Cherry Hill Bankruptcy Blog

When do you lose assets as part of a bankruptcy filing?

One of the biggest reasons that people give for avoiding or putting off bankruptcy is the potential for the loss of their major assets. Most people only have a cursory understanding of how bankruptcy works, but the idea that the courts will liquidate certain assets is well known. People might imagine the loss of their home, their vehicle or just about everything else.

However, the actual risks to your assets may be less than you might assume. Bankruptcy is there to help people overcome debt and avoid poverty, not to push them into indigence by stripping them of everything they own. There are protections in place that allow you to retain some or all of your assets depending on your income, your assets and the nature of your debts.

WHERE SHOULD MY BANKRUPTCY BE FILED?

There may be more than one place where you can file your bankruptcy. The statute indicates you can file where you reside, where you are domiciled or where your principal assets are located. Lets say your permanant address is in Willingboro New Jersey. That is where you have lived and that is where you intend on living. Willingboro NJ is therefore your domicile. But what if you have an ill mother living in Northeast Philadelphia Pennsylvania and you moved in with her for the last nine months to help her. The Philadelphia address is your residence and you could file in either place. If you own, for example, a vacation home in North Carolina and that is your most valuable asset, you could also use North Carolina as the venue to file and file there. For most people they can only file in one place. But as you see, that is not always the case.

HOW MUCH WILL MY CHAPTER 13 BANKRUPTCY PAYMENT BE?

"How much will my Chapter 13 bankruptcy payment be?" is a question I am often asked. While it is a simple question, the answer is not simple since the amount is determined by a number of factors. First, is the Chapter 13 purpose to pay mortgage arrears? If so, the total amount of the arrears would need to be paid over three to five years. Do you owe any priority debt such as taxes. That also must be added to the amount that is to be paid. What if you could afford to pay even more. The court looks at you monthly income and expenses to determine not only if you can afford to pay the mortgage arrears, etc., but also to see if you can pay something to other creditors such as credit cards and medical bills. Another major consideration is the nonexempt equity in your assets. Normally having equity in your home or other assets is a good thing, but in a bankrutpcy it could result in you having to pay something to your creditors. You can protect some equity in assets, but if your equity is more than you can protect, that can also increase your monthly payment. There are a number of factors that your attorney must consider in putting together a confirmable plan.

The differences between Chapter 7 and Chapter 13 bankruptcy

People find themselves struggling with debt for all kinds of reasons. Maybe they wound up unexpectedly divorced which depleted their financial resources and savings while simultaneously creating an obligation to pay child support. Maybe they got hurt on the job or in a car crash and can't go back to work yet. Severe illnesses like cancer can also lead to individuals accruing huge amounts of medical debt.

Sometimes, debt slowly builds over time, as people charge a little bit to credit cards every month that they simply can't pay off in full. Regardless of how you found yourself struggling with debt, for many people, bankruptcy is the most effective solution. Unlike payday loans or debt consolidation programs, bankruptcy gets rid of the underlying debt that directly causes your financial hardship instead of simply pushing the repayment date out or slightly reducing the interest rate you pay.

BANKRUPTCY SALE OF ST CHRISTOPHERS CHILDRENS HOSPITAL

Philadelphia 's Hahnemann Hospital and Saint Christopher's Hospital for Children were part of a health care conglomerate that filed for bankruptcy on July 1, 2019. On September 23, 2019 the bankruptcy court in Wilmington DE approved the sale of Saint Christopher's Hospital for Children for 50 million dollars.  https://www.google.com/amp/s/www.bizjournals.com/philadelphia/news/2019/09/23/st-christophers-50m-sale-wins-ok-from-bankruptcy.amp.html The sale will allow most of the employees to stay employed and allow the renown children's hospital, which has been in existence for over 100 years, to continue. The sale also includes the sale of specialty care physician practices including practices in Northeast Philadelphia, Pennsylvania and Washington Township, New Jersey.  https://www.google.com/amp/s/www.bizjournals.com/philadelphia/news/2019/09/23/st-christophers-50m-sale-wins-ok-from-bankruptcy.amp.html

Dealing with a financial emergency when you have a low income

Common recommendations for keeping your finances in good order include budgeting and self-restraint. While this may seem to be wise and good-intentioned advice, it is not of much use to those whose income can barely cover essentials like food and shelter.

Many people in the United States, unfortunately, are not paid a wage that makes living with a disposable income possible, and this is one of the reasons why debt issues are so common.

AVOIDING 1099C TAXABLE INCOME THROUGH BANKRUPTCY

1099c income occurs when there is a cancellation of debt. For example, if you owe a creditor $10,000.00 and they agree to settle for $6,000.00, forgiving the $4,000.00, the sum of $4,000.00 can count as income to you. However, if instead the entire debt is eliminated through a bankruptcy, there is no income to you and no tax consequence since the debt is discharged rather than forgiven or cancelled. A tax can also result from forgiveness of debt with a foreclosure. Again, filing a bankruptcy before the completion of the foreclosure can help avoid a tax liability.

Am I eligible to file a Chapter 13?

"Am I eligible to file a Chapter 13?" is a question I am often asked. Bankruptcy code section 109, entitled "Who may be a debtor" provides many of the requirements. To file a Chapter 13 you cannot have more than $1,257,850.00 in secured debt nor more then $419,275.00 in unsecured debt. Since this is Federal law these rules apply regardless of whether you file bankruptcy in New Jersey, Pennsylvania or anywhere else. In addition you must have completed a credit counseling course within 180 prior to the filing. You must be an individual. Also, you are not eligible to file a Chapter 13 you had a Chapter 13 within the prior 180 days and your prior case was dismissed for willful failure to obey court order or to appear in proper prosecution of a case. In addition, if you dismiss a chapter 13 bankruptcy after the creditor has filed a motion for relief from the automatic stay, you cannot file another Chapter 13 for 180 days. However, if your prior bankruptcy was dismissed by the court, and not at your request, you can refile. There are other rules that come into play, such as good faith. It is best to consult with an experienced bankruptcy attorney to confirm eligibility

How does bankruptcy affect your credit report?

Bankruptcy can be a helpful step for people with overwhelming financial obligations to eliminate or reorganize their debt. A Chapter 7 bankruptcy can stay on your credit report for 10 years, and a Chapter 13 filing will remain for seven to 10 years.

Accounts included in a bankruptcy filing will be listed as “discharged” or “included in bankruptcy” on your credit report, which can hurt your chances for a loan or a credit card. However, those accounts are no longer listed as “unpaid” or “past due,” and your credit scores will start rebounding, providing you remain financially responsible.

Losing your job-issued credit card during bankruptcy

Maybe you fear you’ll have to declare bankruptcy. You’re even playing it out in your head, trying to see how it would really go.

What about that business credit card from your employer, which you use for job-related expenses? Will they take it away from you? Does your employer even have to know about your bankruptcy?

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