Tuesday, September 29, 2009
Devalued Homes and Chapter 7
Many homeowners fear filing for chapter 7 because New Jersey does not have a homestead exemption. New Jersey, however, allows debtors to choose between the NJ set of exemptions or the federal exemptions. The federal exemptions allow individuals to exempt $20,200 worth of equity in a home and $40,400 for married couples. Many of my clients rely on a one to two year old appraisal for real estate valuation. This is a mistake. As per the old appraisals, most of these individuals would not qualify because they have too much equity in their home. If they were to file a chapter 7 bankruptcy in NJ, they fear losing their home. Prior to considering yourself ineligible for a chapter 7 filing in New Jersey, you should consider obtaining a new appraisal. This new appraisal will reflect the significant decrease in property values. I recently had a couple in my office who stated their home was valued at $850,000. I asked them to obtain a new appraisal so we can get an idea of the true value. After some hesitation, the couple decided to obtain a new appraisal in hopes of qualifying. The result: their home was valued at $675,000. This was significantly less than my clients had thought. Fortunately, it qualified them for a NJ Chapter 7 filing because they no longer had any equity in the home. Prior to ruling out the possibility of a New Jersey Chapter 7 filing, obtain an appraisal.
Thursday, September 17, 2009
Does It Make Sense to File Bankruptcy?
My office receives a lot of calls during the week from potential clients inquiring about a bankruptcy filing. Throughout the conversation, one important question remains in my mind. Does it make sense for this person to file for chapter 7 bankruptcy? This is a very important consideration. Many attorneys fail to keep this in mind. Whether this is attributed to oversight or a fear of losing the legal fees is another topic. The answer to this question is not always clear at first.
The first consideration is the amount of debt a person has. There are countless people that call my office and say "I have one credit card bill for $3000 and I can't afford to pay it. Can you help me file for bankruptcy. I want to get rid of this bill." My answer is always, no. It makes no practical sense to file a chapter 7 bankruptcy for one bill that is $3000. I view this as an abuse of the bankruptcy law. The law is meant to help individuals who have incurred their debt with the mentality that they will repay the debt and have tried to repay it. Although the law does not specify an amount that is necessary to file a chapter 7 bankruptcy, it is senseless to file if your debt is less than $5000. Consider that you will be responsible for the payment of attorney fees, filing fees, and credit counseling fees when filing a chapter 7 bankruptcy.
The second consideration is the type and amount of assets a person has. When filing a chapter 7 bankruptcy, we want to be sure that we protect your assets. Usually, my clients do not have to forfeit any of their assets. We take all measures to protect them. However, you cannot be driving a fully-paid 2009 Mercedes. This will not be exempt under the New Jersey exemption set or the federal exemption set. We have to keep the exemption amounts in mind. It will come as a shock to you if you file for a chapter 7 bankruptcy and you are forced to forfeit your assets. If you have a house that does not meet the exemption amount, I will advise you to file a chapter 13 bankruptcy. Remember, New Jersey does not have a homestead exemption.
The final consideration is the type of debt. You can discharge unsecured non-priority debts in a chapter 7 bankruptcy. These include, but are not limited to, credit cards bills, medical bills, phone bills, utility bills, personal loans, shortfalls on repossessions, and bank overdrafts. You cannot discharge student loans in a chapter 7 bankruptcy (except for a few narrow exceptions). I will evaluate your "debt portfolio" and decide whether it makes sense for you to file a chapter 7 bankruptcy.
I would love to help every potential client that calls my office. However, the above considerations sometimes forces me to turn some away, for their own good. I do, however, provide them with advice on how to repay their debt and get back on their feet.
The first consideration is the amount of debt a person has. There are countless people that call my office and say "I have one credit card bill for $3000 and I can't afford to pay it. Can you help me file for bankruptcy. I want to get rid of this bill." My answer is always, no. It makes no practical sense to file a chapter 7 bankruptcy for one bill that is $3000. I view this as an abuse of the bankruptcy law. The law is meant to help individuals who have incurred their debt with the mentality that they will repay the debt and have tried to repay it. Although the law does not specify an amount that is necessary to file a chapter 7 bankruptcy, it is senseless to file if your debt is less than $5000. Consider that you will be responsible for the payment of attorney fees, filing fees, and credit counseling fees when filing a chapter 7 bankruptcy.
The second consideration is the type and amount of assets a person has. When filing a chapter 7 bankruptcy, we want to be sure that we protect your assets. Usually, my clients do not have to forfeit any of their assets. We take all measures to protect them. However, you cannot be driving a fully-paid 2009 Mercedes. This will not be exempt under the New Jersey exemption set or the federal exemption set. We have to keep the exemption amounts in mind. It will come as a shock to you if you file for a chapter 7 bankruptcy and you are forced to forfeit your assets. If you have a house that does not meet the exemption amount, I will advise you to file a chapter 13 bankruptcy. Remember, New Jersey does not have a homestead exemption.
The final consideration is the type of debt. You can discharge unsecured non-priority debts in a chapter 7 bankruptcy. These include, but are not limited to, credit cards bills, medical bills, phone bills, utility bills, personal loans, shortfalls on repossessions, and bank overdrafts. You cannot discharge student loans in a chapter 7 bankruptcy (except for a few narrow exceptions). I will evaluate your "debt portfolio" and decide whether it makes sense for you to file a chapter 7 bankruptcy.
I would love to help every potential client that calls my office. However, the above considerations sometimes forces me to turn some away, for their own good. I do, however, provide them with advice on how to repay their debt and get back on their feet.
Friday, September 11, 2009
Welcome to my Bankruptcy Blog
Hello and welcome to my bankruptcy blog. As a consumer bankruptcy attorney, I want to share my experience with readers and provide an insight to chapter 7 bankruptcy law. There are a lot of misconceptions and much confusion surrounding the "new" bankruptcy law. I hope to clear up much of that confusion and paint a more clear picture as to what chapter 7 bankruptcy is and what it is not. If you want detailed information on filing a chapter 7 bankruptcy, I encourage you to visit my bankruptcy website.
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