Bankruptcy in North Arlington, New Jersey is a court procedure through which a person or business who is unable to pay their debt is able to have some of their debt legally cleared, or "discharged." This theoretically allows the debtor to move on with a clean slate. However, bankruptcy should not be treated as a way to avoid debt that one simply doesn't feel like paying. It is meant to be a safety net for people or businesses who are honestly unable to pay off their debts. Because bankruptcy is not without negative consequences (such as a heavily damaged credit rating for many years afterward), it should be viewed as an option of last resort.
Therefore, it is advisable to consult with an experienced North Arlington, New Jersey bankruptcy attorney, who can advise you of the costs and benefits of bankruptcy. Because the decision to file for bankruptcy depends very heavily on the facts of each individual case, the advice of a North Arlington bankruptcy attorney cannot be replaced.
Types of Bankruptcy in North Arlington, New Jersey
In North Arlington, New Jersey, there are three basic bankruptcy schemes that are most often used. They are recognized as Chapter 7, Chapter 13, and Chapter 11. Being a product of federal law, the procedural rules governing bankruptcy in North Arlington, New Jersey will be very similar to those in any other part of the United States. Chapter 7 bankruptcy, or "liquidation," requires the debtor to sell some of his or her property to the highest bidder, and using the funds from the sale to pay down as much debt as possible. Once the sale is fulfilled, all dischargeable debt is deemed paid in full, whether or not the sale was able to raise the full amount owed. You should note that some property (usually the types of property deemed essential) is fully or partially exempt from liquidation, meaning that the debtor gets to keep it. This includes houses, cars, and retirement accounts, among others. Some types of debts, however, cannot be discharged in bankruptcy, including taxes, child support, and student loans.
The other frequent bankruptcy scheme used by consumers in North Arlington is Chapter 13 bankruptcy. In this system, debt is not discharged. Instead, it is restructured. This allows the debtor to have the terms of the contracts that gave rise to their debts in the first place thrown out, and replaced with new terms that call for a structured repayment plan, designed to allow the debtor to survive on whatever income they have, and allowing the creditors to get paid back eventually. Once a payment plan is authorized, creditors are not allowed to attempt to collect payment under the original agreements. Although it can be used by individuals, Chapter 11 bankruptcy is used almost always by businesses. Not unlike Chapter 13, Chapter 11 focuses on restructuring of debt, rather than discharging it. Chapter 11 requires that the debtor come up with a reorganization plan designed to reduce debt and cut costs. Before being executed, this plan must be approved by a majority vote of participating creditors.
One major advantage of Chapter 11 bankruptcy is that it allows businesses to continue their operations while the process plays out. Additionally, their stock can still be bought and sold.
How Can a North Arlington Bankruptcy Lawyer Help?
Filing for bankruptcy in North Arlington is a very important decision, and should not be made easily. Before filing, one should consult with a seasoned North Arlington bankruptcy attorney for help.