Robert Manchel

Typically, a chapter 7 bankruptcy is designed for a person that wishes to discharge (eliminate) certain debt, such as unsecured debt (credit card debt). A person may also discharge secured debt. However, if a person wants to keep the property that is connected with the secured debt, such as a house or auto, the person must keep current with the secured debt payments. If a person is behind with their secured debt payments, such as a mortgage or auto financing, the chapter 7 will not help save them from foreclosure or repossession.
If the debtor meets the criteria of a chapter 7, the debtor is entitled to a discharge. However, a chapter 7 discharge does not discharge certain types of debt. The entire process takes about five months from the filing date to the entry of discharge. In the unusual situation that a trustee sells a debtor’s asset, the asset may be sold at any time after the discharge. No court payments are required to be made in a chapter 7 case.
Typically, a chapter 13 requires a monthly payment to a bankruptcy trustee. The amount of the monthly payment and the creditors that are paid, depends on numerous factors.
A person may file for chapter 13 for a number of reasons. The first reason may be based on the debtors’ inability to meet the criteria of a chapter 7, in that he has substantial monthly disposable income. Under this scenario, the debtor is not able to eliminate all unsecured debt or other type of debt, and must pay a portion of the debt to such creditors, over a certain time period.
A person may wish to file a chapter 13 to help save an auto from repossession or a house from foreclosure. Under this scenario, the debtor, in some fashion, must cure the mortgage and/or auto finance arrears over the life of the chapter 13 plan, through the monthly trustee payments.
A person may wish to file a chapter 13 for the purpose of discharging a type of debt that is not dischargeable in a chapter 7, such as certain debt that is due to an ex spouse. Also, certain debt may be reduced in a chapter 13, that cannot be reduced in a chapter 7.
Similar to a chapter 7, certain debt is not dischargeable in a chapter 13, even though the entire bankruptcy plan is successfully completed.
NJ bankruptcy practitioner, Robert Manchel, may be reached at (866) 503-5655 to discuss your specific circumstances.

The chapter 7 trustee’s preparation for the Meeting of Creditors Hearing 341(a) Hearing
Please note that it is unusual for a chapter 7 trustee to sell a debtor’s asset.
A chapter 7 trustee’s job is to review and investigate the debtor’s total financial picture to determine if the debtor is entitled to a discharge and/or whether the debtor owns substantial assets that may be liquidated, with the funds to be paid to the creditors. If the trustee believes that the debtor is entitled to a discharge, the trustee will recommend to the judge that an order of discharge be entered. If the trustee believes that the debtor should not be entitled to a discharge, the trustee should advise the court accordingly. However, under this scenario, the debtor may contest the trustee’s objection.
The issue of selling property is not mutually exclusive to an entry of discharge. In other words, a debtor may be entitled to a discharge and the trustee may sell the debtor’s assets if possible. Typically, if the trustee sells an asset and the debtor is entitled to a discharge, the discharge will be entered in the normal time period with the sale of the asset at a much later date.
Prior to the Meeting of Creditors, the debtor’s attorney forwards all of their financial documents to the trustee for his review. This includes: six months of the debtor’s and household members’ paystubs; six months of all bank statements; all relevant income tax returns; professional valuations for real estate and other property; estimated mortgage and auto finance payoff statements; alimony and support orders, etc. Typically, if their expenses are reasonable, the trustee will not require proof of the reasonable and necessary expenses, such as food and clothing. In the event that a debtor operates a business, the debtor must provide proof of the business’ income and expenses, such as a profit and loss statement, receipts, business bank statements, etc.
Prior to the meeting, the trustee will prepare for the bankruptcy hearing by reviewing all of these documents. If the documents appear to the trustee to be contradictory to each other or the bankruptcy petition information, the trustee will make a note of these issues.
You may call NJ bankruptcy attorney Robert Manchel at (866) 503-5655 to discuss your chapter 7 bankruptcy questions and the potential for receiving bankruptcy protection.