General Bankruptcy Information

New Jersey Attorney Explains How Bankruptcy Trustee Avoids A Transfer As A Preference

As I explained in a separate blog, a New Jersey Bankruptcy Trustee has seven Avoidance Powers that provide the right to avoid (cancel) specific types of transfers made by the debtor.  The bankruptcy code, 11 U.S.C. § 547, permits the trustee to avoid (cancel) any transfer of interest in the debtor’s property that was made: to or for the benefit of a creditor; for or on account of an antecedent debt owed by the debtor before such transfer was made; while the debtor was insolvent; and within the ninety (90) days prior to the bankruptcy filing; and the transfer enables the creditor to received more than such creditor would have received if the transfer had not been made.
A transfer may not necessarily mean that the debtor transferred property to a creditor. A transfer may also mean that a creditor obtains a better interest in the debtor’s property, such as converting an unsecured interest into a secured interest. An example of a transfer is a creditor gaining a benefit by filing a lien against the debtor’s property, in connection with a prior debt owed to the creditor.
The following is an explanation of the criteria. “for or on account of an antecedent debt owed by the debtor before such transfer was made” means that the debtor previously owed a debt to the creditor prior to the time of the transfer. If the debtor sold property and received money for the property, the transfer is not avoidable, as no previous debt was owed to the creditor. The following example meets the criteria of a transfer that relates to an antecedent (prior) debt. A bank account levy and removal of funds, in connection with a debt that was previously due to the creditor, prior to the filing of the levy. In this scenario, the transfer is the filing of the levy.
All of the above listed criteria must occur simultaneously. Therefore, at the time of the transfer, the debtor must have been insolvent. Insolvent means that the debtor’s aggregate debts are greater than the total value of all of the debtor’s assets. With regard to the last criteria, if the transfer does not entitle the creditor to receive more money or an improved interest in property, than the transfer is not avoidable as a preference.
Most chapter 7 bankruptcy cases do not involve the sale of assets or the distribution of funds. In a chapter 7, the trustee will not pursue the avoidance of a transfer, if there is no asset to liquidate or money to disburse to creditors.  Typically, a chapter 7 trustee will not permit a debtor to use his power, strictly for his own benefit. Therefore, even if all of the criteria is met, but there is no distribution to creditors in the chapter 7, the trustee will not pursue the avoidance action.
In a chapter 13, the avoidance of a transfer may benefit the debtor, by reducing the amount that the debtor must pay to such creditor, if the transfer was avoided. However, this power is strictly limited to the trustee and not the debtor. Typically, the chapter 13 standing trustee will avoid a transfer if the avoidance results in a substantial benefit to creditors other than the creditor who participated in the transfer. For example, if the result of the transfer results in a substantially higher payout to numerous other creditors, the trustee will likely pursue the action. Each trustee may not permit the avoidance of a transfer that solely benefits the debtor and no other creditors by reducing his payments to the trustee.
As always, there are a number of exceptions to the ability to avoid a transfer as a preference, assuming all of the criteria are met. There are a number of exceptions to consider. One exception is the business exception. The business exception does not permit an avoidance of a transfer made in the ordinary course of business or financial affairs of the debtor, which was made according to ordinary business terms. In addition to the business exception there are many more. I would be happy to discuss how they can individually apply to your personal circumstances.
Robert Manchel, an expert NJ Bankruptcy Lawyer, may be contacted at 866 503 5655 to discuss your bankruptcy protection questions.
 

Below Is A List of Facts About New Jersey Bankruptcy

1. Bankruptcy stops debt collection and protects property.

2. All assets and debts must listed on the petition.

3. Husband and wife may file together or separately.

4. Even though the husband may file without wife, or vise versa, both of their income must be included on the petition. This assumes that they are not separated.

5. The bankruptcy code does not set forth a minimum amount of debt that is required for filing.

6. Typically, a chapter 7 case requires one hearing and a chapter 13 case requires two hearings.

7. The Trustee’s “Notice of Abandonment” means that the trustee is abandoning his right to property and does not mean that the debtor must abandon the property. In other words, “Notice of Abandonment” is a good thing, not bad.

8. A chapter 7 will stop a foreclosure action, but not permit someone to permanently save a house with mortgage arrears.

9. A chapter 13 will stop a foreclosure action, and may permit someone to permanently save a house with mortgage arrears.

10. Typically, the chapter 7 process is about four months and the chapter 13 process is about thirty six to sixty months.

11. Chapter 7 does not require any payments to be made.

12. Chapter 13 bankruptcy requires monthly trustee payments.

13. Although the filing of a chapter 7 bankruptcy petition stops an auto repossession, a chapter 7 does not allow a person to permanently save their auto, if there are payment arrears.

14. Typically, a chapter 7 allows someone to eliminate unsecured debt, such as credit card debt.

15. There are three bankruptcy courthouses in New Jersey, which are Newark, Trenton and Camden.

16. The bankruptcy code lists certain debt that cannot be discharged or eliminated.

17. Certain types of debt must be paid in a chapter 13.

18. Even though a bankruptcy filing is included on one’s credit report, does not mean that the person cannot restore their credit and credit report.

19. There are three New Jersey chapter 13 standing trustees, with one trustee handling all cases that are filed in each particular courthouse, as explained above

20. There are numerous chapter 7 trustees that handle cases in each courthouse.

Robert Manchel is an experienced New Jersey Bankruptcy Lawyer. His telephone number is (866) 503-5655. Please call to discuss your bankruptcy protection options.

On this website, we’ve answered hundreds of the common, and not so common, questions that we’ve been asked over the years about debt, bankruptcy, home foreclosure and how to get your life back.
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The bankruptcy code specifically permits a monthly contribution to a qualified religious or charitable entity or organization as a legitimate expense in a chapter 13 bankruptcy. The code indicates that the monthly contribution may be as much as 15% of the debtor’s gross income. This means that a debtor may have less monthly disposable income by increasing monthly expenses by the 15% religious contribution. Typically, the monthly 15% religious contribution is permitted as an expense in a chapter 7 bankruptcy as well.
The bankruptcy code does not indicate that a debtor must provide proof of a history of monthly religious contributions as a prerequisite of using the monthly contribution as a present and/or future expense. However, it is typical for a chapter 13 trustee to request such proof prior to approving the contribution.
You may contact expert NJ Bankruptcy Lawyer Robert Manchel at 1 (866) 503-5655 if you need assistance and have questions about how bankruptcy protection may apply to your personal circumstances.

About 30 days after the bankruptcy filing, the debtor must appear at a Meeting of Creditors’ Hearing, which is called a 341a hearing. The bankruptcy trustee asks the debtor questions to ensure that he is entitled to a discharge and whether the trustee may sell any of the debtor’s property.
Although unusual, any of the debtor’s creditors may appear and ask the debtor questions. However, the creditor will be limited in the amount of time available for questioning, as the trustee has a number of cases that he must complete in a short time period.
A creditor is entitled to question the debtor at greater length at hearing called a 2004 hearing, which is a deposition. Typically, the deposition is held at an attorney’s office, with a court reporter that records all of the debtor’s responses.
The scope of the questioning of the 341a hearing and the 2004 hearing is the same, which is as follows:
The creditors questions must relate to the acts, conduct or property, or to the financial condition of the debtor, to any matter which may effect the administration of the debtor’s estate, or to the debtor’s right to a discharge. This means that the questions must relate to virtually any aspect of the debtor’s assets, liabilities, expenses, financial situation, income, and possible bankruptcy fraud issues concerning all aspects of the above.
Robert Manchel, experienced NJ Bankruptcy Lawyer, is happy to assist you with your bankruptcy protection questions at 1 (866) 503-5655.
 
 
 

Phantom Debt is the creation and collection of fictitious debt.  In other words, no debt exists.
A person that has substantial debt issues is less likely to confirm that a debt collector is legitimate. Based on this scenario, the scammer preys on non-suspecting individuals who are in default with a number of creditors. The scammer purchases the names and personal information of such victims. The scammer requests payment of the fictitious debt by way of elaborate collection letters or threatening telephone calls.
Sometimes the scammer may attempt to collect a debt that has been previously discharged in a bankruptcy case.
Robert Manchel, a New Jersey bankruptcy attorney, can be contacted to discuss your questions regarding bankruptcy protection at 1 (866) 503-5655.