What are the advantages of bankruptcy? It can save your home; force your bank to work with you, help you deal with other debt, and stop the calls, lawsuits, wage garnishments.

What is the disadvantage of bankruptcy? It lowers your credit score and is carried for 10 years in your credit report. You cannot file again for 7 years so banks will loan to you again, but not as much and not at great rates.

Can I save my home in bankruptcy? Yes, there is a bankruptcy that allows you to pay off the amounts you are behind in the mortgage over time, deal with all your other debt and receive the benefits of bankruptcy discharge. This is known as a Chapter 13 bankruptcy named after the section of the bankruptcy law so numbered.

What if I can't afford my house? First, you need to look at your budget and ask yourself if you only had the house to pay for can you afford to stay in it. Then you need to consider what debts you can disharge in bankruptcy and then see if that would help you stay in your home. Most debts can be forgiven in a bankruptcy, but there are exceptions like student loans, taxes and others. You should contact my office for a free initial consulation to review if this option is for you.

I want to use bankruptcy as a last resort. How long can I hold out? Once a lawsuit like foreclosure starts you must decide what to do. In New Jersey you lose the right to keep your home via bankruptcy the day the Sheriff sells your house. See an attorney BEFORE the Sheriff's sale.

Should I liquidate my retirement plan to catch up? NO NO A THOUSAND TIMES NO! You can keep over $1 million in retirement in bankruptcy and only $20,000 per person in home equity and you probably don't have equity in your home right now anyway. Before you do this sit down with a debt counselor and see if you are only delaying the inevitable. I want to cry when someone comes in to my office a year after they liquidate their retirement and lose both that and their house.

What is the means test and how does it apply to me?

The means test was the bright idea of our lawmakers to force more people to do a 5 year repayment plan bankruptcy. If you make more than $100K per year for a family of 4 in New Jersey then you may have to do a 5 year repayment plan bankruptcy with your "means" or disposable income. There are a series of calulations provided by IRS to determine if you must and how much. Of course, it is complicated; the government came up with the formula after all.

Do I have to take classes to file bankruptcy?

Yes, there are two required classes, but they are inexpensive at about $25 per class and can be done over the internet in a one hour session.

What can I keep in a bankruptcy?

In a Chapter 13 bankruptcy everything; in a Chapter 7 in New Jersey; some of your home equity, car, work tools, retirement, life insurance; household stuff and jewelry, but there are maximum amounts on each of these.

Is there any way to stop the relentless phone calls from debt collectors and now there are court complaints being filed against me?

Yes, the moment you file for bankruptcy it is mandatory that all contact with you stop. If you have received a court complaint the next step is to take money directly out of your paycheck so you must file a bankruptcy to stop that from happening.

Can I reduce my mortgage to the value of my home? The answer to the first mortgage is no, but you can do it with the second mortgage. I know that doesn't make sense, but that's what the current state of the law is. There are efforts to change that, but so far none have been successful.