Posts tagged "New Jersey"

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

MEDIAN INCOME FOR BANKRUPTCY INCREASES IN 2019

Under Bankruptcy Law, the Bankruptcy Court takes into account the debtors household income and compares it to the median family income of their state to help determine whether a chapter 13 or a chapter 7 should be filed. On April 1, 2019 the household income numbers increased. In New Jersey, there is a presumption that a Chapter 13 should be filed (although depending on expenses a Chapter 7 is still possible) if income exceeds $68,349.00 for a family of one, $82,263.00 for a family of two, $103,634.00 for a family of three and $125,465.00 for a family of four. In Pennsylvania those numbers are $55,117.00 for a family of one, $66,649.00 for a family of two, $82,518.00 for a family of three and $100,078.00 for a family of four. Note that even if you make less than the average similiar family, equity in assets and expenses will still also be used to determine whether chapter 7 is appropriate.

I DON'T WANT TO INCLUDE MY CAR IN MY BANKRUPTCY

Whether I am in my office in Willingboro New Jersey or in Northeast Philadelphia I often hear the same statement when a client comes in to file a Chapter 7 bankruptcy- "I don't want to include my car in the bankruptcy ".  While keeping a car is generally not a problem, the car is required to be included in the bankruptcy since  a debtor is required to list everything owned and all debts, including car loans. However, in addition to listing the car, a Statement of Intentions regarding the car must also be filed. In it the debtor states whether they intend to surrender the vehicle, reaffirm the debt on the vehicle, or redeem the vehicle. Reaffirm means a form is completed and filed with the court which has the effect of taking the car out of the bankruptcy. The good part is it helps rebuild credit. The bad part is if you default and the car is repossessed you will be liable for any deficiency claim. Redemption is when you have a car worth, for example, $10,000.00 and you owe $15,000 there are companies that will lend you the $10,000 and you are basically saying if I gave you the car back you would only get $10,000 even though I owe you $15,000 so I am giving you $10,000 and that is what you get. The bottom line is keeping your car in a bankruptcy is generally not a problem.

Bankruptcy Benefits For High Income Earners

When you have a high amount of credit card debt, bankruptcy is often a good solution even if you are a high income earner. In a bankruptcy the court considers equity in assets and income compared to expenses in determining whether you can eliminate the debt or whether you have to pay back some or all of the debt. I sometimes have people come into my Cherry Hill, New Jersey or Philadelphia, Pennsylvania office that believe bankruptcy is not an option because they "earn too much money". While the high income may prevent the individual from filing a chapter 7, they can file a chapter 13 bankruptcy. Depending on disposable income after taking into account reasonable and necessary living expenses, the disposable income would be used for a period up to five years to pay the creditors. Depending on total debt and income, you may be able to pay a reduced amount, like 40% of the debt. However, even if you have to pay the debt in full, you can pay it over 5 years without interest. This results in a significant savings. Short term, the payment is going to be less than you were paying monthly. Long term the savings is even greater because if you are paying minimum payments on a credit card, it will take approximately 22 years to pay off the debt. In Chapter 13, it is only 5 years. Even a high income earner should consult with an experienced bankruptcy attorney if they are struggling with high credit card debt.

First Day Orders in Chapter 11 Bankruptcy Cases

When a Chapter 11 business bankruptcy is filed, as a general rule the debtor company cannot pay prebankruptcy debts until a plan or reorganization is approved many months letter. However, in certain circumstances the inability to pay certain prepetition debts can put the company out of business. For example, if a bankruptcy is filed on a Thursday and the next day payroll is to be paid for the prior 2 weeks, the company must be able to pay that or will lose many employees. Or a company might be dependent on the services of a vendor such as a vendor that provides packaging for items sold by debtor. To avoid impacting the debtor the rules provide the opportunity to file a motion to be heard almost immediately on the first day the bankruptcy is filed. The rules such as New Jersey local bankruptcy rule 9018 require immediate notice by telephone and email to creditors to have an opportunity to respond or object. While the creditors have limited time to respond these orders are necessary if a reorganization is to be successful 

Keeping Your Home In A Chapter 7 Bankruptcy

The increase in exemptions available in New Jersey to protect the equity in your home has made it easier to keep your home in a Chapter 7 Bankruptcy. As of April 1, 2019 the exemption a home owner is allowed under federal exemptions, which are used in New Jersey, increased to $25,150.00 per home owner. For example, if you and your spouse own a home in, say, Cherry Hill, NJ or Voorhees, NJ and the home is worth $200,000.00 and there is a mortgage of $130,000.00 you would be able to file a chapter 7 and keep your home as long as you are able to continue making your mortgage payments and as long as you meet the other chapter 7 eligibility requirements such as those relating to income. That is because there would be no reason for a trustee to sell your home since there would be no benefit to your creditors. If a trustee sold the home in this example, the trustee would have realtor and other fees of about $20,000.00, the mortgage of $130,000.00 and you and your spouse could protect from creditors a total of $50,300.00. Consequently, if you are in need of a bankruptcy but are concerned you will lose your home, you should immediately consult with an experienced bankruptcy attorney

Bankruptcy Exemptions Increase April 1, 2019

When a bankruptcy is filed the individuals filing are allowed to protect a certain amount of equity in their assets and keep those exempt assets. In New Jersey and Pennsylvania debtors filing bankruptcy can protect assets using Federal or state exemptions. Except for certain types of assets, most bankruptcies in New Jersey or Pennsylvina rely on Federal Exemptions. Those Federal Exemptions increased as of April 1, 2019. For example, the amount of equity in your residence increased from $23,675.00 per owner to $25,150.00 per owner. Household goods and furnishing exemptions increased from $12,625 to $13,400.00. Other increases include motor vehicle from $3,775.00 to $4,000.00, jewelry from $1,600.00 to $1700.00 and proceeds from personal injury lawsuit from $23,675.00 to $25,150.00. As a result, even when filing a chapter 7 bankruptcy often the debtor will not lose any assets in the process.

CHAPTER 13 BANKRUPTCY CONFIRMATION HEARING

When a chapter 13 bankruptcy is filed the court automatically schedules two hearings. The first is a meeting of creditors. The debtors are required to attend this meeting with the chapter 13 trustee and their attorney. Creditors are invited to come but they rarely do. The other hearing is the confirmation hearing. The debtors' do not have to attend this hearing but their attorney does. In New Jersey the hearing will take place at the Federal courthouse in Camden NJ, Trenton NJ or Newark NJ. The purpose of the hearing is to have the court approve the chapter 13 plan regarding repayment to creditors. Often the confirmation hearing will need to be adjourned to address the claims filed or other issues raised by the trustee. Except in unusual or complicated matters if the Chapter 13 trustee is satisfied with the plan and objections have been addressed the trustee will recommend confirmation and the judge will enter an order approving the chapter 13 plan

Gymboree Reported to Soon Be Filing Bankruptcy

The Wall Street journal reports that Gymboree is on the verge of filing a bankruptcy with the likely closure of their stores. Locally there are several stores including at the Cherry Hill Mall in Cherry Hill New Jersey, The Promenade at Sagemore in Marlton NJ and the Deptford Mall in Deptford NJ. In Philadelphia Pennsylvania the store at the Philadelphia Mills Mall would be impacted. The bankruptcy will be just another reminder of the difficulties retail chains face today.

NJ Bankruptcy Court Impacted by Government Shutdown

The New Jersey Bankruptcy Court, which is part of the Federal Court System has addressed the impact of the federal government shutdown on its official website. Specially the site notes "the Judiciary has continued to operate by using court fee balances and other "no-year" funds. The Administrative Office of the U.S. Courts has revised its original estimate and now is working toward the goal of sustaining paid operations through Jan. 18, 2019." If the shutdown is not resolved by then, the bankruptcy court will not have funds to operate. This applies to the bankruptcy courts in Camden, Trenton and Newark NJ.

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