What Is The Chapter 7 Bankruptcy Exemption Rule?
One of the most challenging things to come to terms with when considering filing for bankruptcy is the prospect of potentially losing your hard-earned and cherished possessions. However, one of the central tenets of bankruptcy is the liquidation of assets to repay creditors and give you the best possible chance at getting a clean slate and restarting with a clean financial slate. However, bankruptcy proceedings can be one of the most convoluted and complicated processes in the legal sphere. Without the proper guidance and support of an expert Chapter 7 Attorney, you risk coming out of the situation dazed and confused.
To find the options available to you and discuss the possibility of keeping assets that you cherish, placing a call to the office of Michael McLaughlin is the place to start. With a broad range of experience gained of a career of helping clients endure and complete bankruptcies in a wide range of situations, attorney Michael McLaughlin is ready and waiting to help you find relief as well.
By choosing to seek the expert services of an attorney, you can rest assured knowing that you are making each decision from an informed place to ensure no loose ends are missed, leaving you with the pure relief that comes along with ease from debt.
What Property is Exempt in Chapter 7 Bankruptcy?
There is a specific set of property labeled exempt and non-exempt on both a Federal and state level when filing for bankruptcy. However, while there are many resources online that offer lists and general items that fit into each of these categories, there is very little chance they are comprehensive and a high chance that they may not fit your situation at all. This is why it is crucial to retain an expert Chapter 7 Attorney who specializes in Exemptions in Chapter 7 Bankruptcy. That alone is not enough, however. Since there are guidelines and regulations unique to each state that interact with those on the Federal Level, you must find an attorney who is an expert in your local area.
For example, a general rule of exemptions is that some property necessary for essential function and utility in life qualifies. Thus, cloths, beds, some vehicles, and even some jewelry are exempt. However, suppose these items exceed a set value or fall into the category of luxury or superfluous goods. In that case, there is a good chance the bankruptcy trustee will deem them worthy of liquidation to begin repaying creditors for the debt in which you have found yourself.
Since it is critical to find an attorney familiar with the area, attorney Michael McLaughlin prides himself on staying up to date on the almost constant bankruptcy code and law changes. By maintaining an ever-evolving knowledge and grasp on the minutia, he can offer a level of comprehensive service not to be found elsewhere in Somerville, NJ. To begin discussing the options available to you when considering filing for bankruptcy, the first step is scheduling an initial consultation.
During this consultation, you will meet with attorney Michael McLaughlin to discuss the situation you are in and the options you may have available. If you have the property of which you are unsure of its exemption status, this matter can quickly be cleared up, allowing you to make an informed decision of which option will be best for you and anyone else who may be involved. To begin exploring your options when it comes to Chapter 7 Bankruptcy, call the office of Michael Mclaughlin in Somerville, NJ, as soon as possible to schedule your initial consultation.
Chapter 7 bankruptcy exemption rules differ significantly from state to state. In New Jersey, everyone takes the federal exemptions, which are more liberal than the very minimal New Jersey law exemptions. The largest exemptions are for equity, real estate, and household goods. For example, an individual debtor can exempt $25,150 in real estate equity, $4,000 in automobile equity, and $13,400 in household goods. There is also an exemption for personal injury lawsuit proceeds in the amount of $25,150. A joint filing such as between a husband and wife allows each Debtor to assert their own individual exemptions would result in a real estate equity exemption up to $50,000. Also, the cash surrender value of any whole life insurance policy up to the limit of $13,400.00.
What Type Of Debt Is Dischargeable In A Chapter 7 Bankruptcy?
Credit card debts in most circumstances are dischargeable in a Chapter 7 bankruptcy. People often have loans from friends and family which fall in the category of contract debt and are also dischargeable. In general, the debts that people seek to have discharged in a Chapter 7 bankruptcy arise from agreements between credit card companies, online lenders, or friends and family members or contracts with vendors and leasing companies.
What Type Of Debt Is Not Forgiven In A Chapter 7 Bankruptcy?
Non-dischargeable debts are defined by the statute and include alimony and child support and domestic support obligations. Claims arising from fraudulent conduct are not dischargeable. For example, if a creditor alleges that there was a misrepresentation of income on a credit card application or a pattern of usage on a credit card prior to the bankruptcy that could demonstrate the size and frequency of purchases with historical usage, then those debts might not be dischargeable. In these instances, a creditor must file an adversary complaint and be able to prove fraudulent intent by the totality of the circumstances.
Tax debts are generally non-dischargeable, but under some circumstances, they can be discharged if tax returns were timely filed and the debt is over 3 years old. Debts associated with an accident caused by willful conduct such as drunk driving are not dischargeable. There are other categories under the bankruptcy code that detail which debts would be unaffected.
Matrimonial debts are in an interesting category because they’re considered domestic support obligations. Domestic support obligations include debts that arise as a result of a divorce decree or court order. Very often the issue comes up of whether the equitable distribution component is dischargeable. In a Chapter 7 bankruptcy, the rules are fairly simple in that if the equitable distribution claim was agreed upon in the property settlement agreement, then it’s not dischargeable. In a Chapter 13 bankruptcy, equitable distribution claims are potentially non-dischargeable; this is determined on a case-by-case basis and requires a careful analysis of the nature of the debt and the filing of a Complaint by the creditor. If the Debtor’s Chapter 13 plan devotes all disposable income and has been filed in good faith, a Debtor may be able to partially discharge a matrimonial debt.
Get Information on Chapter 7 Bankruptcy Exemption Rule, or call the Michael McLaughlin, LLC, for an initial consultation at (908) 373-8500 and get the legal answers you are seeking.