Robert Manchel

Can I Keep A Mobile Home In A New Jersey Bankruptcy Case?

June 21, 2016 by Robert Manchel

Bankruptcy lawyer explains how a New Jersey chapter 7 and chapter 13 bankruptcy works, with a debtor that owns a mobile home.

A residence under the bankruptcy code includes real property, which is a house, or personal property that is used as a residence, such as a mobile home.The determination as to the property that the debtor is permitted to keep in a chapter 7 is based on exemptions. The amount of money that must be paid to unsecured debt in a chapter 13 is based on the value of assets, such as a mobile home, the applicable exemptions and disposable income.
The bankruptcy code has numerous sections relating to real property. Real property is land and all improvements that are fixed to the land, such as a house. A mobile home, that is used as a residence, is not real property under the bankruptcy code. However, the exemption 11 U.S.C., section 522 (d) (1), specifically covers real property and personal property in which the debtor uses as a residence. Therefore, a mobile home applies to this exemption. This provides substantial protection to a person that resides in a mobile home, as a mobile home typically has less value than a typical house.
If a mobile home is completely exempt, the debtor may keep their New Jersey mobile home. The 11 U.S.C., section 522 (d) (1) exemption is $23,675.00. This means that a person may keep their mobile home, in a chapter 7, if the mobile home’s value, minus the mortgage is $23,675.00, after subtracting the mortgage payoff and 10% of the projected cost of sale. For example, a mobile home valued at $40,000.00, minus a mortgage payoff of $10,000.00, has equity of $30,000.00. The court permits a projected 10% cost of sale, which is 10% of $40,000.00, or $4,000.00. $30,000.00, minus $4,000.00 is $26,000.00. $26,000.00, minus the $23,675.00 exemption is $2,325.00. Therefore, technically, the chapter 7 trustee may sell the house and receive $2,325.00 for the creditors.
If I modify the example above by changing the house’s value to $37,675.00, the debtor would be permitted to keep the mobile home in a chapter 7 and avoid the chapter 7 trustee’s sale of the property. $37,675.00 (house value), minus $4,000.00 (cost of sale), minus $10,000 (mortgage payoff), minus $23,675.00 (exemption) is $0.00. If the mobile home has a value of $35,000.00, in the above referenced example, the property will be fully exempt and the debtor will be permitted to keep the mobile home.
In the above referenced example, where the mobile home has a $40,000.00 value, the debtor will be able to file a New Jersey chapter 13 and save his mobile home. However, the debtor will be required to pay at least $2,325.00 toward his unsecured debt, as a result of the $2,325.00 “unexempt” equity in the mobile home. In the above referenced example, where the mobile home has a value of $35,000.00, the debtor would be able to file a chapter 13, keep his property, and pay nothing to toward his unsecured debt, as it pertains to his mobile home equity.
Although a person may file a bankruptcy case for the sole purpose of resolving mobile home issues and associated debt, the debtor must deal with all of his debt, according to the bankruptcy code. A chapter 13 debtor, who owns a mobile home, may be required to pay other debt based on the value of all of his assets, disposable income and type of other debt.
Please contact Robert Manchel, Esq., your NJ. bankruptcy attorney, at 866 503 5644.

What Happens To A Mobile Home Loan In A New Jersey Bankruptcy Case?

June 20, 2016 by Robert Manchel

Attorney explains the NJ. Bankruptcy law benefits of a mobile home loan.

Believe it or not the bankruptcy code allows additional benefits for a mobile home loan, in New Jersey, that is not permitted for a house residence mortgage. A mortgage on a mobile home may be “crammed down” in a chapter 13, even though a home mortgage cannot. As I explained, in other blogs, a cram down is changing the secured status of a loan to a partially secured portion and a partially unsecured portion. The secured portion is reduced to the fair market value of the mobile home, with the balance due on the loan to be changed to general unsecured. For example, if the value of a mobile home is $25,000 and the total balance due on the loan is $70,000.00, the secured portion may be reduced to $25,000.0. with the balance of $45,000.00, to be classified as general unsecured. The bankruptcy code does not permit such a change in a mortgage on a house, that is the debtor’s residence.
How does this benefit the owner of the mobile home? In general, a New Jersey chapter 13 bankruptcy debtor is only required to pay the secured portion of the mortgage, plus a reasonable interest rate, through the bankruptcy plan, over five years. In most situations, the debtor may either eliminate all of the unsecured portion or most of the unsecured portion. This means that the debtor in the above reference example will only be required to pay the $25,000.00 (secured portion), plus a fair interest rate. However, the $25,000.00, plus the fair interest rate must be paid within the five year bankruptcy plan. The amount that must be paid towards the $45,000.00 (unsecured portion) balance and any other unsecured debt is based on the debtor’s income, expenses, type of debt owed and asset values.
The determination as to the property that the debtor is permitted to keep in a chapter 7 is based on exemptions. The amount of money that must be paid to unsecured debt in a chapter 13 is based on the value of assets, exemptions and disposable income. This blog is limited to exemptions on a residence. A residence under the bankruptcy code includes real property, which is a house, or personal property that is used as a residence, such as a mobile home.
Please note that the bankruptcy code considers all of the debtor’s finances and assets. Therefore, even though a debtor has filed for bankruptcy protection to deal with his mobile home debt, he may be required to pay other debts and creditors.
Robert Manchel will answer your bankruptcy questions at 866 503 5644.

The Tax Process In A New Jersey Chapter 13 Bankruptcy Case.

June 14, 2016 by Robert Manchel

New Jersey Attorney Explains The Tax Process Of A Chapter 13 Case

I have written extensively in other blogs about how to determine the amount of a debtor’s tax debt, the portion of the tax debt that is dischargeable and the amount that must be paid through a New Jersey chapter 13 bankruptcy plan. This blog explains the chapter 13 process of handling tax debt. The bankruptcy code applies the same laws and procedures to the IRS and State of New Jersey, Division of Taxation, which includes federal and state income tax debt.
In a New Jersey chapter 13, all tax returns must have been filed with the taxing authorities, including both federal and state tax returns. If any returns have not been filed, the trustee may ask for the case to be dismissed at the first scheduled Confirmation Hearing. Dismissal means that the case is thrown out. The trustee is responsible for administering the bankruptcy case and to ensure that the debtor pays the appropriate creditors, in the appropriate amounts.
The IRS and the State of New Jersey, Division of Taxation, must file a Proof of Claim with the court, reflecting the amount of debt owed for each year and the classification of the debt for each year. If the taxing entity’s proof of claim reflects that a tax return has not been filed with the taxing entity, the trustee will not permit the debtor to move forward with their case. The trustee will require that the taxing authority file an amended claim with the court, reflecting that all returns have been filed.
However, the trustee will typically agree to postpone the Confirmation Hearing to allow time for the taxing authority to modify their claim. The debtors’ attorney may forward the debtors’ returns to the IRS or State, directly, and resolve the matter without court intervention. However, if the parties are unable to resolve the matter, the debtors’ attorney may need to file a motion with the court objecting to their proof of claim. In most circumstances, all issues are resolved after the motion is filed with the court, and without the need for the judges determination.
If the taxing authority files a claim reflecting an incorrect classification or amount due, the debtors’ attorney may attempt to resolve the matter in the same manner, as explained. Under these circumstances, the Confirmation Hearing date, must be postponed to allow for the resolution of these tax issues. The trustee’s job is to ensure that the tax claim reflects that all returns have been filed and that the debtor has sufficient disposable income to pay secured and priority class tax debt. It is the debtors’ attorney’s job to ensure that the tax claim reflects an accurate figure, not the trustee.
Robert Manchel may be reached at 866 503 5644 to discuss your bankruptcy questions.

What Credit Card Creditors Do In A New Jersey Bankruptcy Case?

April 29, 2016 by Robert Manchel

NJ. Lawyer Explains What Action Credit Card Creditors Take In A New Jersey Bankruptcy Case.

This blog is limited to banks and other creditors that collect debt on behalf of credit card debt. The term “creditor” as used in this blog refers to such creditors, only. The creditor’s participation in a New Jersey chapter 7 bankruptcy case is different from a chapter 13 case. In a chapter 7 case, upon the filing, the court sends all creditors a notice of general information related to the bankruptcy filing.
Typically, the creditor takes no action, whatsoever, in connection with a chapter 7 case, with no distribution of assets or money, Generally, the creditor will appear at any hearing and will not file any documents with the court. However, if the creditor believes that the debtor incurred certain debt with no intention or ability to pay, at the time of the charge, the creditor may pursue a Complaint for the Non Discharge-ability of the debt. Allegations of fraud are atypical.
The creditors involving a New Jersey chapter 7 case, with an asset distribution, is handled differently. In this scenario, the trustee notifies each creditor that they may be entitled to funds from the debtors’ assets. Thereafter, the creditors file a Proof of Claim, with the court reflecting various information related to the debt. The proof of claim includes the classification of the debt, the amount due, etc. After the trustee receives the asset, he makes the appropriate distribution to each creditor. In an asset case, the creditor may still pursue a Complaint for the Non Discharge-ability of the debt.
A Chapter 13 case requires all debtors to make monthly payments to the trustee. Upon the filing, the court sends notices to all creditors. The chapter 13 notices include additional information about the case and include a form proof of claim for completion. Each creditor must file a proof of claim with the court. Typically, the creditor takes no further action, whatsoever.
Generally, in New Jersey chapter 13 case, the amount that will be paid to each creditor is handled and enforced by the trustee and not each creditor. In other words, typically creditors take no action to enforce the amount that they may receive. Such creditors do not appear at any hearings or file any court documents that may protect their interests, or possibly increase the amount that is received. The trustee will ensure that each creditor is paid the amount that is required per the bankruptcy laws. Although very unlikely, the creditor may still purse an action of non discharge-ability if they believe that fraud was involved in the use of the credit card.
Robert Manchel may be contacted at 866 503 5644 to discuss your New Jersey bankruptcy law questions.

Can You Reduce Tax Liens In A New Jersey Bankruptcy?

March 26, 2016 by Robert Manchel

New Jersey Bankruptcy Lawyer Explains How to Reduce Tax Liens In Bankruptcy

I have drafted numerous blogs explaining how tax debt is treated in a New Jersey bankruptcy case. This blog deals with how income tax debt may be partially eliminated, in the event that the taxing entity has filed a lien against the debtor in the county recording office.
In general, there are four criteria that relate to income tax debt, regarding the Internal Revenue Service and the State of New Jersey, Division of Taxation. If the four criteria are met, the tax debt becomes unsecured, which may be dis-chargeable in bankruptcy. No. 1. The date of the filing of the bankruptcy petition must be more than 3 years after the tax return filing due date, for such years return. No. 2. The date of the filing of the bankruptcy petition must be filed more than 2 years after the returns were filed for such year. No. 3. The date of the bankruptcy filing must be more than 240 days after such years taxes are assessed. No. 4. If the taxing authority filed a county lien against the debtor for such tax year, the tax liability for that year will be classified as secured and may not be dischargeable. If fraud is involved, the taxes for such year may not be discharged.
Criteria Number one above relates to when taxes are due. In other words, the returns for tax year 2012 are due on April 15, 2013. Criteria number three above relates to the date on which the taxing entity assesses the taxes for each particular year. The assessment date is typically the date on which the returns were filed. However, the filing date may not be the assessment date in various circumstances. Also, the same years taxes may be assessed, again, if the taxing authority believes that the return is inaccurate. Also, the 240 day period, may be tolled (delayed) if a payment agreement was entered into with the taxing authority.
If the taxing authority files a county lien against a person for a particular tax year, the tax liability for that year may be partially dischargeable. The filing of a county lien classifies the debt as secured. In general, a bankruptcy debtor cannot eliminate secured debt. However, a debtor may be able to reduce the amount of the claim that is classified as secured. Ultimately, the debtor only need to pay the secured portion of the debt and may possibly eliminate the unsecured portion of the debt.
Initially, the lien may only be reduced if the first three criteria listed above are met. I will explain how to reduce or “cram down” the secured portion of the IRS’s claim. For example, we will assume the following facts for income tax year 2011, in connection with an IRS tax liability of $15,000.00. The debtor filed his 2011 tax returns on time and filed his chapter 13 bankruptcy petition on March 17, 2016. The IRS filed a $15,000.00 county tax lien against the debtor, in 2014, for the tax year 2011. We will assume that the taxes are assessed on or about April 15, 2012 and no fraud was involved.
The debtor may attempt to cramdown the lien into a secured and unsecured portion. The secured portion of the lien must be paid in bankruptcy. However, the unsecured may possibly be eliminated (discharged) if he meets the bankruptcy criteria, which is explained, in numerous other blogs. The secured interest may be reduced by the equity in all of the debtor’s property, at the time of the bankruptcy filing. This means all and not some of the debtor’s property.
Lets assume that all of the debtors property values, at the time of the bankruptcy filing, is as follows: sofa-value of $300; refrigerator-value of $100.00; pencil-value of $.01; car-value of $1,000, with an auto financing payoff of $200.00; house-value of $200,000, with a mortgage payoff of $201,000; TV-value of $75.00. Based on the above, the total IRS.’s secured interest may be reduced to $1,275.01, with the balance of $13,724.99. This means that the total amount that must be paid to the IRS, through the bankruptcy plan is $1,275.01. The balance of $13,724.99 is classified as unsecured and may be eliminated based on certain criteria.
Robert Manchel is available to answer your NJ. bankruptcy law questions at 866 503 5644.

When Is A Divorce Related Asset A New Jersey Bankruptcy Case Asset?

March 13, 2016 by Robert Manchel

New Jersey bankruptcy attorney explains how to determine when one spouses asset is considered another spouses bankruptcy asset.

One criteria of a New Jersey chapter 7 bankruptcy filing is the value of the filing person’s assets. A person is entitled to a fresh start in a chapter 7. The fresh start allows a person to keep a certain amount of property to move forward with their life. However, there is a limit as to the amount of assets a person may own. Although, very unusual, if the value of the person’s assets is beyond the acceptable amount, the trustee may sell certain assets or a portion of various assets. The property that a person may keep in a chapter 7, is determined by bankruptcy exemptions, which is explained, in detail, in numerous other blogs.
Also, the value of a person’s assets may increase the amount that must be paid to creditors in a New Jersey chapter 13 bankruptcy case. If the debtor has substantially valued assets, he may be required to pay more money towards his general unsecured debt, such as credit cards and personal loans. The analysis as to whether a debtor must pay more money in a chapter 13, as a result of owning valuable assets, is based on the same application of exemptions that is used in a chapter 7 case.
Typically, the bankruptcy court and the trustee determine which assets the debtor owns by way of the legal instrument reflecting ownership of the specific asset. For example, the individuals on a deed reflects the ownership of that property and the individuals on an automobile title reflects the owners of the car. Furthermore, the person whose name is on an investment account, is the owner of the account and the individual’s name that is reflected on a bank account, owns the money in the account. However, there may be numerous exceptions to this rule. An example of one possible exception, is using all of Mary’s money to buy a house that is solely in the name of John.
Another exception to the typical determination as to who owns an asset pursuant to New Jersey bankruptcy law, is as follows. In a New Jersey divorce, a husband may be entitled to his wife’s asset, even though the asset is solely titled in his wife’s name. Per New Jersey family law, one spouse may have a right to a partial interest in the other spouse’s asset, although no portion of the asset is titled in that particular spouse’s name. However, please note that the ownership rights to various marital property depends on various factors and that one spouse may not have an interest in the other spouses asset, as a result of marriage. Typically, under New Jersey bankruptcy law, the right of such an interest is triggered after the filing of the divorce complaint.
For example, Mrs. Smith is the sole owner of an investment that she acquired during the marriage. Mr. Smith has a one half interest in the investment, under family law, and only he files for chapter 7 bankruptcy protection, two days after she filed a divorce complaint. Under this scenario, the chapter 7 trustee will consider as a bankruptcy asset, all of Mr. Smith’s interest in Mrs. Smith’s investment. Therefore, if he is entitled to 50% of her $50,000.00 investment, pursuant to family law, his chapter 7 trustee will bring his $25,000.00 interest into his bankruptcy estate, for analysis. Mr. Smith may apply his applicable exemptions to the $25,000.00, which may result in the trustee disbursing all or a portion of the funds to creditors. Please note that there are numerous exceptions to the above examples.
Robert Manchel, Esq., may be contacted, at 866 503 5644, to discuss all of your bankruptcy questions for the State of New Jersey.

Manchel
New Jersey
Bankruptcy Law