August 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 closes Midtown II diner

A Bankruptcy ultimately was not enough to save a Philadelphia Pennsylvania diner. According to Philly.com at   http://articles.philly.com/2016-06-02/business/73496318_1_diner-bankruptcy-health  , during the last two years, the Midtown II diner at 11th St and Sansom St in Philadelphia was cited by the sanitations department for 125 health code violations, 66 of them serious.

9 Politicians Who Have Filed for Bankruptcy

Thomas Jefferson, founding father and 3rd president, filed for bankruptcy protection from debts incurred building his plantation home, Monticello. Books, fine wines, artwork, silver and furniture were all purchased on credit. Abraham Lincoln filed for bankruptcy protection from debts incurred purchsing a general store in New Salem, IL. It took him 20 years to pay off the debt. Benedict Arnold, William McKinley, George McGovern, Tom McMillen, Ruben Hinojosa, and Ron Stephens have all also filed for bankruptcy.

Bankruptcy Filing By a Candidate Could be a Non-Issue in Election

As many in New Jersey have learned during the most recent recession, filing for bankruptcy is not an easy choice, but it is often the only choice for some who are struggling with debt. In these difficult economic times, especially, many found themselves victims of the real estate bust or having lost jobs and savings. Filing for personal bankruptcy may offer some the chance to start over financially and to even seek new careers.

Information Required when Filing Bankruptcy

Since bankrupcy is a federal law, whether filing bankruptcy in Voorhees, New Jersey or Philadelphia, Pennsylvania, the information to be provided is the same.  Section 521 of the bankruptcy code, entitled "Debtor's Duties" lists different requirements.  The debtor needs to provide 1.) a list of creditors, 2.) a schedule of assets and liabilities, 3.) a schedule of current income and current expenditures, 4.) a statment of the debtor's financial affairs, 5.) a bankruptcy petition signed by the debtor's attorney, 6.) copies of all payment advices received within 60 days before the date of the filing of the petition, 7.) a statment of the amount of monthly income, 8.) a statement disclosing any reasonably anticipated increase in income or expenditures over the 12-month period following the date of the filing of the petition, 8.) a statement of the debtor's intention with respect to the retention or surrender of property, 9.) a copy of the debtor's federal income tax return. In addition, a trustee may ask for additional information such as bank statements, deeds, etc.

Abandonment of Property in a Chapter 7 Bankruptcy is a Good Thing

A Chapter 7 Bankruptcy client from Mount Laurel New Jersey called the other day concerned he was going to lose his house. He had received a Notice of Abandonment relating to his house and was not sure what it meant. I explained that when a person files a Chapter 7 bankruptcy, the trustee appointed in the case in effect gets an ownership interest in the individual's property. This would allow the trustee to sell the property, but only in the unusual circumstance where there is a lot of equity in the house. Since individuals can protect some equity in their home, in most Chapter 7's the trustee will decide there is no benefit to the creditors to sell the home because after paying the realtor, the mortgage and allowing the debtor approximately $24,000 in equity ($48,000 if jointly owned) there is no reason to sell the home. So the Trustee will send out a Notice that he is abandoning "his" interest in the property, not "yours". It is understandble why receiving a notice for abandonment would seem like a problem, but it is not.

Discharging Willful and Malicious Damages in Bankruptcy

Damages caused by willful and malicious injury to another person cannot be discharged in bankruptcy. Bankruptcy discharges many kinds of debt. However, there are some exceptions under Section 523 of the bankruptcy code. One type of exception relates to Willful and Malicious Injury to another person. For example, Kathryn Knott was recently released from a women's prison in Northeast Philadelphia. http://www.phillymag.com/news/2016/07/12/kathryn-knott-released-from-jail/  According to Phillymag.com a civil lawsuit has been filed against her and the other two attackers by the victim. If any of them turned to bankruptcy, if the injuries were the result of a Willful and Malicious attack, the damages claim would not be discharged. In other words, they would still owe the money to the victims. The Philly mag article also notes there is a $2000 fine owed. That would also not be dischargeable under Section 523 of the bankruptcy code.

Reestablishing Credit after Bankruptcy

Each year a number of people file for bankruptcy protection as a responsible means of getting their financial lives back on track. Across the United States, over eight hundred thousand individuals filed for personal bankruptcy in 2015 and in New Jersey that number was around 25,000. Typically a bankruptcy will reduce or eliminate debt. By also taking some proactive steps, recovering after filing may be faster than expected.

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