New Jersey Bankruptcy Lawyer

What Debts Can Bankruptcy Eliminate

As a New Jersey bankruptcy attorney this is by far one of the most critical aspects of my job – determining which debts are dischargeable in bankruptcy and which are not.   Let me explain…
Unsecured Debt
Unsecured debt is any type of debt that is not secured by any of your property.  For example, credit cards and medical bills are hardly ever secured by any other your property.  I can help my clients wipe out ALL of their unsecured debt in bankruptcy.
Secured Debt
Secured debt is any type of debt that is secured by your property.  A car loan is typically secured by the car.  If for any reason you default on the loan they can always repossess the car.  Home loans also work the same way.  In bankruptcy, you can choose how you want your secured debt to be treated.  For example, if you have a car loan you can reaffirm that debt if you want to keep the car.  Another option is that you can surrender the car and wipe out any debt you may be liable to the car company for.  A third option is to redeem the loan i.e. to pay the market value (not the payoff balance) of the item when you file for bankruptcy and the debt will be discharged in bankruptcy.
Most Debts are Dischargeable in Bankruptcy – A Few Are Not
There are a few debts that are not dischargeable in bankruptcy such as debts you owe on alimony, child support, and student loans.  While it is technically possible to discharge student loans, it is almost impossible to get them discharged because the requirements and test for qualification are so difficult.  Back taxes are also difficult to get discharged but it is possible.

Please call me and I will help you find out which debts you can discharge in bankruptcy.  Give my office a call and I will give you a free phone consultation now.
Most of your debts are probably dischargeable (i.e. you can wipe them out to $0 in bankruptcy with no tax consequences).  Examples of debts you can wipe out in bankruptcy are credit card debts, medical bills, and many others.

The Different Chapter of Bankruptcy: Chapter 7 & 13

Everyone has probably heard of the term chapter 7 and chapter 13 before but they probably don’t know the difference between these two chapter of bankruptcy.  For most of my clients, Chapter 7 is 100% the right choice for them.  If you qualify for a chapter 7 bankruptcy, then in most cases you can wipe out all of your credit card debt, medical bills, repossessions, even your personal liability on the car and home loans in a matter of 3 to 4 months.  For most of my clients they are ecstatic to find out that they can wipe out all of their debts they have been carrying around for the past few years in a matter of months.

A chapter 13 bankruptcy is used primarly for people who make so much money that they do not qualify for a chapter 7 bankruptcy.  Another reason why someone may want to file for a Ch 13 bankruptcy is because they want time to catch up on either their car or home mortgage payments.  The Chapter 13 will allow you to make up those back payments over time but only if you can continue to make the normal monthly payments in additional to an extra sum that will go towards the back payments.  A chapter 13 takes 3-5 years to complete it so if you want that relief your going to be in bankruptcy fora  long time.  For most of my clients, we can solve all of their problems in 3-4 months in a chapter 7 rather than 3-5 years in a chapter 13.  If you have questions whether you qualify for a Chapter 7 or if it’s right for you, call my office and I will be happy to go over your financial situation with you to determine which is best for you.

Which Property Can You Keep When You File for Bankruptcy

By far the biggest surprise to my clients is that they can often keep most if not all of their property.  You are probably wondering how this works.
The bankruptcy laws allow for each debtor to exempt i.e. to keep a his properties up to a certain dollar amount.  Let me explain this through a  few examples.
Your Home
I can help my clients retain up to $20,200 of equity in their home or if both spouses are filing $40,400 of equity in their home.  Let’s say you own your home.  It is worth $200,000.  You have a mortgage on it for $190,000.  Therefore, you have only $10,000 of equity in your house.  So if you were filing either alone or with your spouse, in this example, you could keep your home as long as you stay current on your mortgage, even though you are wiping out $10,000, $25,000 or $100,000 of unsecured debt (i.e. credit card, medical bills, etc).  If you are above that amount, that does not mean you will lose your house.  There are many different ways I can help you retain your house even if you are over the exemption amount.  Please call me for more details about your options.
Your Car
I can help my clients retain up to $3,225 of equity in their car.  For example, let’s say you own your car outright and the market value is $3,000.  So therefore, you could keep your car even though you are wiping out all of your unsecured debt.  But now let’ say your car value is worth $20,000 and your payoff balance on the car is $15,000.  So you have $5,000 of equity and I can only exempt $3,225.  Not to worry, I can either apply the wild car exemption to exempt the remainder OR worst case scenario you will pay the difference over a 6-12 month period.

Household Furnishings
I am able to help my clients retain $10,775 of household goods but no single item may exceed $525.00.

Your Tools
You may keep up to $2,025.00 of equity of the tools that you use for your profession.
Your Life Insurance
Whole life insurance policies have an amount that you could take out at a certain time.  Term life insurance policy does not have this feature.  If you have a whole life insurance policy, you may keep up to $10,775.00 in an unmatured life insurance policy.

Your Jewelry
I am able to help my clients retain up to $1,350 of equity in their jewelry.  The market value is based on yard sale prices (not necessarily what you paid for it).
Wild Card
I can apply an extra $1,075.00 to any item that you may be over the exemption if you are a homeowner.  If you are renting, I am able to apply $10,125.00 to any item that you may be over the exemption.
The exemption laws for New Jersey residents who are filing for bankruptcy are quite complex.  I have only touched the tip of the iceberg here in how to exempt certain items.  Please consult with a New Jersey bankruptcy lawyer such as myself at (732) 734-5889 so that you can be assured you can retain as many assets as possible through bankruptcy.