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Paul N. Mirabelli, Esq

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Paul N. Mirabelli, Esq

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It would not be advisable for an individual to sell assets or give away money before filing for bankruptcy. The trustee will be looking for evidence of insider transfers, which are transfers to insiders (e.g. family members) that occur before outstanding debts have been paid. If the trustee identifies an inside transfer, they can take back the money from the insider. Similarly, if the trustee finds that the filer paid off one creditor before another creditor (often referred to as a preferential payment), then they can take back that money from that creditor and pay it out on a pro-rata basis to all of the creditors. If there are credit cards that an individual wants to include in their bankruptcy, then they must stop using those credit cards for at least 90 days leading up to the filing of bankruptcy; anything that is charged during those 90 days that is not a necessity may be deemed non-dischargeable and therefore have to be repaid.

The best course of action is for people to come and see me, even if they don’t have all of the necessary documents. After conducting a financial analysis to determine which type of bankruptcy they should pursue, we will begin the paperwork. It takes anywhere from two weeks to 30 days to actually fill out the bankruptcy petition. Prior to filing for bankruptcy, individuals are required to take a credit counseling course, which costs anywhere from $10 to $48. This class can be taken over the phone or online.

What Can I Expect To Happen Once I’ve Actually Filed For Bankruptcy?

Once a client files for bankruptcy, the court will generate a notice that will be sent to all of their creditors informing them of the bankruptcy. I will receive a copy of the notice, as will the client. Next, I typically send a letter to the client informing them of when the meeting of creditors will take place. This meeting is really just a meeting with the trustee, since very few creditors ever show up (once a creditor learns that a debtor has filed for bankruptcy, they know they are not going to get paid, so they do not waste their time attending this meeting). Once creditors receive notice of the bankruptcy, they must stop all collection proceedings and efforts.

If the client filed for Chapter 7 bankruptcy, then they will meet with the trustee, and the trustee will determine whether or not there are any assets that have nonexempt equity. If there are, then that equity will be used to pay the trustee. If there are no assets, then the case will be considered a no-asset case, which is very common with Chapter 7 bankruptcy. The client will need to complete a second financial course on personal management before their debt can be discharged. The meeting of creditors usually takes place about 30 days after filing, and discharge of the debts usually occurs about 60 days after the meeting.

If the client filed for Chapter 13 bankruptcy, then they will meet with the trustee, and the trustee will review the Chapter 13 repayment plan to ensure that the client has an income sufficient to make the payments and still pay for monthly living expenses. In some cases, a trustee might request additional information, but it will usually be clear after the first meeting whether there are any nonexempt assets. After three to five years of making payments in accordance with the Chapter 13 repayment plan, the client’s debt will be discharged. Once the discharge has occurred, the client will have a document stating that they no longer have to make payments on the debts associated with the Chapter 13 bankruptcy.

How Long Does It Take For Someone To Recover Financially After Filing For Chapter 7 Bankruptcy?

As long as a person doesn’t have any additional credit problems after they file for Chapter 7 bankruptcy, it will only take about one year before they will be able to finance a car, and about two years before they will be able to buy a home. In order to reestablish credit after filing for bankruptcy, obtaining a secured credit card, using it regularly, and making every payment on time can help.

Once someone files for bankruptcy, they will be barred from filing again for eight years. Credit card companies often solicit people who have just received discharges, and I caution people against taking credit cards. This is because it is one of the most common ways people get into financial messes in the first place.

For more information on Selling Assets Prior To Bankruptcy In NJ, a Personalized Case Evaluation is your next best step. Get the information and legal answers you are seeking by calling (732) 733-2830 today.

Attorney Paul Mirabelli

(732) 733-2830