Robert Manchel

Here we will discuss a Chapter 7 trustee’s questions and concerns that will come up during the Meeting of Creditors’ Hearing [341(a) hearing]
Please note that it is unusual for a trustee to sell a debtor’s asset.
Although there are number of issues that the trustee is concerned about, in general the most important issues relate to the following:
1.  The value of the debtors’ property.
The trustee is entitled to a percentage of the funds that are distributed to creditors, including the liquidation of assets. Therefore, the trustee is interested in the value of all the debtor’s property. Assets include any interest in any personal property or real estate. An asset includes the debtor’s right to sue for money, such as a breach of contract action or a personal injury action. For example, if the debtor has a right to sue someone for an injury that was caused by a third party, the trustee may have a right to such money.
2.  Ensure that the debtors’ monthly household income is less than their reasonable and necessary expenses.
The main criteria for a chapter 7 is that the debtor’s monthly household income is less than the debtor’s household’s monthly necessary and reasonable expenses. Typically, the expenses only include necessary items such as: food, clothing, utilities, mortgage payments, transportation, etc. The monthly expenses do not include payments on credit card debt.
3.  Ensure that the filing was not fraudulent
The trustee must ensure that the debtor unexpectedly found themselves in a situation that required the filing of bankruptcy protection and that the bankruptcy filing is not fraudulent.
In addition to the above, the trustee is interested in other issues, such as his right to pursue the debtors’ creditors for money. However, most of the questions relate to the above listed issues. Some of the questions that a chapter 7 trustee will ask are as follows:
–        Is your petition true and correct?
–         Did you review the petition prior to signing?
–         Does the petition reflect your signature?
–         Does your petition require any modifications or additions?
–         Do you own any stocks, bonds, or investments of any kind?
–         Can you sue anyone for any reason, including a personal injury action?
–         Do you own any real estate?
–         If so, when did you buy the real estate and how much did you pay to buy the real estate?
–         Did you own or sell any other real estate within the last five years?
–         Do you have a safe deposit box?
–         Are you entitled to receive any money from the estate of a person who passed away?
–         Did you transfer any money or property to anyone within 2 years prior to the filing?
–         Did you sell any property within the two years prior to the filing?
–         Did you pay any creditor, including a family member in the last year?
–         Do you owe or receive alimony or support?
–         Have you ever filed for bankruptcy before?
–         Do you presently or have you in the past five years owned any interest in a company or operate your own business?
–         What happened in your life that required you to file for bankruptcy protection?
You may contact experienced bankruptcy attorney in NJ, Robert Manchel, at 1 (866) 503-5655,  to discuss chapter 7 issues and protection from bankruptcy.

What happens in a chapter 7 bankruptcy case if the trustee can sell the debtor’s property?
There may be circumstances when a person would rather file for chapter 7 and allow the trustee to sell an asset, instead of keeping the asset and filing a chapter 13. If a debtor files a chapter 7 he may still receive an order of discharge of his debts. Therefore the trustee is able to sell an asset if the debtor meets the criteria for a chapter 7 discharge.
The criteria for a chapter 7 discharge is the following: The debtor must meet the Means Test or Current Monthly Income Test. In other words, the debtors’ household income for the six months prior to the filing must be less than New Jersey’s median income of a household of the same size. If the debtor’s household income is greater than the state’s median income, he may still meet this criteria under certain guidelines. If the debtor’s average household net income for the six months prior to the filing is less than the debtor’s household’s average necessary and reasonable monthly expenses for this same time period they can qualify. The expenses must be permitted under the Internal Revenue Service Code.
Additionally, the debtor’s projected future monthly household net income must be less than the debtor’s projected monthly necessary and reasonable household expenses. If the debtor meets the criteria explained above, he will receive a discharge of debts within the normal time period, which is about 3 1/2 months after the filing.
The amount that is due to the trustee is based on non exempt assets. In other words, if the debtor is unable to apply his exemptions towards the fair market value of any property, the trustee is entitled to the value of the property that is unable to be fully exempted.
Example: A debtor has a third auto valuing $10,000.00, with only $4,000.00 of remaining exemptions to apply to the auto. In this example, the debtor must either allow the trustee to sell the auto and keep $6,000, or work out a settlement with the trustee to pay him $6,000.00 over a specific time period. Typically, the trustee will work with the debtors’ attorney to resolve the amount that is due and the manner in which the payments will be made.
If the debtor wishes to avoid these issues, he may be able to file a chapter 13, keep the third auto, and pay an additional $6,000.00 to the creditors, through a monthly bankruptcy plan.
Please contact Robert Manchel, NJ bankruptcy attorney, at 1 (866) 503-5655,  for a free consultation on bankruptcy protection could be applied to your personal circumstances.
 

Any debt that is discharged in a chapter 7, means that the creditor can never attempt to collect the money owed from the debtor. If a secured debt such as a mortgage is discharged in bankruptcy, the mortgage company cannot attempt to collect the money from the debtor. However, if the debtor does not pay the mortgage, the mortgage company is permitted to take the collateral and foreclose on the house.
If the debtor meets the criteria of a chapter 7 bankruptcy filing and everything goes perfectly, there is certain debt that will not be discharged (eliminated). This means that any creditor that is owed debt, which is non-dischargeable, may continue to collect the money from the debtor after the chapter 7 case is complete, as if no bankruptcy case was filed. Most of the type of debt that is non-dischargeable includes the following:

1. most taxes, including, but not limited to, recently incurred income taxes, sales’ taxes, and taxes that an employer owes to the government that were withheld from employees;
2. any debt that was incurred for the payment of taxes that cannot be discharged;
3. domestic support obligations that are typically incurred in connection with a divorce;
4. debts incurred from causing injury to another from operating a motor vehicle, while intoxicated;
5. debts incurred by borrowing funds from certain pension plans;
6. certain debt that is not properly listed on the petition;
7. any debt, whereby the debtor specifically signs a Reaffirmation Agreement, which is approved by the court;
8. student loan debt;
9. certain debt due to a government, such as fines, penalties, forfeiters and criminal restitution debt;
10. debt incurred by fraud;
11. debt incurred by the willful and malicious injury to a person or property;
12. real estate association fees that become due after the filing and prior to the transfer of the deed from the debtor to a third party.

Please note that there are numerous exceptions and variations of the above list.
NJ Bankruptcy Lawyer Robert Manchel can be reached at 1 (866) 503-5655 to explain how you may benefit from a chapter 7 case or if bankruptcy protection is applicable in your case.