By Michael Estrin•

Bankruptcy lawyers often are the beneficiaries of a tough economy, but their clients, many of whom know little about the process and have scant time to research it, are usually at a loss when it comes to seeking the help of an expert.With creditors closing in and desperation mounting, many people foolishly select a bankruptcy attorney based on price, an advertisement or, worst of all, no criteria at all. But selecting the right person to handle your bankruptcy can mean the difference between an eventual rebound and long-term pain.

If you’re considering bankruptcy, here are five things to look for in a bankruptcy lawyer.

1. Get what you pay for

It’s a simple and sad fact that the fee will be a key element for most people when it comes to hiring a bankruptcy attorney. After all, money is at the root of this particular problem. But with prices ranging from $1,000 to $3,000 depending on what part of the country you live in, it’s important to make sure you’re getting exactly what you need.

Fortunately, most bankruptcy lawyers use a relatively standard agreement for a basic Chapter 7, liquidation, or Chapter 13, personal reorganization. The flat fee should include consultation with the client and analysis of the financial situation; preparation of the bankruptcy petition; reviewing the petition with the client; attendance at the meeting of creditors, known as a 341 meeting; and follow-ups with creditors, such as taking action to halt any post-filing collection efforts, if necessary.

In a Chapter 13 case, the fee should also include preparation of the reorganization plan and representation at the confirmation hearing.

According to Meaghan Tuohey-Kay, a bankruptcy lawyer in New Jersey, it’s important to make sure these services are all clearly spelled out in the representation agreement.

In all likelihood, the flat fee won’t cover eventualities like representing the debtor in an adversarial proceeding, such as when a creditor challenges the filing, and so it’s important to ask what the attorney is likely to charge for any possible litigation that may arise out of the bankruptcy. While litigation occurs in only a small number of cases, it’s a factor that all filers should consider before hiring an attorney as the costs can be high and can quickly spiral out of control.

Tuohey-Kay urges people not to choose bankruptcy lawyers based solely on price because courts often cap how much a lawyer can make on a given case, and those who routinely handle such matters tend to charge fees that cluster in the same general ballpark.

“If an attorney is offering representation that is drastically lower than other attorneys in the area, that should be a red flag that either the attorney really doesn’t do much bankruptcy and/or will cut corners on your case,” Tuohey-Kay warns. “However, most reputable attorneys will not give fees out over the phone without a complete consultation, so be wary of attorneys who just give a number over the phone without considering your specific situation.”

2. A true bankruptcy ‘expert’

Technically, any attorney can handle a bankruptcy, but in practice, only those who usually handle such cases are worth using, according to Melissa A. Herman, an Atlanta-based bankruptcy lawyer.

But clients shouldn’t use the length of an attorney’s career as an indicator of their expertise, Herman says. “The better question to ask would be: What percentage of the lawyer’s practice constitutes bankruptcy and how many cases has the lawyer filed?”

At the same time, if a lawyer advertises expertise in numerous other areas, it’s a safe bet that, at best, they are likely a jack-of-all-trades and a master of none, Tuohey-Kay says.

“If a print ad lists 10 different practice areas that include everything from municipal work, general litigation and bankruptcy, I would keep looking,” Tuohey-Kay says. “Find someone with a more limited practice.”

3. Up to date on 2005 code changes

In 2005, Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act. The legislation, designed to reign in millionaires and habitual filers from gaming the system, brought widespread reform to the bankruptcy industry. But the changes also make it harder for some debtors who meet a minimum threshold for income, which varies by state, to file for a Chapter 7 bankruptcy. In some cases, the law requires them to repay their debts through a reorganization rather than receiving outright forgiveness. In addition, it also required those seeking bankruptcy protections to take a credit counseling class before filing.

While it is possible that the changes to the bankruptcy code may have little or no effect on some filers, it’s nearly impossible for a person who is not a lawyer to tell beforehand how their case may differ because of the new legislation. But perhaps more troubling is the possibility that some “experienced” bankruptcy lawyers aren’t current on the 2005 changes, according to Frank Terzo, an attorney who heads the bankruptcy practice for the Miami branch of the GrayRobinson law firm.

But how can you tell? Unfortunately, there are no simple answers. One piece of advice Terzo has is to simply ask how, if at all, your case is likely to be impacted by the 2005 changes to the bankruptcy code. If a lawyer can’t answer the broad strokes of that question in the initial consultation, says Terzo, it’s likely this is not the lawyer you want to represent you.

4. Don’t get run through a mill

While you should always seek out the services of an experienced bankruptcy practitioner, one common pitfall can be falling into the hands of what lawyers call a bankruptcy mill, a firm that churns and burns cases with little regard for their client’s specific needs. Such firms are notorious for shoddy legal work, unhappy clients and raising the suspicions of judges and trustees, who worry that mills, and their clients, are more likely to try and pull a fast one on creditors by abusing the process.

The trouble is that spotting a mill can be rather difficult for a person who is not a lawyer. But a good first step is to check with your local bar association for recommendations on attorneys who specialize in bankruptcy, says Terzo, who points out that most mills don’t do the kind of lawyer-to-lawyer networking that is a customary feature of a local bar association.

“The ranks of the local bar association are typically filled with lawyers who specialize in business bankruptcy, but there are usually more than a few lawyers who do personal work, and they tend to be the smarter, up-and-coming ones in that field,” Terzo says.

But no matter where you go initially to find an attorney, Terzo believes the client should always be on the lookout for certain red flags that could indicate a bankruptcy mill.

“If you don’t meet an actual lawyer in the initial consultation, that’s a big warning sign,” Terzo explains. Terzo adds that most mills use paralegals to do intake and prepare key documents for filing. “At some mills, the first time you meet your lawyer is at the meeting of creditors; that’s a really bad sign,” he says.

Another good way to spot a mill is by asking how many cases an attorney handles at a given time. According to attorney Toby Bartholow of Dallas, if a lawyer handles more than 30 bankruptcies per month, it’s a safe bet you’re dealing with a mill.

A high-volume practice is also likely to be characterized by quick, superficial initial consultations, according to Tuohey-Kay, who points out that even uncomplicated cases require at least an hour for the initial consultation so that the lawyer can familiarize himself with the client’s income over the previous six months and the present market value of their assets.

5. Comfortable relationship

It may sound obvious, but picking a lawyer who you aren’t comfortable with, even if the attorney is well qualified and competitive on price, is a recipe for disaster. Too often, people overlook the interpersonal factors that govern the lawyer/client relationship, according to Bartholow.

“If they don’t have a good feel for their relationship with the attorney, they should go elsewhere and not be shy about it,” Bartholow says. “Filing a bankruptcy is an emotional matter for most people, and it’s important that they feel right about what they are doing and who is doing it for them.”

While that may mean walking away from an affordable, trustworthy and qualified bankruptcy lawyer, Bartholow insists that the prospective client won’t get nearly as much as they should from their attorney if they don’t feel comfortable. That means that the preparation and research that goes into finding a good bankruptcy attorney only lays the groundwork for a more difficult choice that requires the client to trust their instincts when it comes to assessing the character of their prospective lawyer. For that, there are no guarantees, but clients who do their homework before they hire a bankruptcy attorney can be reasonably certain that they’ve found a solid advocate.

Michael Estrin is a freelance writer based in Los Angeles

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I have a very specific goal every single time I talk to a prospective new client on the phone about a bankruptcy case.

I want you to feel better when we are done talking than you did when we started.

This does not always happen.  Sometimes, you will never feel better, it is a sad truth.  But MOST of the time, you do.  You really do.  And I know you think I am crazy.  How can talking to a bankruptcy attorney possibly make me feel better about my situation?  I mean, isn’t filing a bankruptcy case just going to make me feel worse?

The reason that talking to me will make you feel better is because right now you are lost.  You are wandering around aimlessly throwing money you don’t have at a bill that you are not even sure you should pay?  Am I right?  Talking to a bankruptcy attorney will give you a plan.  An actual step by step plan that you can follow to an actual endpoint in your financial distress.  We can give you a finish line.

And that is why you will feel better.  Because being lost and stressed out never helped anyone.  But having a plan.  That is everything.


Let us help you feel better.  Call us at 732-302-9600 or fill our our online consultation form and we will call you!


The good news first:  The bankruptcy court in New Jersey has a loss mitigation program that helps Debtors in bankruptcy cases get swift answers on whether they are eligible for a mortgage modification and hopefully prevents the three year long document losing circus that many of my clients have been dealing with by trying to get a modification on their own.

So how does loss mitigation work in the bankruptcy court?

1.  My office will file a Chapter 7 or a  Chapter 13 with a plan indicating you wish to request loss mitigation through the court.

2.  We will prepare and file a notice of request loss mitigation for your case.  This has to be done quickly as it is due before you have your 341 hearing.

3.  Once the order allowing loss mitigation is approved the mortgage company’s attorney will reach out to my office with a packet that will be submitted through a loss mitigation portal online with a direct contact person.  This presumably should help with the lost paperwork problem. (We hope.)

4.  Once we have submitted all the initially requested documentation the mortgage company will more likely than not come back with more documentation requests.  This is where it is in your best interests to get me the paperwork ASAP!  I usually get nastygrams from the other side if it takes more than 48 hours to get them documentation they request.  The faster we do this, the faster we get a decision.

5.  Once the paperwork is all submitted, the mortgage company sends it to an underwriter and makes a decision that is reported back to me.  If it is the decision you were hoping for my office will file a motion to allow a loan modification, in a 13 we will modify your plan to reflect the modification, and you move on with your life in your home!

Things to bear in mind during this process:

 – The above process is when things go smoothly.

This is not always the case.  Sometimes, getting a modification can be difficult.  Paperwork the mortgage company requests can be hard to find or has to be produced by our office.  Your case will not be as simple as just handing over your tax returns.

There is a lot of back and forth between my office and the mortgage company representative.  It is VERY VERY important that if you are in this process that you respond quickly to my requests for documentation.

 – Please keep your expectations realistic and don’t lose perspective.  

Principal reduction modifications are INCREDIBLY rare.  I have seen three in my entire career.  A lot of bankruptcy attorneys joke that having a client get offered a principal reduction modification is like seeing Bigfoot.  There are a few fuzzy videos out there but most of us have only ever caught him out of the corner of our eye once or twice.

If you are only a few months behind, your payment may go down but if you are more than 100K behind on your mortgage and your mortgage company agrees to modify your mortgage, your monthly payment MAY go up and not down.  This is because your missed payments are capitalized into the new loan and you will be charged interest on this amount.  It is important to remember that your mortgage will be current when this is all done so try to focus on the fact that you are keeping your home and not on the payment.

The Good News

The silver lining of all of this is that the New Jersey loss mitigation program has seen great success.  I have been able to get answers for clients on modifications within two months of filing for them. TWO MONTHS.  That is light years faster than outside of the program.  This is a great program and absolutely worth the time of any client trying to save their home.

Interested in how we can help you with your mortgage modification?  Give us a call at 732-302-9600 or fill out our online consultation form and we will call you!


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So many of my clients are worried about what will happen at their 341 hearing.

There are many reasons you are scared.  Many of you have never been to court.   The hearing is called the “Meeting of Creditors” so many of you think American Express is going to come interrogate you about every coffee you have ever purchased at a Starbucks.

Don’t worry.  Do not let this hearing keep you up at night.

Your hearing is not something to worry about.  You will be in a conference room with twenty people just like you, a trustee will be sitting at a conference table, they will ask you a series of questions that we have already sent you and aren’t designed to trick you, and you will leave afterwards and be DONE….

Unless of course any of the following apply to you:

1.  You have a private jet you failed to tell me about.

2.  You plan to wear a $25,000 engagement ring to the hearing.

3.  You transferred $25,000 to your brother’s checking account 4 days before you filed bankruptcy.

4. You deposited a signing or moving bonus of $20,000 to your checking account three days before you filed.

5. You were given a Jaguar as a birthday gift by a relative after you filed.

6.  You took a $50,000 second mortgage and went on a shopping spree three weeks before you filed.

7.  You took a personal loan from your credit union and went on a shopping spree before you filed.

8.  You continuously changed the name of your business in order to dupe a supplier into selling you more stuff when you owe them money.

9.  You have called my office and asked for permission to buy more jewelry on a Kay Jewelers card just one more time and want to know how long you need to wait to file to get to keep said jewelry without that being a problem.

So as you can see unless you were out doing naughty things before you filed a bankruptcy case you will probably be ok at your hearing and can get through your hearing and the close of your case fairly easily.

So try not to worry too much about your hearing, we will get you through.

It is that time again, the time when we all sit down with the accountant or the nice girl at the local tax prep place and figure it if we owe the government or if the government owes us.

Let’s start with my basic tax time rule:


I don’t like tax refunds.  A tax refund means you gave the government an interest free loan.  I am thrilled when my accountant comes back to me and says “You owe $300.00.”  That means that I got my math almost spot on.  I figured out, somehow, exactly how much I needed to give the IRS and gave them only that amount.  If you don’t owe, that money you are getting back, be it $500.00 or $5,000.00 was sitting in the government’s coffers earning interest for them and NOT YOU.  Why?  BECAUSE A TAX REFUND IS NOT A SAVINGS ACCOUNT!  Uncle Sam isn’t going to pay you interest.  Not going to happen.

So now is the time to ask your CPA if you should walk into HR and adjust those exemptions.  Me, I am a fan of taking your exemptions.  They are yours!  You are entitled to a little more money in your paycheck.  I am not saying walk into HR and take 17 exemptions (unless you have 17 kids…in which case you should also have a reality show).  Go into HR and tell the payroll person, I am married with two kids and adjust your W-4 to Married with three exemptions instead of single with zero.  It can make a real difference in your budget and you may find you have money leftover to save thanks to keeping your own money now instead of a $5,000 refund in April.

The best part, you may STILL get a refund, though slightly lower, depending on your circumstances.  In New Jersey we have such high property taxes, that when combined with our mortgage interest, sales tax, charitable contributions, medicals and kids, even the guy with 17 exemptions might still have a shot at a refund (seriously what would the property taxes be on a house that fits 17 kids in New Jersey…yikes…)

So have the chat with your accountant about whether adjusting your exemptions is right for you because TAX REFUNDS ARE NOT SAVINGS ACCOUNTS….which leads to my next point…

Some of my clients tell me, “But I am not a good saver” or “If I had it I would spend it”.  Ok.  So find a way to not do that.  My personal favorite is to make saving money super convenient, an automatic deduction into a savings account ON PAYDAY, HR can do this or you can set it up through most banks.    Don’t even act like you have it.  Do your budget, now is a great time to update that budget, and figure out how much you can afford to save with your new-found exemption status, and pay yourself first.  If you are person that thinks if you have it you will spend it, have this automatically put into a credit union savings account two counties away from you and don’t request a debit card for the account.  If getting at your savings means crossing two counties during business hours, I promise you will think twice before you make the trip.

But this is not the only thing you should be discussing at your tax appointment.  Here is the list of some of the questions you should discuss with the accountant to save you money at tax time:

1.  Do I qualify for an Health Savings Account?  How much can I put in?  What are the rules?  Would this be better for my health expenses than itemizing my medicals?  (Sarah learned this one the hard way….)

2.  Do I qualify to deduct money I have put into a traditional IRA or should I be saving in a Roth IRA?  (And the hard way on this one too…SIGH….)

3.  I am married now.  Does it make sense for me to file separately or jointly?  Is one better than the other?  What are the rules?

4.  If I take money from my 401k will I be penalized?  How much?  What is the difference between a withdrawal and a loan?

5.  How will Obamacare affect my tax bill?  (Make sure to have details of your current health plan at the ready for this one.)

6.  I am paying a real estate tax lien in my bankruptcy case, will that affect my tax return – (SHORT ANSWER- YES!  Long answer is here.)

This is the short list.  This list could go on and on and on.  Things like whether to let an ex-spouse claim a child or whose name should go on the mortgage interest statement can all make big changes in your tax return and how much tax you owe every year.

Remember, this is the time of year to really evaluate your financial house and discuss it with a professional.  If that professional says your financial house is falling apart maybe it is time to come see us.

If you would like to discuss how bankruptcy may assist you in getting your financial house back on track give us a call at 732-302-9600 or fill out our online consultation form and we will be happy to help you!

My Least Favorite Bankruptcy Myth Ever.

by Sarah J. Crouch, Esq.

Bruce Truesdale new jersey bankruptcy myths

This popped up on my facebook feed the other day…and caused me to fly into a rage.  An absolute screaming, howling, righteous, my husband thinks I am a nutcase rage.

You may think: This seems innocuous enough.  I have no idea why you are so angry about this.  It seems basic.  Don’t spend on frivolous items and you won’t end up in debt right?


If I took a highly unscientific sampling of my clients I can tell you with much certainty that nearly zero of my clients were out buying Ipads and Jimmy Choos.   They were buying groceries, gas, medicine, or paying for emergency repairs on the car or the house.

This means that people with high credit card debt may have just been trying to get by and this “meme” misinforms the public to believe that these people have debt because they were out making frivolous purchases.

And this presumption is why people feel badly when they come into my office the first time to talk about bankruptcy.  They feel like they are deadbeats that aren’t paying their bills.  They feel a moral obligation to pay for purchases they have made even though the bulk of them were likely emergency purchases.  These people feel badly about this.  Terrible.  And the social norm that assumes they were out spending the money they didn’t have on Ipads is why they feel extra bad.  They will never speak of this.  They don’t want emails about this going to their personal email.  I have had clients literally get PO boxes so the mail carrier wouldn’t know ( I could honestly care less what my mail carrier thinks of me…)

It is amazing.

And all because they are using a financial tool that Congress made available to them to get out of debt that was not their fault.  Something happened.  They got sick, they lost a job, they had a family emergency, they got divorced.  There is no reason to feel badly for pursuing all your options and make a call that is best for you, not for your mail carrier.

There are many many reasons that people file bankruptcy and get into debt.   I have been doing this for awhile now….and Jimmy Choos and Ipads are not among the reasons I have ever heard.


If you take affirmative steps to rebuild your credit, your credit score will improve even though a reported bankruptcy, foreclosure or late payments remain on your credit report. Remember, a credit report is simply reporting history – it’s like a history book about you!

You must take some steps to rebuilt your credit. It will not simply get better unless you make an effort to rebuild it. The finance companies and banks get higher interest and make more profit as long as your score is low because you have to pay a higher interest rate.

You must give the credit reporting agencies, Trans Union, Equifax, Experian, etc., new, good information to place on your credit report so the new, better information, is there to judge your creditworthiness by. If the bad credit items simply fall off of your credit report and you do not replace those items with new information, you will simply have “NO CREDIT,” which is as bad or worse than bad credit. If you do not replace the information on your credit report, your credit score will remain low even though some of the bad credit blemishes on your credit report have fallen off after seven to ten years.

Get rid of your debt. Take a look at your overall financial picture. Can you pay your expenses going forward? If you cannot and you continue to make late payments to your creditors, your credit score will remain low or even drop. Sometimes getting rid of all of your debt by declaring bankruptcy is a wise first step because you will have obtained a fresh financial start and will be virtually “debt free” after your bankruptcy case. Removing your debt burden may make it easier to make timely payments on those living expenses you must pay each month.

As stated above, replace your credit information. The credit reporting bureaus give more weight to the most recent information. If your recent credit information is poor, late payments, foreclosure, etc., then your credit score will remain low. But as your new, better, credit activity begins to be reported as you reestablish your credit, mortgage paid on time, credit cards paid on time, etc., your credit score will start to improve despite your earlier poor credit history.

Catch 22 – you need credit to obtain credit, but you don’t need a lot of credit. In other words, even small lines of credit can start you on your path to rebuilding your credit and improving your credit score. You do not need large limit lines of credit to improve your credit score. Using even small amounts of credit and paying the creditors back right on time can result in significant improvements in your credit score. Sometimes this starts with a “secured” credit card.

Look at your credit report, really study it. It has been reported that almost half of the credit card companies incorrectly list your credit limits. This incorrect reporting can lower your credit score. A huge number of people have readily apparent errors on their credit reports. Fixing the errors is not difficult, but can be a bit tedious and time consuming, but significant errors should be corrected to boost your credit score.

As your credit score increases, you will become entitled to lower interest rates. Banks are not in a hurry to see your credit score increase as it means that they will have to take less profit from you on any loans they make to you. So, you must be proactive and make the effort to improve your credit score. Do not try to trick the credit bureaus with the many “credit repair” scams that exist. Those scams are seeking to take YOUR money. Some of these scams will temporarily remove bad credit information from your credit report. However, if the information is accurate, the bad credit information will return to your credit report eventually. Your credit report is a history book, no one can change history and remove accurate but negative information from your credit report – it’s illegal to do that.

There are stories all over the news right now about payday lenders behaving badly and a regulatory crackdown on them.

This isn’t news to the attorneys at Bruce C. Truesdale.  We find it more interesting that the regulators seem to be more concerned about putting the rates in big letters than they are about capping the abusively high fees in the first place.

The nutshell version: The feds want it to be clearer to you that you are going to be charged a big pile of fees, they aren’t going to stop you from being charged a big pile of fees.

But this is DC and they can’t be bothered with simple things like logic so we will give you the whole story on why payday lenders are a very bad thing for consumers.

A payday loan may seem like a good deal, you can even get “Deposit Advances” from your bank now lending some reputability to the practice, but AVOID THEM LIKE A PLAGUE.    Here is why:

1.  Unbelievably high fees.  Even the reputable ones through big commercial banks like Wells Fargo have 180% interest rates.  This means if you borrow 500 bucks and the bank is able to pay itself in a timely manner you will pay $900.00.  That is an insane return on a short term loan.  The less reputable lenders online charge upwards of 300%.

2.  You are handing over banking information and this can create an endless cycle of misery.  If you take your loan on November 1 and promise to pay on November 15, the lender will hit your bank on November 15th no matter what.  If you do not have the funds to pay that massive interest rate in your account you will be subject to overdraft fees AND fees by the lender.  Some of these lenders will hit your bank multiple times over several days/weeks causing you to incur hundreds of dollars in overdraft fees that are hard to dig out of and still pay your regular monthly bills.

3.  Their collection practices are BAD.  Payday lenders are not permitted in New Jersey so you are dealing with largely unregulated online institutions.  This means that when they call you they are hard to track down and because of this they feel like the federal rules on debt collection don’t apply to them.  They are going to threaten to arrest you at your job, send the cops to your house, and even take your house.  I have heard of one woman who had a payday lender threaten to kill her dog.  They can’t do any of these things but they can make life pretty miserable by threatening you constantly.

4.  They sell your phone number to scammers.  If I had a nickel for every time a client told me they paid a scam artist because they were afraid of the consequences I listed above I could retire.  I am hoping this post will help slow my road to retirement.   Let’s say you pay the payday lender on time.  But two days later you get a collection call from some agent saying you still owe money and you better pay it now or they will send the Sheriff to arrest you at your job.  The collection agent says that you have to pay them with a pre-paid debit card.  DO NOT DO THIS.  THIS IS A SCAM.  HANG UP ON THIS GUY RIGHT NOW (especially if he is Indian and says his name is Peter…that guy is bad news and calling half of New Jersey right now.)  If you pay this person you will never see that money again, it will pay nobody that you owe money to and the calls will just continue.

If you are thinking about a payday loan your money troubles are probably bigger than just that payday loan and taking one out could just take you even further down a bad financial path.

If you need help getting back on the right financial path, call us instead of going to a payday loan service.  We will talk to you about how we can help you get back on the right financial track through a bankruptcy case.

Interested in talking to us?  Give us a call at 732-302-9600 or fill out our online consultation form and we will call you.


A question our office has been getting a lot lately is “Can I even file bankruptcy anymore?”

This is because in 2005 the bankruptcy code was changed in order to make it more difficult to file a bankruptcy.  Now you have to qualify to file a Chapter 7 bankruptcy and a Chapter 13 payment is not quite so easily calculated as before.   The end result is that it is not more difficult to qualify for a bankruptcy case but it is more difficult to prepare one and most consumers will need an attorney to prepare their case these days rather than going it alone (something we would never recommend to our clients EVER).

But worry not.  We are here to help!

For information on the Chapters of bankruptcy available to you, check out our video explaining how to qualify.

We have articles on what will happen to your house or your car if you file a bankruptcy and how a bankruptcy is better than a debt settlement plan.

Most importantly, you can call us at 732-302-9600 or fill our our online consultation form and we will give you advice specific to your circumstances and be happy to go over any questions you may have about how to get your financial house back in order.

New Jersey Bankruptcy Sarah J. Crouch continues our video series of frequently asked questions today with a video explaining the differences between Chapter 7 & Chapter 13 bankruptcy and why they might be the right option for you.

Interested in how bankruptcy can help you out of your financial situation.  Give us a call at 732-302-9600 or fill out our online consultation form and we will contact you.