Why Chapter 7 Bankruptcy Might Be The Right Decision For You
The whole purpose of a Chapter 7 bankruptcy is to help honest people, who, through circumstances outside of their control, accrued substantial debt. Most clients who file under Chapter 7 of the Bankruptcy Code have minimal property, and they have to be under the median income or pass the means test to qualify.
In New Jersey, the median income is $68,349 for a family of one, $82,283 for a family of two, $103,634 for a family of three, and $125,465 for a family of four, adding $9,000 for each additional person in excess of a family of four. However, even if you are above the median income, you may qualify if you can beat the means test with all the deductions.
Chapter 7 Bankruptcy: Exempt And Non-Exempt Property
The vast majority of our clients who file Chapter 7 do not lose any property since all the property they own is exempt or protected. At Taieb Law, one of the regular questions we receive is, “Will I lose my home if I file Chapter 7?” The answer depends on the equity in your home.
If you are current on your mortgage payment and your home is worth $150,000, and you owe $120,000, you will be able to keep the real estate that you live in since, under the law, you are now allowed an exemption of $25,150.
The analysis is as follows: $150,000 – $15,000 (10% of cost of sale) – $120,000 = $15,000 equity that would be fully exempt. However, Congress only provides so many exemptions for real estate, clothing, household goods, motor vehicles and many other properties you own.
You have to be very careful before you file Chapter 7 bankruptcy because if you have too much property, it will not be exempt. A Chapter 7 trustee will sell the nonexempt property to pay a portion to creditors. Besides being under the median income and not having too much property, you want to make sure that you qualify for Chapter 7 bankruptcy, but all your property would be exempt or protected.
Experience Matters In Filing For Bankruptcy
Our founding attorney, Steven N. Taieb, has been a South Jersey bankruptcy attorney for over 35 years and is board-certified in consumer bankruptcy law. He will work with you to find the best possible solution to your debt problems.