Robert Manchel

Can I Keep Financed Jewelry In A New Jersey Chapter 7 Bankruptcy Case?

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Bankruptcy Lawyer Explains When A Person May keep Financed Jewelry In A New Jersey Chapter 7 Case

An asset must be protected from the trustee and the financing creditor in a New Jersey chapter 7 bankruptcy case. It is unlikely that a chapter 7 trustee will sell the debtor’s jewelry.  A trustee may only sell an asset that is not totally exempt. I have explained how exemptions work in bankruptcy and when an asset is not totally exempt. Jewelry is an asset, which is generally 100% exempt. However, if the jewelry has substantial value, in excess of the financing payoff amount, it is possible that a trustee may sell the jewelry.
Additionally, a debtor must consider when and how the financing creditor may repossess the jewelry, assuming that the trustee will not sell the item. Typically, if a person obtains financing to buy jewelry, the financing creditor is granted a security interest in the jewelry.  The secured interest is granted by way of a “Purchase Money Security Interest”, which is special financing of property that is used to purchase a non-real estate asset. A security interest grants the financing creditor a lien in the jewelry.
In a chapter 7, in New Jersey, the secured debt and personal liability that is owed to the jewelry financing company is typically discharged. Discharged means that the debt is eliminated. However, the finance company’s lien is not effected by the bankruptcy discharge. This means that the finance company may not sue the debtor, for the money that is owed, after the bankruptcy case is discharged and completed. However, after the completion of the bankruptcy case, the finance company may pursue the repossession of the jewelry, if the payments are not current.
If a debtor falls behind with the payments, the finance company may file a state court civil action to obtain possession of the jewelry, but can never purse a civil action to collect any money that is due on the debt. The enforcement of their lien is called a “Replevin Action”, which is a state court civil lawsuit for a court order requiring the debtor to turnover the jewelry. Please note that the creditor may not pursue the “Replevin Action” if they believe that the lawsuit is not worth the attorney’s fees and costs. Also, a debtor may wish to voluntarily give back the piece of jewelry to the finance company.
You may contact Robert Manchel at 866 503 5644 for NJ. bankruptcy inquiries.

How A Financed Washer And Dryer Is Treated In A New Jersey Chapter 13

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New Jersey Lawyer Explains How The Financing On A Washer And Dryer Is Treated In A Chapter 13.

In a New Jersey chapter 13, the debtor must make monthly payments to a chapter 13 trustee. The number of months of the entire bankruptcy plan and the amount of the monthly payments depends on numerous issues. Unsecured debt and secured debt are treated and paid differently. An unsecured creditor does not hold a lien on property. The most common type of unsecured debt is credit card debt and a personal loan. Typically, the amount to be paid to the unsecured creditors, is based on the debtor’s disposable income and the debtors’ equity in their personal property and real estate. Theoretically, depending on the debtor’s circumstances, he may be permitted to eliminate all unsecured debt. I explain how unsecured debt is treated in a chapter 13 in numerous blogs within this website.
A secured creditor is granted a lien in property. If the debtor wishes to keep such property, he must pay the secured creditor  and the property  must be essential to the household, such as a house, car, etc. The property cannot be their brother in law’s camper. In my opinion a washer and dryer is essential.
The bankruptcy code permits various options as to how a debtor may pay for a washer and dryer. If the debtor is current with their washer and dryer finance payments, at the time of the bankruptcy filing, the debtor may continue to make his monthly payments, as they did prior to the filing. In other words, the debtor may pay the monthly payments directly to the finance company. If the debtor was behind with his payments prior to the filing, he may continue to make monthly finance payments directly to the finance company and pay his finance arrears, within his monthly bankruptcy plan payments. In this scenario, the court will divide the amount of his arrears by the number of the months of his bankruptcy plan.
The third option permits the debtor to pay the entire amount of the debt through the bankruptcy plan’s monthly payments, without having to make the regular monthly payments directly to the finance company. The bankruptcy code allows the debtor to stretch out the payments, after the due date on the financing contract.
Additionally, the debtor may be able to “cramdown” the debt. This means that the debtor may keep the items, by only paying the finance company, the fair market value of the items, plus a fair rate of interest.  The total amount of the value will be paid through the monthly bankruptcy plan, without having to make direct payments to the finance company. The debtor may only “cramdown” the debt and pay the value, if the washer and dryer was purchased a certain period of time prior to the bankruptcy filing. For example, if the value of the washer and dryer is $500.00 and the financing payoff is $1,000.000, the debtor must pay the $500.00, plus a fair rate of interest only. Please note thate there are numerous exceptions to this law.
Contact Robert Manchel at 866 503 5644 to discuss your NJ. bankruptcy law questions.

Can I Keep A Financed Washer and Dryer in a New Jersey Chapter 7?

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NJ. Bankruptcy Lawyer Explains When A Person May Keep their Financed Washer and Dryer In A Chapter 7.

Typically, in a New Jersey chapter 7 bankruptcy case, the debtor discharges (eliminates) all unsecured debt. Unsecured debt is any debt that is not connected to any property, such as credit card debt, or a personal loan. Generally, a credit card charge does not require the debtor to include any property as collateral. In others words, the debtor does not agree to give the creditor a lien in property that may be repossessed, if the debt is not paid. Also, credit card debt consists of borrowing funds for services, as well, which the creditor cannot lien
Secured debt is money that is borrowed, in which the debtor, grants the creditor a lien in certain property, such as a mortgage on a house and financing on an automobile. In a chapter 7, in New Jersey, secured debt is discharged as well, as unsecured debt.  Discharge of the debt means that the creditor may not sue the debtor for the money that is due. However, if the debtor does not make payments on his mortgage, after the discharge, the mortgage company may take the property, only, by filing a foreclosure action.  Auto financing is treated the same in that if a debtor does not make his auto finance payments, after the discharge, the finance company is permitted to repossess his car, only.
Even though a chapter 7 discharges the secured debt,  such as a mortgage and/or auto financing debt, typically, the debtor may keep the house, or an auto, if the debtor continues to make timely payments on the secured debt, (ie: mortgage; auto payments). Generally, even though the debt is eliminated, the debtor must continue to make timely monthly payments to prevent a repossession and/or a foreclosure action, after the discharge.
What type of debt is connected to a washer and dryer? Typically the debt is secured debt, which grants the creditor a secured interest in the washer and dryer. The debt is generally secured, pursuant to state and bankruptcy laws, because the large item was purchased with the financing and the debtor grants the creditor a security interest in the items. Please note this explanation is simplified and the result depends on each transaction.
As a result, if the debtor falls behind with his payments, after the  chapter 7 bankruptcy discharge, the creditor may not sue the debtor for the debt. However, the creditor may file a New Jersey State Court lawsuit ordering the debtor to turn over the appliances. Depending  on the value of the items, it is unlikely that the creditor will pursue such action, as a result of the cost of lawyers and other lawsuit costs. Also, if the payments are not made in compliance with the contract, the warranty will likely be invalid.
Robert Manchel may be contacted at 866 503 5644 to discuss your NJ. bankruptcy law questions.

What Pay Check Deductions Are Allowed In A New Jersey Bankruptcy Case?

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NJ. Bankruptcy Lawyer Explains What Pay Check Deductions Are Permitted For a New Jersey Bankruptcy Case

A debtor’s projected household net (after tax) income must be less than their projected necessary and reasonable household  expenses to receive a chapter 7 discharge. The trustee reviews the pay stubs of the debtor, the debtor’s non filing spouse, and any other household members to ensure that their pay do not include disallowable deductions. The typical allowable deductions include the following: any and all taxes; health insurance; dental; medical; union dues; precriptions.
Generally, any deductions for non essential items will be added back to the net income. For example, funds deducted for items such as savings will be added back to the net income, resulting in the actual allowable net income. If the court permitted savings as an expense, the debtor could reduce thier net income to any amount by deducting additional savings. Sometimes a debtor will deduct funds from their gross income for a mortgage and/or an auto payment. Such payments may be deducted. However, the debtor cannot take the same deduction as an expense on the bankruptcy expense schedules.
This pargraph explains the allowable deductions in a New Jersey chapter 7 bankruyptcy case. Pension or pension like deductions are typically not permitted unless the deduction is mandatory. Most companies do not mandate that their employees contribute to their pension. However, various government entities typically require their employees to contribute a portion of their pay towards their pension, such as the State of New Jersey. If the debtor’s employer requires a contrbution to thier pension, the deduction is permissable. Consequesntly, State of New Jersey employees may use their pension contribution deduction as an allowable deduction. However, a pension contribution from virtually all non governmental entities is not allowable, as the deduction may be stopped to allow additional net income. The bankruptcy code does not specifically deal with pension loan payments. However, generally, all chapter 7 trustee’s allow the deduction on each pay.
The allowable chapter 13 deductions may differ from the chapter 7 deductions based on the trustee who is administering the case. The bankruptcy code permits a reasonable voluntary pension contribution as an allowable deduction, in a New Jersey chapter 13 case only. Therefore, a voluntary contibution to a pension that is not required, may be deducted from a person’s pay to arrive at the net income amount. In a chapter 13, a debtor may also use a pension loan as allowable expense. However, the amount of the deduction and the manner in which the deduction is applied may vary with each trustee.
Tax refunds appear to be applied differently based on the assigned chapter 7 and chapter 13 trustee. A tax refund may be considered an asset in a chapter 7 case depending on the date of the filing. A tax refund may be considered an asset, additional income or disreguarded, in a chapter 13,  based on the time of the filing and the assigned trustee.
Contact Robert Manchel at 866 503 5644 to discuss your NJ. bankruptcy law questions.

What Expenses Are Used In A New Jersey Chapter 7 Bankrutpcy Case?

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New Jersey Attorney Explains The Expenses That Are Used In A New Jersey Chapter 7 Bankruptcy Case

One criteria in a New Jersey chapter 7 bankruptcy case requires the debtor’s projected net household income to be less than the projected reasonable and necessary household expenses. If the income is more than the expenses, the debtor does not meet the chapter 7 criteria. If the debtor’s monthly household income is less than the monthly expenses, there are no disposable funds to pay to the creditors. An individual debtor that files without her spouse, must include her husband’s income in the calculations, if they are residing together in the same household. If the debtor does, in fact, have disposable income, each month, the debtor must pay back, at least, the amount of the disposable income to the creditors, in a chapter 13 case. Please note a New Jersey chapter 7 bankruptcy has additional criteria.
The general list of necessary household expenses is reflected below: rent; mortgage; real estate taxes; homeowners insurance; automobiile insurance; home maintenance; utilites;  electric; heat; natural gas; water; sewer; telephone; cell phone; internet; cable; housekeeping suplies; childcare; children’s educational costs; clothing; laundry; dry cleaning; personal care products and services; garbage collection; home maintenance; food; clothing; out of pocket health care and medications; dental; transportation; entertainment; alimony; support; possibly other necessary expenses; homeowners association; health Insurance; other insurance; car payments; possibly other installment payments; recreation; charitable contributions; renters insurance; life Insurance; payments for additional dependants.
The amount that is allowable for each expense is based on the following: number of household members: each individual’s personal situation; the bankruptcy code; the amount the trustee considers reasonable; the amount the presiding judge deems reasonable; IRS standards. The IRS provides a general guideline of the acceptable allowable amounts that are deemed reasonable for each expense. However, the amount may be increased based on the particular needs of each individual. For example, a household member that has diabetes, may require certain foods, that are more costly. A person that drives 100 miles one way to work each day, will incur more transportation costs than a person who works one block from their employment. Also, the number of household members effects the amount  that will be considered reasonable, such as food, etc. Also, the allowable monthly payments for certain expenses, such as entertainment, are typically standard for each trustee.
Allowable expenses do not include any payments to unsecured creditors, such as credit card debt and personal loan payments. This criteria seems to frustrate some clients. However, such expenses are not included because the unsecured debt will be eliminated if the debt is discharged. The court and trustee want to know how much disposable income will be available after their unsecured debt is discharged. In the event that the debtor has disposable income that may be paid to the creditors each month, the debtor does not meet the New Jersey chapter 7 criteria. In this scenario, the debtor will be required to pay the amount of the disposable income to the creditors, in a chapter 13 case.
The amount of the non filing spouse’s income may be reduced by the amount that such spouse pays each month to towards their credit cards and unsecured debt. The court allows for a deduction in this scenario because the non filing spouse’s debt will not be eliminated by the filing spouse’s bankruptcy filing. Also, such payments will reduce the amount that this spouse is able to contribute to the household.
A debtor cannot use funds for an expense that is frivolous and unnecessary. For example, a debtor cannot use a mortgage expense on a second beach house that is not earning the debtor any money. However, if the beach house results in a positive net cash flow, each month, the debtor may use the mortgage payment as an expense. A debtor could not use an auto payment on his Harley Davidson, that is not necessary for transportation to and from work. However, if the debtor requires the motorcycle for work purposes, the trustee will likely permit the payment.
Contact Manchel New Jersey Bankruptcy Law at 866 503 5644 to schedule an appointment.
 

What Happens When Use Credit Card Debt To Pay Taxes In NJ. Bankruptcy

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New Jersey Attorney Explains What Happens To Credit Card Debt That Is Used To Pay Income Taxes In A New Jersey Bankruptcy Case.

Typically, in a New Jersey chapter 7 bankruptcy case, unsecured debt is discharged (eliminated). If a debtor meets all of the chapter 7 criteria, the unecured debt will be discharged and the creditor will never again, be able to attempt to collect the debt. In general unsecured debt is any debt that is owed to a creditor, that is not secured or connected to property, such as a car or house. Also, unsecured debt is different than certain types of debt that is not dischargeable, such as child support arrears and/or some types of tax debt. The most common types of unsecured debt is credit card debt and personal loans, that are not secured against property.
The bankrutpcy law provides an exception to the discharge of credit card debt, in a chapter 7, in the event that a credit card is used to pay a specific income tax liability, that would not have otherwise been discharged. In other words, if the the income taxes that were paid, would not have been discharged, the credit card debt that was used to pay the taxes are not discharged, as well. Therefore, to determine if such credit card debt is not discharged, we must review how taxes are discharged. There are other blogs, within my website, that provide a detailed explanation as to the criteria that required for discharging tax debt in New Jersey.
There are specific types of tax debt that are never dischargeable, such as sale’s taxes and taxes due from employers that are collected from their employees and not paid to the taxing authority. Income tax debt, in certain circumstances, may be discharged. The criteria for discharging income tax debt is partly based on the tax year in which the debtor is attempting to discharge. A bankruptcy filing may permit the discharge of income tax debt for some years and not others. The determination as to whether a person may discharge income tax debt, is based on whether the debtor meets the criteria of each year. Therefore, a complete discharge analysis must be completed for each year.
The following are the criteria that is required to discharge income tax debt for a specific tax year, in a New Jersey chapter 7 bankruptcy case: (1) The date on which the bankruptcy case is filed must be three years after the date on which the tax return was due (ie. typically April 15th of the following year); the returns of said year was actually filed more than two years prior to the bankruptcy filing date; the tax authority assessed the income taxes, for such year, more than 240 days prior to the bankrupty filing date; no tax lien was filed for such tax year. Please note that the above referenced dates will be tolled and extended for periods that the taxing authority is not permitted to collect a debt from the creditor. For example, the dates are extended for periods in which the debtor is under an agreement to make payments on taxes for a specific year.

The bankruptcy code does not permit a discharge of the portion of the credit card debt that was used to pay income taxes, for a particular year, that would not have been discharged based on the criteria explained in the paragraph above. However, all of the other credit card debt that is due to the same creditor, that was not used to pay the taxes, will be discharged. Typically, the credit card company would be required to prove such circumstances by filing an Adversary Complaint with the court, objecting to the discharge. Also, the credit card company would likely be required to prove that the funds were used to pay certain taxes that would have not been discharged.
Additionally, based on the bankruptcy code, this chapter 7 discharge exception does not apply to a New Jersey chapter 13 case. In other words, if a non-dischareable tax debt is paid with a credit card, the credit card debt would be discharged in a chapter 13. Please note that this blog explains this complex and detailed subject matter in a very consice and general manner. The results will differ under various situations and facts.

Contact Manchel New Jersey Law, at 866 503 5644, to discuss your NJ. bankruptcy law questions.

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