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What Happens If I Own Valuable Property Jointly With A Non-Filing Chapter 7 Debtor in NJ?

Typically, someone can keep all of their property in a chapter 7 New Jersey bankruptcy without the trustee selling any property. The loss of any property by way of the sale by a trustee is very unusual. Also, prior to filing a chapter 7 the person filing (debtor) should know, based on the value of his property, that the trustee will sell a particular piece of property. The sale of any property should never be a surprise.

A trustee will only sell property if the particular property is very valuable and may not be fully exempt. However, if a debtor owns any property with a substantial value, the trustee may be permitted to sell such property. The fact that someone else owns the property jointly will not prevent the trustee’s right to sell. However, the non filing joint owner will be paid their ownership interest in the property.


A trailer is jointly owned by a New Jersey chapter 7 debtor and a person who did not file a bankruptcy case.

Trailer value is $75,000.00;
Loan financing balance is $5,000.00;
Cost of sale is $8,000.00

The amount received by the bankruptcy trustee after the sale is $62,000, which is the balance after paying the costs and the loan balance. The non filing joint owner would be paid $31,000, which is his one half interest in the trailer.

Now, lets assume that the debtor can apply $10,000 of his bankruptcy exemptions towards the trailer in a New Jersey bankruptcy. This means that the trustee must pay the debtor $10,000.00, which is his exemption. The trustee would be paid his commission, with the balance to be paid to the creditors, pursuant to priority, under the bankruptcy code.

Robert Manchel is an experienced lawyer in New Jersey, that limits his practice to bankruptcy and foreclosure resolution. Mr Manchel may be contacted at (866) 503-5655.

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