No NJ Homestead Exemption in Bankruptcy But There May Be Hope

New Jersey bankruptcy exemption laws do not include an exemption for the homestead, but there may be an option for people who find themselves in this precarious predicament. In some states, debtors can protect a limitless amount of home equity from the eager hands of creditors and the bankruptcy trustee during bankruptcy proceedings. Unfortunately, New Jersey is not one of those states. There may be hope for New Jersey residents filing bankruptcy who hope to keep their homes. New Jersey permits debtors the option of choosing between state and federal exemptions during a bankruptcy. Under the allowable federal exemptions, there is a $22,975 federal homestead exemption that would be available to people in New Jersey to take advantage of. In order to qualify for this federal homestead exemption a New Jersey resident must be filing for chapter 7 bankruptcy and must choose to use the federal bankruptcy exemptions, meaning they would use all federal bankruptcy provisions and would not be able to select other new Jersey provisions that may be favorable to their bankruptcy filing for other assets. Homestead exemptions provide debtors with the opportunity to protect their home equity when in bankruptcy by exempting the debtor's home equity from the reach of the bankruptcy trustee. During the proceedings, the interested parties are not concerned with the actual value of the home, but the debtor's home equity is what becomes the focus in a homestead analysis. For instance, a debtor's home may be worth $400,000, but if he or she still owes $380,000 on the house there is only $20,000 of home equity. The homestead exemption analysis is only concerned with the home equity amount for the purposes of the bankruptcy and the exemption. Therefore, if the home equity number falls to $22,975 or below (as in the example above), the debtor can choose to use the federal bankruptcy homestead exemption and shield his or her home from the trustee. It is important to note, that the debtor should be able to maintain his or her mortgage payments on the home if they plan on keeping their home in a chapter 7 bankruptcy proceeding, notwithstanding the federal homestead exemption. This exemption does not strip off the remaining debt but simply protects equity, up to the exemption amount, from being applied to payoff of creditors claims. If you are facing foreclosure or simply overwhelmed with debt and believe bankruptcy may be a solution you should be aware the rules of bankruptcy are very complex. It is imperative that you obtain experienced counsel to review your matter and represent you in your bankruptcy filing. For more information regarding, Chapter 7 bankruptcy, Chapter 13 bankruptcy, foreclosure or other consumer debt matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for informational purposes only and not intended to replace the advice of an attorney.

Options For Chapter 13 Debtors Who Cannot Make Re-Payments

Chapter 13 debtors who cannot make their required re-payments have options to assist them from becoming delinquent. The purpose of a Chapter 13 Bankruptcy is the re-organization of debts and assets and the judicial institution of a re-payment plan to allow a debtor to remain in possession of his or her assets. Since under Chapter 13, a debtor has the opportunity to potentially keep their property and/or assets it is an attractive option for many people facing debts that they have been delinquent in paying. Unfortunately, filing a Chapter 13 Bankruptcy petition may not be feasible for everyone facing substantial debts that he or she cannot pay. The Bankruptcy Court will not allow a debtor to proceed with a Chapter 13 petition unless the debtor can provide sufficient proof to the bankruptcy trustee that he or she is earning enough of an income to cover the court's mandatory monthly re-payment amounts. If a married couple reside together, both partners have to include their income and expenses on the Chapter 13 petition, despite who actually filed the petition. Further, any other individuals who live in the same household must also include his or her income and expenses on the petition. In the event that the debtor does not have enough household income to make the monthly payments to the trustee, the trustee may allow a non-household person, such as a relative or close friend, to make income contributions to assist the debtor in making his or her required monthly payments. Typically, a trustee will require that the person who is making income contributions to the debtor sign a legal document stating his or her intent to contribute a certain amount or a certain duration of time. Additionally, the individual who is making contributions will most likely have to submit proof of his or her earnings. If you are facing or considering bankruptcy the options and obligations can become confusing very quickly. Rather than making a life-changing decision without understanding your choices, you should consult with an experienced Bankruptcy attorney to gain more information or assistance with your individual situations. For more information about Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, debt relief, consumer debt, foreclosure or other bankruptcy matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for informational purposes and in no way intended to replace the advice of an attorney.