Frequently Asked Questions

Can I keep my house?

Often the answer is YES. We do our best to avoid putting you in a situation where you might lose your home, and there are a number of ways to avoid that.

What should I do if I am thinking of filing bankruptcy?

First, stop using your credit cards, especially for purchasing that might be deemed a luxury. Then, start gathering your bills, collection letters, and papers from any lawsuits. We will also need your paystubs, tax returns, and business records. Finally, call the Law Offices of Joseph A. McCormick, Jr., P.A. to make an appointment.

What are the most common reasons for a Chapter 7 bankruptcy?

Studies have shown that nearly all bankruptcies are the result of divorce, illness, unemployment or business failure.

Do I need to include all my debts?

Yes, you need to include all of your debts. In fact, you will be swearing under oath that you have done so.

Can I keep a credit card?

No. Since all debts must be listed in your petition, you cannot keep a credit card. Debit cards, however, are unaffected. Oftentimes, both spouses do not need to file. In those cases, the other spouse can usually get you a duplicate card for business travel.

What debts remain unaffected by a bankruptcy?

Non-dischargeable debts do not go away in a bankruptcy. Examples of non-dischargeable debts are matrimonial debt, most student loans, most taxes, and fraudulent debts. Some debts require creditors to bring an adversary proceeding to determine if the debt is dischargeable.

Can bankruptcy stop foreclosure?

Any bankruptcy will temporarily stop a foreclosure. Chapter 11 and Chapter 13 bankruptcy permit debtors to cure defaults and bring the mortgage back to current over time.

What is the automatic stay?

The automatic stay is one of the most powerful tools provided by bankruptcy law. When a bankruptcy petition is filed, the stay stops all attempts to collect a debt, including foreclosure, lawsuits, and garnishments. Even phone calls asking for payment must stop.

What are exemptions?

Exemptions are the list of property that is protected from seizure or sale by a creditor or bankruptcy trustee. In New Jersey, the exemptions provided by the United States Bankruptcy Code are primarily used as opposed to certain other states which utilize their own exemptions.

What are secured debts?

Secured debts are debts protected by collateral. Examples include mortgages and car loans.

What is a trustee?

A trustee is an individual appointed in all Chapter 7 and 13 cases, as well as some Chapter 11 cases. While the trustees operate differently in different cases, all trustees have a fiduciary obligation to administer and recover assets for the benefit of creditors.

What is a debtor in possession?

In a Chapter 11 case, the debtor usually has the powers of a trustee and remains in possession of its assets. If a trustee is appointed, the debtor becomes a debtor out of possession.

What is a discharge?

A discharge is the whole point of filing bankruptcy. It is a federal injunction barring creditors from attempting to collect most pre-bankruptcy debts.

What is a bankruptcy petition?

A bankruptcy petition consists of the legal documents that are filed with the bankruptcy court to start a bankruptcy case. It consists of a list of assets and liabilities, information regarding your income and expenses, and a list of questions called the Statement of Financial Affairs.