New Jersey Bankruptcy Blog

New Jersey Attorney Explains How New Jersey Bankruptcy Deals With A Personal Loan

A personal loan is typically referred to as a loan that is not connected to property. In words, the person giving the loan does not ask for an interest or a lien in any property. A person or company can provide a personal loan. A bank loan that is not contingent on pledging property for the funds, is considered a personal loan. A personal loan does not require a contract to enforce the agreement. For example, an agreement to lend a friend money, without a written agreement, is still a legally binding contract, that must be paid. However, enforcing the oral agreement, without the written contract may be an issue.
The creditor that lent the funds, in connection with the personal loan, is the creditor of the person who received the loan. The person who received the funds is the debtor. A personal loan debt is called unsecured debt in a New Jersey bankruptcy case, as the debtor did not pledged property for the loan, such as a car or a boat, etc. Other types of unsecured debt is credit card debt.
A debtor may be permitted to discharge and eliminate the personal loan (unsecured debt) debt in a chapter 7, if the debtor meets all of the chapter 7 criteria. Discharge means to forever eliminate the debt from collections. I have written numerous blogs explaining, in detail, the chapter 7 bankruptcy criteria of discharging unsecured debt in a New Jersey.
I explained, in numerous blogs, how the New Jersey chapter 13 process works regarding unsecured debt. In short, if a person does not own real estate or personal property having a substantial value and has insufficient income capable of paying the unsecured debt, the debtor can also discharge the personal loan in a chapter 13 case. A chapter 13 discharge means that the debt need not be paid. In certain circumstances, the debtor must pay some or all of the personal loan, through a monthly trustee payment.
Robert Manchel may be contacted at 866 503 5644 to discuss your NJ. bankruptcy questions.

New Jersey Attorney Explains How A Charitable or Religious Donation or Contribution is Handled in Bankruptcy.

In a New Jersey chapter 13 bankruptcy case, the debtor must pay all of their monthly disposable income, after allowable expenses, towards their general unsecured debt. “Unsecured debt” is debt that is not related to any property, such as credit card debt. The allowable expenses must be necessary and reasonable, such as food, clothing, utilities, transportation, etc. A reasonable and necessary expense does not include a payment on a recreation vehicle that is used for vacations.
The religious Liberty and Charitable Donation Protection Act of 1998 amended section 1325(b) of the bankruptcy code, thereby permitting a monthly allowable expense for religious and charitable donations. Section 1325(b) relates to payments in a chapter 13 bankruptcy case. The act specifically permits such a contribution in an amount not to exceed 15% of their gross monthly income. However, the contribution must be paid to a qualified religious or charitable organization.
A New Jersey chapter 7 bankruptcy case has certain criteria that allows a person to discharge their debt. The chapter 7 bankruptcy law requires a person’s household net income to be less than their reasonable and necessary expenses, that are required to live. Such expenses are the same as the chapter 13, as explained above. As a result of the aforementioned amendment, chapter 7 trustees also allow the same monthly contribution in determining disposable income.
Depending on the NJ. bankruptcy trustee, a debtor may be permitted to make a larger monthly contribution if he can establish a history of making such payments. Also, depending on the trustee, the debtor may be required to establish proof of any contributions.
Contact Robert Manchel, esq. at 866 503 5644 to discuss your NJ. bankruptcy law questions.

Attorney Explains How Financed Jewelry Is Treated In A New Jersey Chapter 13 Bankruptcy Case.
Typically, a person will file a chapter 13 bankruptcy case for issues other than jewelry financing. However, when a New Jersey chapter 13 is filed, the debtor must include on the petition any and all debt and assets. Additionally, the debtor must handle this issue per the bankruptcy code, in addition to all of the other issues.
A chapter 13 bankruptcy case requires a monthly trustee payment for 36 to 60 months. The debtor must pay all of his household disposable income to the trustee, each month, after payment of all reasonable and necessary expenses. If a debtor has sufficient monthly disposable income to pay a portion toward their unsecured debt, such as credit card debt, the debtor must make such payments. The application of the necessary and reasonable expenses that a debtor uses to determine his disposable income, must, in fact, be necessary and reasonable. In other words, a debtor cannot use a $3,000 monthly food budget for a household of 2. Also, a debtor cannot use an $800 finance payment on their third car, for a household of 2.
Each trustee may handle the reasonable and necessary expense issue differently. The trustee’s dilemma is whether they will permit the monthly finance expense of keeping a ring, which reduces the debtor’s disposable income. In other words, will the trustee allow the debtor to make jewelry finance payments thereby reducing the funds that would have been available to other creditors. A New Jersey chapter 13 trustee may either disallow the payment, or permit the payment, if the debtor reduces the amount of another expense. If the trustee disallows the payment, the debtor may not make the jewelry finance payments and/or keep the jewelry. If the trustee disallows the payment, the debtor will likely not be permitted to keep the jewelry.
If the New Jersey chapter 13 bankruptcy trustee permits the debtor to keep the jewelry and make the finance payments, there are various options as to how the payments may be made. The first option is to make the monthly payments directly to the finance company with no portion to be paid through the chapter 13 bankruptcy plan. The second option permits the debtor to pay the entire balance due, plus a reasonable interest rate, entirely through the bankruptcy plan. If the debtor is behind with his finance payments, he may be permitted to pay the arrears through the bankruptcy plan, with the future monthly payments to be paid directly to the finance company. Also, under certain situations, the debtor may be permitted to keep the jewelry by paying back only the value of the jewelry, plus a fair interest rate, through the bankruptcy plan.
Please note that there are numerous exceptions to the above issues.
You may contact Robert Manchel at 866 503 5644 to discuss your NJ. bankruptcy law questions.

NJ. Bankruptcy Lawyer Explains When A Person May Keep their Financed Washer and Dryer In A Chapter 7.

Typically, in a New Jersey chapter 7 bankruptcy case, the debtor discharges (eliminates) all unsecured debt. Unsecured debt is any debt that is not connected to any property, such as credit card debt, or a personal loan. Generally, a credit card charge does not require the debtor to include any property as collateral. In others words, the debtor does not agree to give the creditor a lien in property that may be repossessed, if the debt is not paid. Also, credit card debt consists of borrowing funds for services, as well, which the creditor cannot lien
Secured debt is money that is borrowed, in which the debtor, grants the creditor a lien in certain property, such as a mortgage on a house and financing on an automobile. In a chapter 7, in New Jersey, secured debt is discharged as well, as unsecured debt.  Discharge of the debt means that the creditor may not sue the debtor for the money that is due. However, if the debtor does not make payments on his mortgage, after the discharge, the mortgage company may take the property, only, by filing a foreclosure action.  Auto financing is treated the same in that if a debtor does not make his auto finance payments, after the discharge, the finance company is permitted to repossess his car, only.
Even though a chapter 7 discharges the secured debt,  such as a mortgage and/or auto financing debt, typically, the debtor may keep the house, or an auto, if the debtor continues to make timely payments on the secured debt, (ie: mortgage; auto payments). Generally, even though the debt is eliminated, the debtor must continue to make timely monthly payments to prevent a repossession and/or a foreclosure action, after the discharge.
What type of debt is connected to a washer and dryer? Typically the debt is secured debt, which grants the creditor a secured interest in the washer and dryer. The debt is generally secured, pursuant to state and bankruptcy laws, because the large item was purchased with the financing and the debtor grants the creditor a security interest in the items. Please note this explanation is simplified and the result depends on each transaction.
As a result, if the debtor falls behind with his payments, after the  chapter 7 bankruptcy discharge, the creditor may not sue the debtor for the debt. However, the creditor may file a New Jersey State Court lawsuit ordering the debtor to turn over the appliances. Depending  on the value of the items, it is unlikely that the creditor will pursue such action, as a result of the cost of lawyers and other lawsuit costs. Also, if the payments are not made in compliance with the contract, the warranty will likely be invalid.
Robert Manchel may be contacted at 866 503 5644 to discuss your NJ. bankruptcy law questions.