straight, honest answers about what to expect. Call (866) 503-5655 now for a free, confidential, consultation.

In New Jersey, the application of bankruptcy law to income taxes is a very complicated matter. This portion of the website provides a very general explanation regarding an individual debtor’s income tax liability and the application of bankruptcy. It is very important to note that there are numerous exceptions and variations of the law and the information provided is very general.

Income taxes may be discharged (eliminated) in bankruptcy, under certain circumstances. Income taxes may be classified as a secured debt and/or priority debt and/or unsecured debt. An individual may have a portion of their income tax liability classified as priority debt, a portion classified as unsecured debt, and a portion that is classified as secured debt. The bankruptcy laws pertaining to income taxes are the same for federal taxes that are due to the Internal Revenue Service and New Jersey state taxes that are due to the State of New Jersey, Division of Taxation.

The portion of income taxes that are classified as unsecured and/or secured and/or priority will be treated as such pursuant to the bankruptcy code. In other words, income tax that is treated as priority debt will be treated like other priority debt, etc. You can read more about income tax priority debt in our section about priority debt. Although Income tax debt may be classified as secured, neither the State of New Jersey nor the Internal Revenue Service will commence a mortgage foreclosure action against the debtor.

Individuals’ Income Taxes

Note: This section does not pertain to corporate or partnership income taxes.

The following explains income tax classified as priority debt. Any income tax liability due in connection with a tax year for which no return was filed, is treated and classified as priority debt. Income taxes that are due and timely filed, within three years from the date that the taxes are due and the date of the bankruptcy filing are classified as priority debt. A tax liability may be considered both priority and secured.

The following explains unsecured income taxes. An income tax liability in connection with a timely filed tax return, which was filed and due more than three years before the bankruptcy filing may be classified as unsecured. Unsecured income taxes may be discharged.

The following is an explanation with regard to secured income tax debt. Income tax debt is classified as secured if the State of New Jersey, Division of Taxation, and/or the Internal Revenue Service accurately filed a legal tax lien in the debtor’s county in New Jersey. The amount of the secured portion of the tax liability depends on the value of the debtor’s personal and real property minus the secured interest in that particular property. The debtor may not apply any exemptions to reduce the amount of the secured lien.

Contact a Bankruptcy Attorney in New Jersey

The New Jersey bankruptcy code has special considerations when it comes to income taxes, which is just one example of the many nuances of the NJ bankruptcy laws. Prior to filing, it is important that you understand how bankruptcy will effect you, and why. Robert Manchel has many years of experience with New Jersey bankruptcy laws. He will be able to answer your questions and identify potential issues, before they become a problem. For a free consultation, contact the NJ bankruptcy law firm, The Law Offices of Robert Manchel.

If you are considering filing for bankruptcy, it is important that you understand the debt that can be discharged and the debt you will have to continue to make payments on. Even with a Chapter 7 filing, there are many debts that cannot be eliminated. To fully understand how a bankruptcy will affect your finances, you would have it in your best interest to discuss your situation with a NJ bankruptcy attorney.

Debt That Cannot Be Discharged

Not all debts can be discharged with a bankruptcy filing. Debts that cannot be included are:

• Student loans
• Child support
• Back taxes
• Some credit card cash advances
• Fraudulent debt

Credit card debt is one of the major forms of unsecured debt that can be discharged in a bankruptcy proceeding. Cash advances from a credit card company, however, have many requirements that need to be met in order to be considered for discharge.

Recent Cash Advances

It is considered fraudulent to receive a cash advance and then file for bankruptcy with the intent of not paying back the advance. A cash advance over $750 that was received within 70 days of filing for bankruptcy will not be discharged. Chapter 7 bankruptcy requires the full cash advance to be paid back before other debts are discharged. When a cash advance cannot be paid back in full, a payment arrangement will be made to clear the cash advance debt.

Utilizing Multiple Banks

It may be necessary to move your money to a bank to which you do not owe money. The money you have in an active checking or savings account that is with the same bank where you have debts, may take that money to help cover your debts before your debts are discharged. Having an account separate from a location where you have debts will protect your liquid assets.

Paying Back Your Debt

It is fraudulent to spend money that you know will be discharged. So, you may not max out your accounts just because you are filing for bankruptcy. Your intent to pay back your debts will be considered when you file for bankruptcy protection. It is important that you are clearly making all the payments you can and that you are attempting to live within your means.

New Jersey Bankruptcy Attorneys

Filing for bankruptcy is an opportunity to eliminate your debts and reestablish your credit. Bankruptcy court proceedings can be complicated and lengthy. Anyone considering filing for bankruptcy has it in their best interest to contact a New Jersey bankruptcy law firm.

If you are considering filing for bankruptcy, please contact the Law Offices of Robert Manchel. We have helped clients get out of debt and back on the road to financial recovery. Please call us today at 866-503-5655 to discuss your financial options.

STUDENT LOAN DEBT IN A CHAPTER 7

In New Jersey, a Student Loan Debt is unsecured debt that is specifically excepted from a general discharge in a chapter 13 and 7, with one exception. With regard to a Chapter 7, typically, the order of discharge does not discharge or eliminate a student loan. This means that after the bankruptcy is complete, the debtor owes the total student loan balance, plus any interest that continues to accrue. After the completion of the chapter 7 case, the student loan creditor may pursue the debtor for the loan balance as if no bankruptcy case was filed.

The only exception which permits the discharge or elimination of a student loan is if payment of the debt would impose an undue hardship to the debtor. Typically, the exception regarding undue hardship relates to the debtor’s physical or mental disability, which results in a debtor’s inability to work. The debtor must provide proof to the bankruptcy court by way of doctor’s reports and tests, indicating that the debtor is disabled and unable to work. The debtor must file a separate motion and obtain a separate court hearing, requesting an order discharging the student loan debt.

Although student loan’s may not be discharged, upon the filing of any bankruptcy case, no creditor may pursue any action against the debtor, including a student loan creditor. Only after the chapter 7 or chapter 13 case is fully completed and/or discharged, may the student loan creditor pursue the debtor for the balance due.

Student loan debt in a Chapter 13

In New Jersey, the student loan is treated as any general unsecured debt, during the pendency of a chapter 13 plan. As I stated in a separate portion of this website, any and all unsecured debt must be treated equally. Therefore, any payments to general unsecured creditors must be paid to all unsecured creditors pro rata. In the event that all creditors are paid 100%, the student loan debt must also be paid 100%. The difference between unsecured debt and student loan debt is that the portion of the student loan that is not paid during the bankruptcy plan, continues to be due after discharge. Also, any and all interest on the balance continues to accrue during the bankruptcy plan.

Contact a Bankruptcy Attorney in NJ

The laws regarding which type of debt is dischargeable in your NJ bankruptcy case, may determine whether you wish to file. These type of important issues are why it is important to consult with a skilled bankruptcy lawyer prior to filing. With numerous years of experience practicing bankruptcy law, New Jersey bankruptcy lawyer Robert Manchel can provide answers to any questions you may have about student loans or other debts you may have incurred. Call (866) 503-5655 now for a free consultation.

The Chapter 7 bankruptcy process fully discharges allowable debts. Chapter 13 bankruptcy helps you create payment plans to repay lessened portions of debts. Anyone with tax debts would be well-advised to consult with a New Jersey bankruptcy attorney to discuss the types of tax debt that can be discharged during the bankruptcy process.

Discharging Tax Debt

There are criteria that must be met for a tax debt to be eliminated by a bankruptcy filing.

• The due date for filing a tax return is at least three years prior to filing for bankruptcy. For a tax debt to be eliminated by a bankruptcy filing, the tax return must have been due at least three years ago.
• The return was filed at least two years ago. The tax return in question must have been filed at least two years before the debtor files for bankruptcy. The time is not measured by when it was due but by when the debtor filed the return.
• The tax return was accurate. A fraudulent return will not be considered.
• The debtor must not have been convicted for tax evasion. The taxpayer must not be guilty of evading the tax laws.
• The tax assessment must be 240 days old. At least 240 days must have passed between the debtor filed for bankruptcy and the IRS assessed the tax.

Unfiled Tax Returns

Anyone who does not file a tax return will accrue penalties and debts to the IRS. A bankruptcy filing will not discharge debts that arise from not filing a tax return. The tax cannot be discharged until enough time has passed after the taxes have been filed.

Information You Will Need To Provide

Before a bankruptcy case is allowed to start, the debtor must provide the four previous tax returns. Bankruptcy petitioners are also required to have a copy of their most recent tax return. Debtors may have to provide a copy to the creditors present and to the New Jersey bankruptcy court.

Can Bankruptcy Court Decide Tax Disputes?

The bankruptcy court does have the power to decide disputes between a debtor and the IRS. If all the proper criteria are met, a Chapter 7 bankruptcy may be able to eliminate tax debts. A Chapter 13 bankruptcy may restructure the debt owed to the IRS. A bankruptcy court can often be the easiest way to determine a tax dispute. The IRS can even compromise with debtors during the repayment process. For the IRS to consider negotiating with a taxpayer, the debtor must have a “doubtful liability” (where there isn’t that much due to the IRS) or a “doubtful collection” (you do not have the money to reasonably make payments).

The Automatic Stay

Filing for bankruptcy puts an automatic stay on payments requested by creditors. This suspension of legal proceedings provides added time for a debtor to organize his or her debt and to assess the situation. An automatic stay applies to banks trying to foreclose on a home and to the IRS trying to collect tax debts.

Consulting a New Jersey Bankruptcy Attorney

The attorneys with Manchel New Jersey Bankruptcy Law understand the complexities of bankruptcy laws and how to deal with tax debt. Let our experienced New Jersey bankruptcy lawyers provide you with a free consultation. Please call us at 866-503-5655 today.