General Bankruptcy Information

If a bankruptcy debtor has funds in a bank account and the debtor owes a debt to the same bank, under certain circumstances, the bank may be permitted to take the funds.
A debtor may owe a debt to a bank, based on various reasons, such as non sufficient fund charges or having a credit card debt with the same bank. Also, a debtor may have a savings or checking account with the same bank. Under either scenario, the bank may be able to keep the debtor’s bank account funds in an amount that is less than the amount that is owed to the bank. However, in general, the funds must have been placed in the account more than 90 days prior to the bankruptcy filing.
Typically, the process works as follows: After the bankruptcy filing, the bank would freeze the funds in the account. Thereafter, the bank would file the appropriate papers with the court, requesting permission to turnover the funds to the bank.
The moral of this story is, do not leave funds in a bank that is owed a debt.
Robert Manchel, a New Jersey bankruptcy lawyer, may be reached at 1 (866) 503-5655, to discuss your questions regarding bankruptcy protection.
 

How much money can a person keep in their bank account at the filing of a chapter 7?

This depends on the amount of exemptions that are available to apply towards the bank account funds. The federal exemptions that may be applied towards bank account funds are called the wildcard exemptions, under U.S.C., section 522 (d) (5). Each person filing is permitted to apply $1,150.00 towards any property, plus $10,825.00 of the unused portion of their allowable $21,625.00 exemption (homestead exemption). The homestead exemption is applied towards the debtor’s residence.
This means that the most a person can keep in a non-pension like bank account at the time of the filing is $11,975.  A person may need to apply some or all of their homestead exemption. The homestead exemption may be required to save and protect the sale of their house from the trustee. The debtor is permitted to use only a portion of their homestead exemption, as follows:
Value of Home:    $275,000
Mortgage Payoff: $230,000
Difference:            $45,000.00
10% Cost of Sale:  $27,500.00
Difference:             $17,500.00
In the example above, the debtor will use $17,500.00 of his homestead exemption. This results in allowing only $4,125.00 of the unused portion of the homestead exemption, plus $1,150.00, for a total bank account exemption of $5,275.00. This means that the debtor may keep only $5,275.00, in the bank account, with the balance to be paid to the trustee.
Please note that the amount of the federal exemptions continuously change over the years. Also, a debtor may wish to apply a portion of his wildcard exemptions to property other than the bank account. Additionally, the amount and property protected may change based on numerous factors, including the filing of a joint bankruptcy case.
If you are considering a New Jersey chapter 7 bankruptcy, I can be contacted at 1 (866) 503-5655 with any further questions you might have concerning bankruptcy protection.
 
 

Health care debt is classified as unsecured debt and is treated the same as credit card debt in all bankruptcy chapters.
If the debtor meets all criteria for a chapter 7 and is entitled to a discharge, all of the health care debt will be discharged and eliminated in the chapter 7.
Health Care Debt in a Chapter 13
All unsecured debt is paid the same as all other unsecured debt. All unsecured debt must be treated the same. The court adds all unsecured debt, together, including credit card debt, health care debt, and any other unsecured debt.  Then, the court looks at the following three criteria to determine the amount that must be paid towards all of the unsecured debt:
1. Unexempt real estate or personal property values;
2. Amount of disposable monthly income, pursuant to the Means Test or Current Monthly Income Test;
3. Amount of monthly disposable income, pursuant to the debtor’s projected future average disposable income, after deducting reasonable and necessary monthly expenses from net income.
In general, the easiest explanation as to the amount that must be paid towards health care debt in a chapter 13 is as follows: Usually the debtor pays only the amount he is able to pay on monthly basis during the life of the bankruptcy plan, based on his disposable household income.
The unsecured debt is paid pro rata. This means that each month the trustee will disburse a portion of the funds due to each unsecured creditor, based on the debtor’s disposable income and his ability to pay. When the plan is paid and completed, the balance that is due to each unsecured creditor, including each health care debt, is eliminated and discharged. Typically, if the debtor does not have sufficient disposable income to pay any amount towards the unsecured debt, the entire amount due to the unsecured creditors is eliminated and discharged.
Although unusual, if the debtor owns real estate or personal property, with a substantial value, the debtor is required to pay an additional amount towards the unsecured debt, which includes health care debt.
The debtor may be required to pay all unsecured debt, if he owns property having a substantial value, and/or has sufficient disposable income to pay all of the unsecured debt.
Robert Manchel, a bankruptcy lawyer in NJ, can be contacted at 1 (866) 503-5655, to discuss your bankruptcy protection questions and concerns.
 

Chapter 7
The information provided below may not apply to your telephone service provider, as the terms vary with each provider.
If the debtor owes a debt that is due to a cell phone provider, the debt will be eliminated in a chapter 7.  After eliminating the debt that is due prior to the bankruptcy filing,  the debtor  may wish to continue the same service by establishing another account.  If the debtor wishes to continue the service with the same provider, the provider may require a security deposit.  The security deposit requirement, may depend on the debtor’s credit history, in addition to other factors.
A cell phone is an asset and should be listed on schedule B of the bankruptcy petition, as such.
Chapter 13
Typically, cell phone providers handle the debtor’s account, the same in a chapter 7 as a chapter 13.  In a chapter 13 any debt accrued after the bankruptcy filing is not eliminated in bankruptcy and must be paid.  In the event that the debtor converts to a chapter 7, any debt incurred after the chapter 13 filing, through the date of conversion, may be eliminated in the chapter 7.
The New Jersey bankruptcy attorney, Robert Manchel, may be reached at 1 (866) 503-5655 , to discuss any debt issues.
 
 
 

The particular state exemptions that apply to a debtor is a different issue than the State where a person can file their bankruptcy petition. A person may be permitted to file in a particular state, but may not be permitted to apply the exemptions of the same state.
New Jersey permits a person to use all federal exemptions or all New Jersey state exemptions, but not both. A person cannot mix and match state and federal exemptions in a bankruptcy case filing, but rather must select all federal or all state exemptions.
If a person has lived in New Jersey for a period of 730 days prior to the bankruptcy filing, he may apply New Jersey law and use all New Jersey exemptions or all federal exemptions. However, if a person resides in New Jersey at the time of the filing, but has moved from another state into New Jersey within 730 days prior to the filing, the person must use the exemptions that are permitted by the state from where they moved.
Therefore, if a person moved from Florida, which only permits a debtor to use only Florida state exemptions, the person filing in New Jersey must apply Florida’s exemptions, which are limited. If a person moved from Pennsylvania to New Jersey, within 730 days prior to the filing, he must apply Pennsylvania law, which permits a debtor to use only Pennsylvania exemptions or only federal exemptions.
Please note if a state permits an individual to apply federal exemptions, the federal exemptions are the same in every state.
New Jersey Bankruptcy Attorney Robert Manchel can be contacted at 1 (866) 503-5655, to discuss your bankruptcy protection questions.

Should spouses file bankruptcy jointly or separately?
One spouse can file bankruptcy without the other spouse. Each spouse should only file if there is a benefit for each spouse.
A person is liable and owes a debt to a person or company, if that same person contracts with the entity to borrow the money. If two people, such as a husband and wife, jointly, contract with a company to borrow money, both individuals owe the entire amount to the same company. This means, the company can sue both of the individuals for the entire balance due, in the event of a default. However, the company cannot obtain more than the amount that is due. In other words, the creditor can obtain 60% from one co-debtor and 40% from the other, or 90% from one and 10% from the other. A spouse is not liable to the other spouses’ creditor solely due to marriage.
The criteria of a chapter 7 and chapter 13 is not affected by whether a person files alone or jointly with their spouse. In other words, the criteria regarding the household income and expenses are the same whether or not there is a joint filing. This means that if the wife does not wish to file, the court will still include her income, in the determination of the disposable income analysis’.
In general, if the non-filing spouse owes a joint credit card debt with the filing spouse, the non-filing spouse will continue to owe the debt after the bankruptcy filing and discharge. However, if the one filing spouse pays all of the credit card debt through a chapter 13 bankruptcy plan, the non-filing spouse is no longer liable for the debt.
If only one spouse files a chapter 7, the filing of the bankruptcy case does not stop the creditor from pursing the non filing spouse for the debt. In other words, the automatic stay provision of the bankruptcy case does not apply to the non-filing spouse and the creditor can pursue the non-filing spouse at any time after the filing. However, in a chapter 13, the filing of one spouse, does initially, stop a creditor, from pursuing the non-filing joint debtor spouse. If  the joint debt is not paid, in full, through the chapter 13 plan by the one spouse, the creditor will be granted permission from the court to pursue the non-filing spouse for the balance that is not paid through the bankruptcy plan.
If  a mortgage company is foreclosing on a residence that is jointly owned and mortgaged, there are circumstances, whereby both spouses need not file a chapter 13 to permanently stop the foreclosure action and reinstate the mortgage.
There are a number of strategic reasons why only one spouse should file. There may be a situation that would permit married individuals to save additional equity in their property and/or reduce the amount that must be paid through a chapter 13, in the event that there is  substantial equity in their property.
You may contact NJ bankruptcy lawyer Robert Manchel at 1 (866) 503-5655 to discuss your financial issues and options for filing for bankruptcy protection. Schedule a free one hour consultation today!