General Bankruptcy Information

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.

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.

New Jersey Attorney Explains The Consequences Of Filing For Bankruptcy Protection In New Jersey
The consequences of filing for bankruptcy protection and obtaining a discharge varies based on each person’s: intentions; assets; income; expenses; and financial position.
Chapter 7 Bankruptcy
After the chapter 7 has been completed, in approximately four months, the debtor is free to move forward with their life, without the debt that is discharged. A New Jersey chapter 7 discharge will result in the elimination of unsecured debt, such as credit card debt, personal loans, utility bills, medical bills, etc. A person who does not wish to save or keep their house will eliminate mortgage debt and liens on their house. A person who does not wish to keep their car will eliminate their auto finance and/or lease debt. Additionally, it is possible that none, all, or a portion of tax debt may be eliminated, as well. Any and all wage garnishments and bank levies are permanently eliminated. Also, pending lawsuits in connection with unsecured debt are permanently stopped and/or eliminated.
A person that wishes to keep their house, may possibly eliminate all or a portion of their non-mortgage house liens, depending on various factors. The debtor is liable for any portion of taxes that are not eliminated by the bankruptcy filing. Utility debt is discharged and the utility company must allow the debtor to restore service and/or continue service. Automobile fines will not be eliminated and must be resolved after the discharge.
Chapter 13 Bankruptcy
A New Jersey Chapter 13 debtor will receive a discharge after making trustee payments for 36 to 60 months. A chapter 13 discharge will has similar consequences as a chapter 7, with the following possible exceptions. If a debtor filed a chapter 13 to cure their mortgage arrears and save their house, their house payments should be current at the completion of the case. The debtor may do the same for automobile finance arrears. At the completion of the case, all tax debt will be paid or eliminated. There will be no tax debt that must be paid after the discharge. Also, any child support or alimony debt will have been paid during the life of the bankruptcy case. Therefore, there will be no such debt that must be paid after the discharge. A chapter 13 may allow for additional benefits such as paying one’s automobile fines. Another benefit of a chapter 13 is to allow debtors to eliminate second mortgages in certain situations. Also, any liens that are eliminated and discharged in a New Jersey chapter 7 and chapter 13, do not attach to property purchased after the bankruptcy discharge.
11 U.S.C, section 524, of the bankruptcy code is called the, “Effect of Discharge”. This code section prohibits certain acts by creditors after a bankruptcy discharge, for all chapters. Therefore, after a discharge, certain creditors’ acts may still be a violation of the bankruptcy code. If a creditor violates this code section, the debtor may bring them back into bankruptcy court for the reinforcement and sanctioning of such actions. In general, this section prohibits a creditor’s act to collect a debt that was discharged, or collect on a lien that was eliminated and discharged. This section also prohibits telephone calls, letters, lawsuits, etc., regarding debt that was incurred prior to the filing. There are other non-bankruptcy laws that may be breached by the same acts.
The other portions of this website explain, in detail, other effects of bankruptcy, including, but not limited to: rebuilding credit; obtaining debt after bankruptcy; how to recover; and what to expect.

Lawyer explains how welfare and social security debt and benefits are treated in a New Jersey bankruptcy case.

In many instances, New Jersey debtors have debts owed to state or federal governmental agencies, that arise out of various public benefit programs. Such benefits include welfare and social security. These debts may arise out of a an obligation to reimburse a specific entity as a result of an over payment which the debtor is required to repay.

Bankruptcy lawyer explains how a New Jersey chapter 7 and chapter 13 bankruptcy works, with a debtor that owns a mobile home.

A residence under the bankruptcy code includes real property, which is a house, or personal property that is used as a residence, such as a mobile home.The determination as to the property that the debtor is permitted to keep in a chapter 7 is based on exemptions. The amount of money that must be paid to unsecured debt in a chapter 13 is based on the value of assets, such as a mobile home, the applicable exemptions and disposable income.
The bankruptcy code has numerous sections relating to real property. Real property is land and all improvements that are fixed to the land, such as a house. A mobile home, that is used as a residence, is not real property under the bankruptcy code. However, the exemption 11 U.S.C., section 522 (d) (1), specifically covers real property and personal property in which the debtor uses as a residence. Therefore, a mobile home applies to this exemption. This provides substantial protection to a person that resides in a mobile home, as a mobile home typically has less value than a typical house.
If a mobile home is completely exempt, the debtor may keep their New Jersey mobile home. The 11 U.S.C., section 522 (d) (1) exemption is $23,675.00. This means that a person may keep their mobile home, in a chapter 7, if the mobile home’s value, minus the mortgage is $23,675.00, after subtracting the mortgage payoff and 10% of the projected cost of sale. For example, a mobile home valued at $40,000.00, minus a mortgage payoff of $10,000.00, has equity of $30,000.00. The court permits a projected 10% cost of sale, which is 10% of $40,000.00, or $4,000.00. $30,000.00, minus $4,000.00 is $26,000.00. $26,000.00, minus the $23,675.00 exemption is $2,325.00. Therefore, technically, the chapter 7 trustee may sell the house and receive $2,325.00 for the creditors.
If I modify the example above by changing the house’s value to $37,675.00, the debtor would be permitted to keep the mobile home in a chapter 7  and avoid the chapter 7 trustee’s sale of the property. $37,675.00 (house value), minus $4,000.00 (cost of sale), minus $10,000 (mortgage payoff), minus $23,675.00 (exemption) is $0.00. If the mobile home has a value of $35,000.00, in the above referenced example, the property will be fully exempt and the debtor will be permitted to keep the mobile home.
In the above referenced example, where the mobile home has a $40,000.00 value, the debtor will be able to file a New Jersey chapter 13 and save his mobile home. However, the debtor will be required to pay at least $2,325.00 toward his unsecured debt, as a result of the $2,325.00 “unexempt” equity in the mobile home. In the above referenced example, where the mobile home has a value of $35,000.00, the debtor would be able to file a chapter 13, keep his property, and pay nothing to toward his unsecured debt, as it pertains to his mobile home equity.
Although a person may file a bankruptcy case for the sole purpose of resolving mobile home issues and associated debt, the debtor must deal with all of his debt, according to the bankruptcy code. A chapter 13 debtor, who owns a mobile home, may be required to pay other debt based on the value of all of his assets, disposable income and type of other debt.
Please contact Robert Manchel, Esq., your NJ. bankruptcy attorney, at 866 503 5644.

New Jersey Attorney Details How To Give Back A Timeshare And Eliminate the Debt In A New Jersey Bankruptcy

There are many people who are very happy with their timeshare purchases. However, there are situations, whereby the enticing and aggressive marketing programs convince people to purchase a timeshare, that results in buyer’s remorse. Typically, a timeshare requires a periodic finance payment, in addition to the ongoing maintenance fees. The maintenance fees appear to be endless. How can someone get rid of the timeshare and the associated finance and maintenance payments. New Jersey Bankruptcy may be your answer.
Chapter 7
A New Jersey Chapter 7 bankruptcy will permit a person to surrender their timeshare and completely eliminate and discharge any and all of the debt and the obligation to make any future payments. This means that the time share company will not be permitted to collect any debt that was due prior to the filing and will not be able to bill the debtor for any payments that come due in the future. Typically, under these circumstances, the timeshare company will ask the debtor to sign a document that conveys the property back to the company.
Typically, under all circumstances, the bankruptcy trustee and/or the bankruptcy court will not take the timeshare or require the debtor to sell the property, unless their is substantial value in the property as a bankruptcy asset.  Also, “in theory”, a debtor may keep the timeshare, that does not have substantial value, if he is current  and keeps current with all required payments. I write, “In theory”, because any debtor that meets the chapter 7 criteria should not and cannot have sufficient income to make payments on a nonessential timeshare.
Chapter 13
The debt owed to a timeshare company is considered a secured debt as to the timeshare. A debtor must file a plan that reflects how the time share will be treated. The explanation as to whether a debtor may keep a timeshare in a New Jersey chapter 13 is very similar to keeping a motorcycle that is used solely as a luxury item. Please read my blog regarding how a motorcycle and motorcycle financing is handled in a chapter 13. Generally, if a timeshare is surrendered, the debtor may eliminate and discharge any and all associated required payments  and debt. Typically, under this scenario, if the plan if artfully drafted, the debtor will not be required to pay any money, whatsoever, through the trustee payment, to the timeshare company.
You may contact Robert Manchel at 866 503 5644 to discuss your timeshare and NJ. bankruptcy law questions.