I DON’T HAVE A LOT OF DEBT BUT AM WORRIED I CAN LOSE PROPERTY IF I FILE BANKRUPTCY. CAN YOU ADVISE ME WHAT BANKRUPTCY WILL PROTECT MY PROPERTY?
Steven N. Taieb, Esq. deals with this issue for every case he files. The normal rule of thumb is to try to put somebody in a Chapter 7 if they are under the median income and don’t need to reorganize. However, what happens if you are under median income, which is $66,284 for a family of 1, $81,054 for a family of 2, $98,174 for a family of 3, and $121,226 for a family of 4. New Jersey has one of the highest median incomes in the country.
However, what happens if you own a home and have 2 car payments. The federal exemption for real estate is pretty high so if you and your spouse are current on the mortgage and own a home worth $200,000 and owe $150,000 on the mortgage, you will not lose the home since after cost of sale you would have $30,000 equity which is covered by the exemption of $23,625 for each party. However, if the home is worth $250,000 then you would have way too much equity and a Chapter 7 trustee would move to sell your home. Thus, before you file bankruptcy, you must have a value for your home with a payoff on the mortgage since an error can be extremely costly.
With respect to the vehicles if you are current and the vehicles have minimal equity, you won’t lose the vehicles. However, if there is some equity in your home and some equity in your vehicles, you have to be very careful with filing Chapter 7 since a Chapter 7 trustee could then sell any non-exempt property or you would have to buy off the trustee the value of the non-exempt equity if you didn’t want him to sell it.
Thus, if you file Chapter 7 without sufficient valuation and payoffs, there can be serious problems if you make a mistake.
Please contact TAIEBLAW at 856-235-4994 if you have any questions concerning this issue or any other issues dealing with financial problems, or visit our website at TAIEBLAW.COM.
Steven N. Taieb, Esq. has been a South Jersey Bankruptcy Attorney for over 33 years and is board certified in consumer bankruptcy law by The American Board of Certification which is accredited by The American Bar Association.
We are more than happy to discuss all your options and to see if bankruptcy is the best option for you.