It has become a regular occurrence in my New Jersey office that a client or potential client will say to me during a meeting, "My friend-coworker-uncle-cousin filed bankruptcy, and he-she said . . . " Aaaahhhhhh!!! People are scared and embarrassed enough as it is without these "well meaning" people making it worse by spreading misinformation.
Even if what happened to them is true, each bankruptcy case is different, and there is no reason that what happened to them will necessarily happen to you.
One of the reasons I maintain this site, and update it regularly, is to provide accurate information about New Jersey bankruptcy that people can easily find online. There are a lot of bankruptcy myths out there that are keeping people from considering it, as I have written here before.
A recent post on the Bankruptcy Law Network on this topic made this point very well. Another side effect of these myths is that it might give you unrealistic expectations about your case.
Asset Situations Can Differ
For example, your friend says that he filed chapter 7 bankruptcy and was able to keep his vacation home in Sea Isle City. Based on that, you figure you can keep your vacation home as well.
Lo and behold, after you file, the trustee decides to sell the home to pay creditors because you own it outright (you inherited it free and clear from Aunt Mabel, who wanted you to have it). What you did not consider is that maybe in your friend's case:
- He was upside down on the home and owed more than it was worth;
- He had some equity, but was able to use exemptions to protect it; or
- He conveniently forgot to tell his attorney about it, did not list it, and did not get caught.
Income Situations Can Differ
Another example would be your friend and his wife file a joint chapter 7 bankruptcy, and it sails through without a problem. However, when you file, the U.S. Trustee files a motion to dismiss for bad faith because the means test shows you have disposable income available to pay creditors. Therefore, you should be in a chapter 13.
How can this happen? You and your friends both make the same amount of annual household income. However, the difference could be:
- The other couple has three children, and you have two. Thus even though the gross income is the same, their median is higher due to the additional child;
- The other couple had more expense deductions in means testing. Perhaps the husband is paying alimony and child support to a spouse from a previous marriage; or
- The husband of the other couple was laid off for part of the six month means testing period, so even though you both have the same income NOW, his calculates lower due to the lack of income during part of that period.
The point is that each case is different, and you should NOT listen to whatever anyone else says about bankruptcy.
Talk to a Lawyer!
The best thing to do if you are thinking about bankruptcy is to speak with a lawyer. If you live in the Gloucester County area, please feel free to call my office at 856-432-4113 or contact me through this site to schedule an appointment in my Woodbury office. You can then find out what you would really be facing in a bankruptcy.
If you are looking for more information about bankruptcy, then download my free book,Top Questions People Ask About Filing Bankruptcy in New Jersey.