New Jersey Bankruptcy Resources

Bankruptcy and Your Emotions

Read this page from top to bottom. (Then read it again...and again...and again.)

stressed couple

In a world where the airline industry requires a $15 billion dollar bailout, in a country where MCI has filed for bankruptcy, where United Airlines has filed for bankruptcy, where the economy has shed 350,000 jobs in the space of two years, you should feel bad about filing bankruptcy? Bankruptcy is the original social security net. It was created by the founding fathers of our country as a way to protect the citizenry from overbearing and unruly creditors. The Bankruptcy Code is the last vestige of consumer law that is truly beneficial to the consumer. Bankruptcy is a financial decision, not an emotional one. No one thinks you are less of a person for declaring bankruptcy. Do you think MCI or United Airlines are lesser companies for declaring bankruptcy? Remember, even Walt Disney filed for bankruptcy at one point.

Do not feel bad about declaring bankruptcy. Every day people sit across from us and say "I was raised to pay my bills." We agree with you. We were all raised that way. But, your parents did not grow up in the consumer credit driven society of today. Did your parents have a lot of credit cards? Probably not. Credit to them meant having an account down at the local butcher's shop. Credit today means something entirely different and unfortunately, none of us were ever taught how to handle credit or what the true cost of credit is.

Many people find that life after bankruptcy is much more satisfying, much less stressful. Living without debt is a truly rewarding experience! There is nothing stopping you except yourself and your own perceptions about what bankruptcy means. Do you think Capital One, Providian, American Express, First Bank, MBNA or Fleet Credit Card really care about you as a consumer? They are large companies out to do one thing. . . make money. That is why businesses exist. To make money. It's a simple truth and there's nothing wrong with that principle. But please don't be fooled into thinking that large creditors or the person answering the phone at the call center is on your side. Nothing could be farther from the truth.

Perhaps you thought about consumer credit counseling. But this is not the most viable option either. Most credit counseling agencies are nothing more than scams. Not all creditors will work with counseling agencies. Many credit counseling agencies advertise themselves as 'non-profit', but why do you think this means they are free services? Simply because they are non-profit, doesn't mean they are free. Many of our clients who were former credit counseling clients were appalled when out of their $150.00 per month payment, $50.00 was going to the counseling agency. Does that sound like 'non-profit'?

Do not be duped into thinking you are doing something wrong and do not be misled by creditors saying you cannot file bankruptcy. Of course you can file bankruptcy. Anyone can, it's your right as a debtor and a citizen. The bankruptcy law is the original social security net provided by our forefathers. America's founders wanted to do away with the idea of a debtor's prison. The truth of the matter is we might have done away with the physical confinement of a cell, but there's no doubt that today's society still allows for a debtor's prison to exist, if only in our minds.

So break out of jail and talk to us. No one can interfere with your right to file bankruptcy. That little clause in your contract with the creditor that says you can't file bankruptcy is false. Even the IRS cannot stop you from filing bankruptcy.

Stop for a minute and consider the alternative. Take a look into the future and stop thinking about what you had, but instead, what you have now and what you will have tomorrow. Is the situation getting any better? Most of us think that if only we could unwind some key event then we would not be in this situation. But that's hiding the truth. You have to deal with what is going on now. Creditors are calling, the house is up for foreclosure, the license has been suspended for non-payment of tickets, you are using payday loans. Even if things turned around tomorrow, would it be enough to allow you to pay back your debt?

So you think to yourself, "I don't want to declare bankruptcy. I was taught not to do that." It's time to question your lessons. You are losing sleep, you're stressed out because you can't pay the bills, you're fighting with your spouse or significant other. This is not a way to live. Should you continue to try and slog your way uphill against an ever increasing mountain of bills and past due accounts sacrificing your health and relationships for a creditor? You know the answer to that question.

Call us today and find out how we can make your life easier and better. Let us show you what declaring bankruptcy truly means. You'll be amazed at what we can do and you will be amazed that bankruptcy is not a furtherance of your debt problems, but a solution. Call us today.

Being Comfortable and Prepared

(Preparing for Your 341 Hearing)


NJ Bankruptcy - Being Prepared



1. State your name and current address for the record.

2. Please provide your picture ID and Social Security number card for review.

If the documents are in agreement with the 341(a) meeting notice, a suggested statement for the record is:
"I have viewed the original State of New Jersey drivers license (or other type of original photo ID) and original Social Security card (or other original document used for proof) and they match the name and Social Security number on the 341(a) meeting notice."

If the documents are not in agreement with the 341(a) meeting notice, a suggested statement for the record is:
"I have viewed the original Social Security card (or other original document used for proof) and the number does not match the number on the 341(a) meeting notice. I have instructed the debtor (or debtor's counsel) to submit to the court an amended verified statement by [date], with notice of the correct number to all creditors, the United States Trustee, and the trustee; and to file with the court a redacted copy of the notice, showing only the last four digits of the Social Security number, and a certificate of service."

When the documents do not match the petition, the trustee shall attempt to ascertain why and shall report the matter to the United States Trustee.
If the debtor did not bring proof of identity and Social Security number, the trustee shall determine why.

3. Did you sign the petition, schedules, statements, and related documents and is the signature your own? Did you read the petition, schedules, statements, and related documents before you signed them?

4. Are you personally familiar with the information contained in the petition, schedules, statements and related documents? To the best of your knowledge, is the information contained in the petition, schedules, statements, and related documents true and correct? Are there any errors or omissions to bring to my attention at this time?

5. Are all of your assets identified on the schedules? Have you listed all of your creditors on the schedules?

6. Have you previously filed bankruptcy? (If so, the trustee must obtain the case number and the discharge information to determine the debtor(s) discharge eligibility.)

7. What is the address of your current employer?

8. Is the copy of the tax return you provided a true copy of the most recent tax return you filed?

9. Do you have a domestic support obligation? To whom? Please provide the claimant's address and telephone number, but do not state it on the record. Are you current on your post-petition domestic support obligations?

10. Have you filed all required tax returns for the past four years?


1. Do you own or have any interest whatsoever in any real estate?

If owned: When did you purchase the property? How much did the property cost? What are the mortgages encumbering it? What do you estimate the present value of the property to be? Is that the whole value or your share? How did you arrive at that value?

If renting: Have you ever owned the property in which you live and/or is its owner in any way related to you?

2. Have you made any transfers of any property or given any property away within the last four years?

If yes: What did you transfer? To whom was it transferred? What did you receive in exchange? What did you do with the funds?

3. Does anyone hold property belonging to you?

If yes: Who holds the property and what is it? What is its value?

4. Do you have a claim against anyone or any business?

If there are large medical debts, are the medical bills from injury?
Are you the plaintiff in any lawsuit?
What is the status of each case and who is representing you?

5. Are you entitled to life insurance proceeds or an inheritance as a result of someone's death?

If yes: Please explain the details.

If you become a beneficiary of anyone's estate within six months of the date your bankruptcy petition was filed, the trustee must be advised within ten days through your counsel of the nature and extent of the property you will receive.

6. Does anyone owe you money?

If yes: Is the money collectible? Why haven't you collected it? Who owes the money and where are they?

7. Have you made any large payments, over $600, to anyone in the past year?

8. Were federal income tax returns filed on a timely basis? When was the last return filed? Do you have copies of the federal income tax returns? At the time of the filing of your petition, were you entitled to a tax refund from the federal or state government?

If yes: Inquire as to amounts.

9. Do you have a bank account, either checking or savings?

If yes: In what banks and what were the balances as of the date you filed your petition?

10. When you filed your petition, did you have:

a. any cash on hand?
b. any U.S. savings bonds?
c. any other stocks or bonds?
d. any certificates of deposit?
e. a safe deposit box in your name or in anyone else's name?

11. Do you own an automobile?

If yes: What is the year, make, and value? Do you owe any money on it? Is it insured?

12. Are you the owner of any cash value life insurance policies?

If yes: State the name of the company, face amount of the policy, cash surrender value, if any, and the beneficiaries.

13. Do you have any winning lottery tickets?

14. Do you anticipate that you might realize any property, cash or otherwise, as a result of a divorce or separation proceeding?

15. Have you been engaged in any business during the last six years?

If yes: Where and when? What happened to the assets of the business?

Bankruptcy and Your Credit Score

credit score

Recently, I read an article that surprised me. The article, in Smart Money, addressed the issue of credit scores and the effect of a bankruptcy filing on the score.

People considering filing for bankruptcy have many questions and concerns about the impact of their filing bankruptcy. Among the questions I am often asked about is the impact the bankruptcy filing will have on their credit score. Here is the surprise:

The negative impact on your credit score may not be as bad as expected and in some cases, may not be negative at all!

First, in most, but not all cases, my clients have been struggling with their debt for some time and do not currently have a stellar credit. If there have been repayment problems, charged off accounts, high balances and collections, the fact is that your credit score is not great. So what does a bankruptcy filing do to the score in that situation?

For starters your credit report gets a cleansing. Your high balances are going to be removed, your late payments are going to be removed and your records of unpaid debts are going to be removed. In their place your credit report will report these debts as "included in Chapter 7 Bankruptcy" or "included in Chapter 13 Wage Earner Plan," depending on the chapter of bankruptcy that was filed.

Over the long run the credit score may further benefit. This is because when the credit score is calculated, the FICO formula developed by the Fair Isaac Company (the most widely used credit scoring formula) is put together in such a way that it compares consumers in similar financial situations. Fair Isaac divides consumers into 10 groups, using what it calls "score cards." It then ranks the consumers in each group based upon the others in the group. One of the groups is bankruptcy filers.

So, when you file a bankruptcy case your credit score is determined based upon how you do when compared with other people who have filed bankruptcy. You are more fairly compared. You are not being compared to people with impeccable credit credentials.

You are not going to be able to achieve a perfect 850 credit score while you still have a bankruptcy appearing on your credit report, but the FICO spokesman quoted in the article indicated that with good credit management after the filing of your case, credit scores in the 700's were not impossible.

Another recent report indicated that an increase of 60 to 71 points in an individual's credit score was occurring following a bankruptcy filing. I am not saying you should file bankruptcy to increase your credit score. An increase may not occur in your case in any event. What is indicated that the impact may in fact not be nearly as severe as previously thought.

To get your credit score back up after your bankruptcy filing, be certain that all of your accounts included in bankruptcy show that they were in fact included in the bankruptcy filing and now indicate $0.00 balances. A creditor should NOT be reporting the account as "delinquent" after the bankruptcy case. Your credit will suffer. You can take steps to correct this misreporting by the creditor.

As soon as your bankruptcy case is over get a credit card and start making on time payments. If you can not get an unsecured card, get a secured card (you make a deposit with the credit card issuer which will serve as your credit limit). As you make on time payments you will receive offers for unsecured cards. Be very, very careful in your usage of the credit cards. You are trying to rebuild your credit, not repeat mistakes of the past.

Auto loans are available right out of bankruptcy. Your local bank might turn you down but the finance manager at the dealership will find financing for you in most cases. Be prudent, shop around. Get the lowest rate. Ask yourself, "do I really need to incur new debt right now?" If you wait to finance a car until you begin rebuilding your credit your interest rate is likely to be lower.

As I write this the mortgage market is a mess. The sub-prime mortgage market imploded and arguably no longer exists. Traditionally, mortgage lenders were willing to write mortgage loans after two years of on time credit payments following bankruptcy. Only time will tell what will occur with the mortgage market as it goes through it’s correction phase.

Bankruptcy Credit Score