Chapter 7 Bankruptcy

There is no specific debt requirement that must be met to file for chapter 7 bankruptcy protection. In a chapter 7, the debtor may have as little or as much debt, assuming that he meets all of the criteria for a discharge. The debtor must make the decision as to whether he has the financial ability to deal with his debt without the benefit of a bankruptcy.
A certain amount of credit card debt may seem substantial to one person and low to another. Furthermore, even though the amount of debt may seem low, if a person is unable to make minimum monthly payments on the debt, or otherwise have the ability to payoff the debt, bankruptcy may be a feasible option.
An individual should make an informed decision about how to handle their debt as soon as possible. In other words, at the time an individual is experiencing debt problems, he should prepare a detailed budget to establish a plan for curing all of their debt. If the budget reflects an inability to payoff their debt, it may be time to seek advice from a bankruptcy lawyer. If a non bankruptcy budget plan is not established, the person may not realize the severity of their financial situation, until $10,000.00 later, after paying mostly interest.
One should consider the following issues with regard to their debt situation. An individual may benefit from a chapter 7 filing instead of using pension, 401(k), or similar funds to pay their debt. Consequently, these similar types of retirement accounts are protected from creditors in a bankruptcy case. Also, a person may meet the chapter 7 criteria for only a certain window of time. Furthermore, if a person is unable to meet their monthly minimum payments, the debt will likely spiral out of control due to increased interest rates.
You may contact New Jersey Chapter 7 bankruptcy lawyer Robert Manchel at 1 (866) 503-5655 if you are interested in filing for bankruptcy protection.

A person cannot file a second chapter 7 case less than 8 years after the filing of a prior chapter 7. However, a person can file a chapter 13 case 4 years after the filing of a chapter 7 case.
This means if a person incurred additional credit card debt after the filing of a chapter 7 case, a person may be able to eliminate a portion or all of their additional credit card debt through a subsequent chapter 13 case.
A chapter 13 debtor must pay all of their monthly disposable income to a chapter 13 trustee for 36 to 60 months, depending on their circumstances. If the debtor is paying certain debt, such as mortgage arrears or an income tax liability through a bankruptcy plan, and there is no additional disposable income to pay any funds toward the credit card debt, the debtor may eliminate all of the additional credit card debt.
In the event that there is disposable monthly income to pay the additional credit card debt through the bankruptcy plan, the debtor need only pay the disposable income toward such debt, thereby eliminating the balance of the debt.
Please note that there are many exceptions to the above information.
New Jersey bankruptcy lawyer Robert Manchel may be reached at 1 (866) 503-5655 to answer any questions that you may have about filing for bankruptcy protection.

The chapter 7 process takes about 4 months until the discharge is entered and the case is completed. After the discharge, the debt that is dischargeable is eliminated and the debt that is not discharged is still due and owed by the debtor. Any debt A chapter 11 U.S.C., section 523 of the bankruptcy code provides a list of the type of debt that is not eliminated (discharged).

There are two issues that deal with the question of whether a debtor can keep luxury personal property in a chapter 7 case. The first deals with whether the debtor is able to fully exempt the equity of the property. The second relates to whether the property is financed and the payments are current.
A bankruptcy trustee only has the ability to take and sell the debtor’s personal property if the specific property cannot be fully exempt. If the property can be fully exempt, the trustee cannot take or sell the property. The bankruptcy code provides a list of exemptions that a debtor can apply towards different types of property. For example, the court allows a debtor to apply an exemption of $3,450.00 towards the value of an auto and up to $21,450.00 per person in connection with their residence.
To be more specific, the exemptions are applied towards the equity of each property. Equity is the difference between the value and the secured interest in the property. For example, property having a value of $10,000, with a financing payoff of $6,000.00, has equity of $4,000.00. The equity of property that is not financed is equal to the value of the property.
If an auto has a value of $3,000.00, the debtor can keep the auto because the auto is fully exempt after applying only $3,000.00 of the allowable $3,450.00 in auto exemptions. Each debtor may be able to apply an additional $11,975.00 of their unused portion of their residential exemption, towards any property or properties. If the $11,975.00 is available, it may be applied to a number of properties, until exhausted. In other words, any portion of the $11,975.00 may be applied towards as many properties as possible, until the entire amount is depleted. If the property is not financed and may be fully exempted, the debtor can keep the property.
The second issue relates only to luxury property that is financed. If the debtor is in default with the financing, the finance company will be permitted to repossess the property, after discharge, or, during the pending case, after permission from the court. Even though the creditor may pursue the repossession of the property, based on a default, depending on the property’s value and other circumstances, the finance company may not wish to repossess the property.
The code indicates that even if the debtor is current with the finance payments, the finance company will be permitted to pursue the repossession process, if the debtor fails to sign a reaffirmation agreement, that is approved by the bankruptcy court, within a certain time period. However, in reality, this is very unusual, if the debtor continues stay current with the payments.
Also, based on the criteria of a chapter 7, the debtor should not be able to pay the monthly financing payments on a luxury item.
New Jersey bankruptcy law expert Robert Manchel can be reached at 1 (866) 503-5655 to explain which property you can keep in a chapter 7. He can also answer any questions that you may have about filing for bankruptcy protection.

Here we will discuss a Chapter 7 trustee’s questions and concerns that will come up during the Meeting of Creditors’ Hearing [341(a) hearing]
Please note that it is unusual for a trustee to sell a debtor’s asset.
Although there are number of issues that the trustee is concerned about, in general the most important issues relate to the following:
1.  The value of the debtors’ property.
The trustee is entitled to a percentage of the funds that are distributed to creditors, including the liquidation of assets. Therefore, the trustee is interested in the value of all the debtor’s property. Assets include any interest in any personal property or real estate. An asset includes the debtor’s right to sue for money, such as a breach of contract action or a personal injury action. For example, if the debtor has a right to sue someone for an injury that was caused by a third party, the trustee may have a right to such money.
2.  Ensure that the debtors’ monthly household income is less than their reasonable and necessary expenses.
The main criteria for a chapter 7 is that the debtor’s monthly household income is less than the debtor’s household’s monthly necessary and reasonable expenses. Typically, the expenses only include necessary items such as: food, clothing, utilities, mortgage payments, transportation, etc. The monthly expenses do not include payments on credit card debt.
3.  Ensure that the filing was not fraudulent
The trustee must ensure that the debtor unexpectedly found themselves in a situation that required the filing of bankruptcy protection and that the bankruptcy filing is not fraudulent.
In addition to the above, the trustee is interested in other issues, such as his right to pursue the debtors’ creditors for money. However, most of the questions relate to the above listed issues. Some of the questions that a chapter 7 trustee will ask are as follows:
–        Is your petition true and correct?
–         Did you review the petition prior to signing?
–         Does the petition reflect your signature?
–         Does your petition require any modifications or additions?
–         Do you own any stocks, bonds, or investments of any kind?
–         Can you sue anyone for any reason, including a personal injury action?
–         Do you own any real estate?
–         If so, when did you buy the real estate and how much did you pay to buy the real estate?
–         Did you own or sell any other real estate within the last five years?
–         Do you have a safe deposit box?
–         Are you entitled to receive any money from the estate of a person who passed away?
–         Did you transfer any money or property to anyone within 2 years prior to the filing?
–         Did you sell any property within the two years prior to the filing?
–         Did you pay any creditor, including a family member in the last year?
–         Do you owe or receive alimony or support?
–         Have you ever filed for bankruptcy before?
–         Do you presently or have you in the past five years owned any interest in a company or operate your own business?
–         What happened in your life that required you to file for bankruptcy protection?
You may contact experienced bankruptcy attorney in NJ, Robert Manchel, at 1 (866) 503-5655,  to discuss chapter 7 issues and protection from bankruptcy.

What happens in a chapter 7 bankruptcy case if the trustee can sell the debtor’s property?
There may be circumstances when a person would rather file for chapter 7 and allow the trustee to sell an asset, instead of keeping the asset and filing a chapter 13. If a debtor files a chapter 7 he may still receive an order of discharge of his debts. Therefore the trustee is able to sell an asset if the debtor meets the criteria for a chapter 7 discharge.
The criteria for a chapter 7 discharge is the following: The debtor must meet the Means Test or Current Monthly Income Test. In other words, the debtors’ household income for the six months prior to the filing must be less than New Jersey’s median income of a household of the same size. If the debtor’s household income is greater than the state’s median income, he may still meet this criteria under certain guidelines. If the debtor’s average household net income for the six months prior to the filing is less than the debtor’s household’s average necessary and reasonable monthly expenses for this same time period they can qualify. The expenses must be permitted under the Internal Revenue Service Code.
Additionally, the debtor’s projected future monthly household net income must be less than the debtor’s projected monthly necessary and reasonable household expenses. If the debtor meets the criteria explained above, he will receive a discharge of debts within the normal time period, which is about 3 1/2 months after the filing.
The amount that is due to the trustee is based on non exempt assets. In other words, if the debtor is unable to apply his exemptions towards the fair market value of any property, the trustee is entitled to the value of the property that is unable to be fully exempted.
Example: A debtor has a third auto valuing $10,000.00, with only $4,000.00 of remaining exemptions to apply to the auto. In this example, the debtor must either allow the trustee to sell the auto and keep $6,000, or work out a settlement with the trustee to pay him $6,000.00 over a specific time period. Typically, the trustee will work with the debtors’ attorney to resolve the amount that is due and the manner in which the payments will be made.
If the debtor wishes to avoid these issues, he may be able to file a chapter 13, keep the third auto, and pay an additional $6,000.00 to the creditors, through a monthly bankruptcy plan.
Please contact Robert Manchel, NJ bankruptcy attorney, at 1 (866) 503-5655,  for a free consultation on bankruptcy protection could be applied to your personal circumstances.