A personal loan that is due to a friend is unsecured, which is the same classification as credit card debt. The bankruptcy code requires that all unsecured creditor be treated equally. Therefore, if a chapter 13 debtor is paying a monthly trustee payment, which includes $100.00 that is to be paid towards unsecured debt, the monthly amount distributed to unsecured creditors must be distributed pro-rata to all unsecured creditors. Also, this means that the debtor cannot make payments directly to the friend or relative that is not included with the trustee payment.

Along this same theory, if a debtor is only having problems with their credit card debt and not their house, the house must be included as an asset and the mortgage company must be included as a secured creditor. However, the inclusion of the house and mortgage does not mean that the house will be taken by the bankruptcy trustee. Quite the contrary, it is extremely unusual for the court trustee to take someone’s property. However, if the debtor is behind with their mortgage payments and they are unable to cure the arrears, typically, the mortgage company will permitted to pursue their foreclosure action

The debtors must also include there auto as an asset and the auto finance company as a secured debt. It is very unusual that the court trustee will take the debtors’ auto. If the debtor is in arrears with their finance payments and cannot cure the arrears, typically, the finance company will be permitted to repossess the auto.

You may wish to contact theNew Jersey Bankruptcy Expert, Robert Manchel, at 1 (866) 503-5655, to discuss how creditors are treated in bankruptcy.

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Consumer bankruptcy is distinguished from a business bankruptcy case, in that the debtor(s) who is filing the petition is an individual with mainly consumer debt, such as credit card debt, instead of business-related debt. There are a number of bankruptcy laws that relate to only consumer debt cases and not business debt matters.

One spouse does not owe the debt of the other spouse solely due to the marriage. The law in New Jersey holds that only the individual who contracted to pay the debt, is liable for the debt. Therefore, if only one spouse contracted with the credit card company / bank for the credit card, only that spouse owes the debt. Under this scenario, the bank may sue only the one spouse that is liable for the debt and not the other. If both spouses contracted with the creditor for a loan or credit card, than the debt is joint and the creditor may sue both spouses. Under this scenario, the debtor may obtain the money from either spouse, but only to the extent of the amount due. In other words, the creditor may obtain 50% from each spouse, or 60% from one and 40% from the other.

A joint bankruptcy case can only be filed by a husband and wife. There are numerous reasons why one spouse would file alone as opposed to filing jointly. If both spouses owe a debt jointly and only one spouse files for bankruptcy protection, the creditor may sue the non-filing spouse. However, if only the filing spouse owes the debt, the entire debt will be eliminated or resolved, as the non-filing spouse is not liable for that particular debt.

Filing for bankruptcy in New Jersey is a process that requires substantial personal and financial information / documentation, time and patience. Prior to filing, each spouse should be counseled on the advantages and disadvantages of filing alone or jointly.

As a Board certified consumer law bankruptcy attorney by the American Board of Certification, Robert Manchel has assisted numerous individuals in filing for bankruptcy in New Jersey. To learn more about how New Jersey bankruptcy lawyer Robert Manchel can help you with your particular situation, please call 866-503-5655 today.

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