During bankruptcy proceedings, the automatic stay is used as a tool to help individuals who are struggling through times of financial difficulty and are trying to fix their situation. Once the paperwork is filed for bankruptcy, the automatic stay goes into effect. It bars creditors from contacting debtors. Due to this, debtors do not have to face harassment from creditors. This gives them breathing room to make a repayment plan and to focus on working toward a better financial future. They will not have to deal with the extra stress of creditors looking for money that they are owed. With this in place, debtors have seen it as a beneficial tool in the bankruptcy process. It relieves part of the stressful process.
What makes me eligible for Chapter 7 bankruptcy?
Individuals have to go through credit counseling and attend a debtor education course to be considered eligible for bankruptcy. After that is completed, they must pass a means test, which compares their income to the median income in the United States. Their income should be below the median income in order for them to be eligible for bankruptcy.
Once you have completed the prerequisites, a petition for bankruptcy must be filled out. In this petition, you will be required to list certain aspects. You have to claim a list of all your debts, an account of your income, monthly living expenses and a list of assets. When the paperwork is completed, an automatic stay will go into effect immediately.
How is Chapter 13 bankruptcy different?
The process of filing for Chapter 13 bankruptcy is similar to that of Chapter 7 bankruptcy. Before you file, you will need to complete credit counseling 180 days before you file. If you previously filed a petition that was dismissed in the 180 days, you cannot file again. Once you file for bankruptcy, you should include documents that display a list of liabilities, assets and property, a statement of financial affairs, a list of executory contracts and unexpired leases, proof of credit counseling and any plan developed to handle the matter, income payments within 60 days prior to filing, monthly net income and any indication in a rise of income or expenditures and interests the debtor has in state or federally-qualified education or tuition accounts. When the paperwork is filed, the automatic stay will go into effect to give you the space you need from creditors.
Detzky, Hunter & DeFillippo, LLC is an experienced law firm that has proudly served clients across New Jersey for decades from their convenient locations in Freehold and Somerville. If you need strong legal guidance, contact us today to schedule a consultation. We are lawyers who listen, counselors who care.
