Lets say you are having financial difficulties but are not sure if Bankruptcy is right for you. Where do you begin. The library is a good place to start. I checked out the Willingboro Library at 220 Willingboro Parkway near my Willingboro office. A review of some of the books available in the Willingboro Library such as Chapter 13: Keep your Property and Repay your Debts Over Time, by Stephen Elias and Robin Leonard or Bankruptcy Law for the Individual Debtor by Margaret Jasper are good places to start. Consulting with an attorney should also be considered since bankruptcy law can be complicated. Once you have the knowlege as to how bankruptcy works, it will allow you to make an informed decision as to whether it is right for you.
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.
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.
On line shopping and high rent costs, among other things has caused multiple retailers to seek protection in Chapter 11 bankruptcy or file Chapter 7 bankruptcy and close. Competition from on line sellers combined with high operating costs are the leading causes. It seems like another large retailer may soon be in bankruptcy. According to USA Today , the retailer Barney's is considering filing a bankruptcy. https://www.google.com/amp/s/amp.usatoday.co/amp/1728925001 The reasons given are pretty typical of the problems facing many retailers today. A combination of high rent and online competition. The final straw may have been a rent increase at the Madison Avenue location which according to USA Today went from$16 to $30 million in January. The impact on the Philadelphia Pennsylvania Barney's is still unclear. Choices of retailers may soon be a thing of the past.
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
As a general rule when a bankruptcy is filed the commencement or continuation of lawsuits or collection matters against the debtor are automatically stopped. However, there are exceptions where the matter can continue. For example, a criminal action is not stopped by a bankruptcy. Nor is a suit to establish paternity, establish support or establish visitation. Audits by the IRS or a demand for tax returns are also not stayed. However the government entity is stopped from collecting the debt while the debtor is in bankruptcy. The automatic stay that takes effect when a bankruptcy is filed stops most kinds of legal actions against the debtor, but keep in mind that it does not stop all of them.
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.
As a general rule when a bankruptcy is filed the commencement or continuation of a lawsuit or collection matters against the debtor are automatically stopped. However, there are exceptions where the matter can continue. For example, a criminal action is not stopped by a bankruptcy. Nor is a suit to establish paternity, establish support or visitation. An audit by the IRS or a demand for tax returns are also not stayed. However the government entity is stopped from collecting even if the bankruptcy does not eliminate the debt. An action involving domestic violence is also not stayed. The state is not stopped from suspending a drivers license or professional license. As you can see, while the bankruptcy stops most litigations against the debtor, there are some significant exceptions.