Can I File for Bankruptcy in New Jersey because of COVID-19?

Businesses across the country have shut down due to COVID-19. People who were experiencing financial hardships are continuing to do so. Income has been reduced while bills continue to pile up. Many New Jersey individuals suffering under economic strain who were thinking about filing for bankruptcy or who were preparing for filing might be concerned about how the pandemic will affect the District of New Jersey Bankruptcy Court and its proceedings.

The New Jersey bankruptcy attorneys at Young, Marr, Mallis & Associates have over two decades of experience helping people in financial crisis. Our skilled and compassionate lawyers have assisted individuals in difficult circumstances and can help guide you through this challenging time. The law firm of Young Marr & Associates has an unwavering commitment to New Jersey residents. Your initial consultation is free of charge and confidential. Call us at (609) 755-3115 to schedule one today.

New Jersey Chapter 7 Bankruptcies and COVID-19

Chapter 7 is the most common type of bankruptcy filed in New Jersey. This fast and cost-effective proceeding is usually the best option to eliminate a substantial amount of unsecured debt. If you were considering filing for Chapter 7 or if you already contacted one of our knowledgeable New Jersey bankruptcy attorneys, the COVID-19 virus should not stop you from continuing the process.

Many of your monthly bills and expenses will not stop because of the pandemic. While the government might provide some relief, mounting credit card bills, medical expenses, or personal loans will continue to grow and accrue interest or penalties. Filing for Chapter 7 allows you to eliminate most of, if not all, of your debt. Additionally, despite COVID-19, the full protections provided by filing for bankruptcy remain in effect. You will not have to worry about annoying phone calls, threatening collection letters, or civil lawsuits.

After a Chapter 7 bankruptcy is filed, a 341 meeting is scheduled. Under normal circumstances, a debtor would be required to attend this hearing. However, due to the ongoing pandemic, 341 meetings throughout New Jersey will be conducted through telephonic conferencing. Our attorneys will provide you information on how this meeting will be arranged. The court does not require that our attorneys and our clients be in the same location during the telephone conference. As this is a fluid situation, our attorneys will inform you of any changes in procedure.

If you are experiencing financial hardships or are overwhelmed by debt, do not let COVID-19 stop you from eliminating that debt and getting yourself a fresh financial start. The attorneys at Young, Marr, Mallis & Associates are ready to assist you every step of the way.

Chapter 13 Bankruptcy in New Jersey During the COVID-19 Crisis

A Chapter 13 bankruptcy is very different from a Chapter 7 bankruptcy. More specifically, Chapter 13 requires a monthly payment to satisfy all, or a portion, of your creditors. Given the reduced income many New Jerseys residents are currently facing, successfully managing a Chapter 13 bankruptcy could be challenging. Our seasoned New Jersey bankruptcy attorneys are aware of these difficulties and will assist you through them.

A debtor currently in a Chapter 13 bankruptcy is expected to continue to make all of their monthly trustee payments, despite the spread of the virus and the country-wide shutdown. Our New Jersey bankruptcy attorneys might suggest a motion to modify your plan if the payments have become too difficult to manage. By altering the terms of your plan, we could propose a lower amount that is more reflective of your current income for a period of months. It is critical to understand that this lower payment does not change the total amount you are required to pay through the plan. Once the period of lower payments ends, your monthly trustee payment will increase to an amount higher than you had previously been paying. For example, if your payment was $100 a month, you would be paying a total of $6,000 over your 60-month bankruptcy plan. You are now 30 months into your plan and have paid a total of $3,000. Due to the virus and a reduction in income, we lower your monthly payments to $50 a month for six months or a total of $300. At 36 months into your plan, you have now paid a total of $3,300. That leaves you 24 months to meet the required $6,000. Therefore, your new monthly payment will have to increase to $112.50 a month.

If you need to file for Chapter 13 at this time, it is essential to review the status of your income with our experienced bankruptcy attorneys. Your first trustee payment will be due 30 from the date of the filing. If your current income is stable, then moving forward with the bankruptcy should be fine. However, there are options if your income has been reduced because of the pandemic. The initial plan filed could begin with a reduced amount with an increase after a specified number of months, when your income increases.

If you can wait to file for bankruptcy, the reduction in income could lower your monthly trustee payment. When you file Chapter 13, a complicated calculation is used to determine if you must pay back any of your unsecured creditors. This calculation uses your last six months of income. If you were initially going to have to pay unsecured creditors a portion or all of the amount you owe, this current reduction could lower or negate that payment. Our experienced New Jersey bankruptcy attorney will review your income and the calculation with you.

Call Our New Jersey Bankruptcy Attorney for a Free Consultation

With the current COVID-19 crisis affecting the entire country, filing for bankruptcy may not sound like the best idea. However, in some instances, the reduction in income might make this the perfect time to file for bankruptcy. To see if this is the ideal situation for you, call our New Jersey bankruptcy attorneys at Young, Marr, Mallis & Associates at (609) 755-3115 to schedule a free, confidential consultation.