April 2016 Archives

Qualifying Military Service and Bankruptcy Means Test

As a general rule, individuals filing a bankruptcy in New Jersey, Pennsylvania and other states must complete and file a "Statement of Your Current Monthly Income," referred to as the means test. Under this test, if you make more than the average family your size in your state, then limits may be imposed on your expenses which could result in you having to pay some or all of your debt back in a Chapter 13. The income limits in Pennsylvania are lower than in New Jersey. However, if you are in the military you may be exempt from this requirement.

Bankruptcy the First Step in Rebuilding Credit

When people reach the point of contacting a bankruptcy attorney, often their circumstances include not only overwhelming debt, but low credit scores from multiple defaults and late payments. The bankruptcy will not only address the debt issue, but by eliminating the debt, begin the process of building your credit score.

Chapter 11 filed by Sun Energy

Despite an industry such as the Solar industry being  strong and growing, companies can still wind up in Chapter 11 bankruptcy.  USA Today, at http://www.usatoday.com/story/money/2016/04/21/sunedison-chapter-11-bankruptcy/83329928/  reports that SunEdison, a renewable energy firm, filed for Chapter 11 bankruptcy reorganization on April 21, 2016. The company recently failed to acquire Vivint Solar and had no additional sources of liquidity to pay off $300 million in debt financing. The filing does not include SunEdison's two subsidiaries, TerraForm Power and TerraForm Global. Apparently the plan now is  to shed debt by selling "non-core" assets. Andrew de Pass, CEO of rival solar installer Conergy said, in regards to SunEdison's bankruptcy, "It has nothing to do with the state of the solar industry in the U.S. or globally. The solar industry is extremely strong." As reported in the USA Today article, according to the U.S. Energy Information Administration, solar power generation in the U.S. was 23.2 million megawatt-hours, up 52% from 2014 and up 186% from 2013. Whether the economy is strong or weak, whether an industry is strong or weak, companies may still need to file bankruptcy to address debts.

Options When Over Chapter 13 Debt Limit

Chapter 13 bankruptcy is a great way to save your home by paying arrearages on a mortgage over time or to pay back unpaid taxes. But Chapter 13 has debt limits. As of April 1, 2016 a debtor cannot file Chapter 13 bankruptcy if they have more than $394,725.00 in unsecured debt or more than $1,184,200.00 in secured debt. Personal guarantees from a failed business, student loans and IRS debt can put an individual in this debt limit dilemma. What options do they have? There are several. A couple in Cherry Hill New Jersey could not file a joint Chapter 13 bankruptcy to save their home because each owed significant student loans. However, individually their total was less than the unsecured debt limit so each filed a separate Chapter 13 to save their home and address their debt. An individual from Mount Laurel New Jersey needing to pay mortgage arrears was unable to file Chapter 13 because of debt left over from a failed business. In his case, an individual Chapter 11 bankruptcy was filed to save his home. Filing a Chapter 7 and doing a modification helped an individual from Voorhees, NJ save his home when he was over the debt limit. Even with high debt limits options exist to deal with debt so meeting with an experienced bankruptcy attorney is an impotant step in finding a solution.

Bankruptcy Exemptions In New Jersey and Pennsylvania

Bankruptcy exemptions are used to protect assets when a bankruptcy is filed. For example, a Chapter 7 bankruptcy is also called a liquidation but the reality is assets are only liquidated if there is equity in the assets and the assets are not exempt. New Jersey and Pennsylvania bankruptcies rely primarily upon the federal exemptions. As of April 1, 2016 those exemptions have increased. For example if an individual files a bankruptcy and they own a home the exemption in their residence is $23,675. This is an increase from the $22,975 utilized prior to April 1, 2016. By way of example, if an individual owns a home worth $200,000 and there is a mortgage for $180,000, for bankruptcy purposes there is no equity since the equity in the home can be exempted. As a result, a Chapter 7 bankruptcy can be filed and the home would not be liquidated. Exemptions also exist for other assets. The new exemption amounts as of April 1, 2016 utilized in New Jersey and Pennsylvania for federal exemptions include $3775 for equity in a car, $12,625 for household goods and furnishings, and $1600 for jewelry. In addition to the exemptions being increased, other amounts also increased such as the maximum amount of unsecured debt in a Chapter 13 which increased from $383,175 to $394,725.

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