Many worry that bankruptcy will “ruin my credit for 7 years or more”. That is a common misconception and it is perpetuated by creditors and others that believe it to be true. Ask yourself what kind of credit reputation do I have right now, with my earlier defaults in payment and other credit problems? The truth is that, with a gang of creditors on your credit report, there isn’t a snowball’s chance of rehabilitating your credit. But, once your credit slate is wiped clean with a bankruptcy, the process of rehabilitation can begin.

This makes common sense too. Is a lender more likely to lend money to one with open credit of say $21,000 due to credit card companies and medical doctors, or is the person with no debts the better choice? With a secured credit card after bankruptcy, and timely payments, there are stories of mortgage loans for a home being granted to the person discharged from bankruptcy—only a year later.

There is other “good” a bankruptcy has done for clients. A list includes:

BILL REDUCTION:

For example, in one case a $4400.00 utility bill was wiped out.

MEDICAL DEBT:

Hospital and other medical bills often drag down the consumer and these can be eliminated or greatly reduced in a bankruptcy proceeding.

REPOSSESSION REVERSAL:

The filing of bankruptcy promptly after an automobile repossession, in one case, resulted in return of the vehicle within 24 hours of filing. A vehicle is a necessity for your economic survival.

MOTOR VEHICLE SURCHARGES:

The Bankruptcy rule of thumb is that any debt payable to a government is not dischargeable in the proceeding. But, there is an exception in New Jersey. Surcharges assessed by the Motor Vehicle Commission (DMV) which are already accrued (not future surcharges), are dischargeable in Bankruptcy since those surcharges are actually sold to another party to raise cash for the State. Thus, the debt is not owed to the State. Surcharges for DWI and other traffic offenses can run into the thousands of dollars and may be wiped from your record without fear that your license will not be restored at the end of your suspension period non payment.

“CRAMDOWN”:

When your vehicles (and also mobile home trailers) are worth less than the total loan remaining to be paid on the vehicle/mobile home, you can cram down the loan to the actual value of the vehicle. So, if you made a “roll up” loan on your vehicle (took the old loan on your last vehicle and rolled it into the next one) you can save thousands of dollars in the long run and also reduce the interest rate from a very high percentage to a reasonable one in the market. You will need to own the trailer or vehicle for at least a year (in the case of a pawn loan) or for 940 days in the case of a purchase money loan.

AVOID A SECOND MORTGAGE:

Similarly, when your home is worth less than your first mortgage, you can avoid the second, third and subsequent mortgages or other liens due to mortgage companies and judgment creditors.

SHED LIABILITIES:

Bankruptcy sheds liabilities for those with judgments, or with threatened judgments from a pending lawsuit. When sued for a negligent fire liability for example, one recent bankrupt party avoided millions of dollars in potential liability for a fire that destroyed several condominiums, leaving the available insurance to cover whatever claims might succeed.

GARNISHMENTS:

A filing stops them and sometimes results in a refund of monies taken, depending upon when the filing takes place and when the garnishment was made. A recovery of $1000 was recently had for a client whose bank account was garnished one month AFTER the filing of the bankruptcy.

SHERIFF’S SALES:

They are stopped in bankruptcy by the operation of the automatic stay. A filing automatically stays all legal proceedings, including sheriff’s foreclosure sales and the underlying foreclosure proceeding, until further order of the Court. One emergency filing stopped the sale with only 7 minutes to spare.

COLLECTION ACTIVITY:

Calls and letters stop upon filing, even the so-called “robo-calls” (automatic calls by computer robots) cease after filing. You turn the tables on the annoying creditor calls when you file. A Debtor that received such calls recently filed suit against the credit card company and is entitled to statutory damages and attorneys fees for the calls. Imagine that? The credit card company will be getting calls from YOU (actually your lawyer) for its activity!

These are just a few examples of the benefits you could derive from a bankruptcy. But you need competent legal advice in order to proceed. Once you receive good advice, you begin the process of pulling free of the heavy yoke of debt. You can get yourself a fresh start, begin to feel comfortable again and get the debt monkey off your back.

The Court will accept emergency filings with limited documents, commonly referred to as a “Skeletal Petition.” The following documents are required when filing a Skeletal Petition:

1. Filing Fee;
2. Voluntary Petition;
3. Statement of Social Security number;
4. Certificate of Credit Counseling with Voluntary Petition Exhibit D; and
   
5. Creditor Matrix with Creditor Matrix Cover Sheet (List of Creditors) (at least one creditor name and address)

If you are in fear of a seizure of a bank account, foreclosure Sheriff’s Sale, seizure of your vehicle in repossession or other emergency, this procedure may be the right one for you.  An Automatic Stay of Civil Proceedings results from the filing of the Petition in Bankruptcy, which can be completed electronically via the internet, even when the Court is closed.

NOTE: The remainder of the required documents must be filed within 15 days from the date of the filing of the petition, or your case may be subject to dismissal.