New Jersey Attorney Explains How A Charitable or Religious Donation or Contribution is Handled in Bankruptcy.
In a New Jersey chapter 13 bankruptcy case, the debtor must pay all of their monthly disposable income, after allowable expenses, towards their general unsecured debt. “Unsecured debt” is debt that is not related to any property, such as credit card debt. The allowable expenses must be necessary and reasonable, such as food, clothing, utilities, transportation, etc. A reasonable and necessary expense does not include a payment on a recreation vehicle that is used for vacations.
The religious Liberty and Charitable Donation Protection Act of 1998 amended section 1325(b) of the bankruptcy code, thereby permitting a monthly allowable expense for religious and charitable donations. Section 1325(b) relates to payments in a chapter 13 bankruptcy case. The act specifically permits such a contribution in an amount not to exceed 15% of their gross monthly income. However, the contribution must be paid to a qualified religious or charitable organization.
A New Jersey chapter 7 bankruptcy case has certain criteria that allows a person to discharge their debt. The chapter 7 bankruptcy law requires a person’s household net income to be less than their reasonable and necessary expenses, that are required to live. Such expenses are the same as the chapter 13, as explained above. As a result of the aforementioned amendment, chapter 7 trustees also allow the same monthly contribution in determining disposable income.
Depending on the NJ. bankruptcy trustee, a debtor may be permitted to make a larger monthly contribution if he can establish a history of making such payments. Also, depending on the trustee, the debtor may be required to establish proof of any contributions.
Contact Robert Manchel, esq. at 866 503 5644 to discuss your NJ. bankruptcy law questions.