Purposeful Advocacy for New Jersey
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What Is an Automatic Stay?

During tough financial times, people should consider filing for bankruptcy. Although bankruptcy may have a negative stigma surrounding it, it can be beneficial in planning for someone’s financial success in the future. It can help individuals to create a plan that will put them in a more stable place financially. Individuals have the opportunity to receive help.

Individuals should consider two options for bankruptcy: Chapter 7 and Chapter 13. With these two options, you may be presented with the opportunity to get your finances in order. When all the paperwork is filed for bankruptcy, individuals will have an automatic stay put into effect. The automatic stay bars creditors from harassing debtors. Creditors are not allowed to contact individuals in pursuit of compensation for their debt. This can give individuals the space they need to create a repayment plan. They will not have the added stress of being harassed by creditors.

When Do I Apply for Chapter 7 Bankruptcy?

Before applying for bankruptcy, individuals have to be eligible. 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. To be eligible for a bankruptcy claim, their income has to be below the median income. Although this is the standard procedure, exceptions have been made before for those with incomes above the median level.

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 of a rise in 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. This can be seen as one of the most beneficial parts of filing for bankruptcy since you will not have to face harassment from creditors anymore.

Juan C. Velasco, Esq. is a trusted attorney who concentrates on bankruptcy, family law, real estate, and estate matters who has been serving the New Jersey area for over 25 years. If you are in need of experienced legal counsel, please contact Velasco Law Office and we will be happy to assist you.