Good Reasons Not to Handle Your Own Bankruptcy Filing

Good Reasons Not to Handle Your Own Bankruptcy Filing

When you are facing financial challenges and have concluded that your best option moving forward is a bankruptcy filing, you may be tempted to handle the bankruptcy on your own, particularly if you are seeking protection under Chapter 7. It’s almost always a bad idea to do that—here are some of the reasons why.

  • Bankruptcy is complex—you might choose the wrong chapter and end up losing money or property. You might be disqualified if you  miss a step, like completing the two courses required. Or you might mess up the Means Test, which is complex. Even experienced attorneys such as us use specialized software and tools to get it right.
  • The forms and procedures are complex and ever changing. Filing the wrong forms could jeopardize your bankruptcy.
  • You may fail to file important documents, or miss critical deadlines
  • You may not get the relief you wanted, needed or expected—Some debts cannot be discharged in bankruptcy. For example, if you file bankruptcy primarily to rid yourself of child support or student loan payments, you won’t succeed, as those types of debts typically cannot be discharged.
  • You may not get all the benefits to which you are entitled—there are both state and and federal exemptions. Some property is excluded. But you won’t know what to do if you’re not trained as a bankruptcy lawyer or assistant.
  • You do not know the judges and the trustees, or the accepted procedures where you are filing.

Contact Neuner & Ventura, LLP

We understand the stress, anxiety and confusion that can be associated with a potential bankruptcy filing. We offer a free initial consultation to every client. For an appointment, call Neuner & Ventura at 856-596-2828 or send us an e-mail. We do, however, reserve the right to charge a fee to review any work done by another attorney. Evening and weekend appointments are available upon request.

Representing Clients across South Jersey



Understanding Bankruptcy Mediation

Image of a pen, calculator and reading glasses on financial documents.

Bankruptcy cases can and often do spawn litigation or major disputes with creditors. If you are in this situation, either as a debtor, a creditor, or as a plaintiff or defendant, you should know and will soon learn that litigation even in bankruptcy court is expensive and the outcome not always certain. In these situations, mediation should be seriously considered.

Indeed, in New Jersey, the Bankruptcy Court requires mediation in all suits (“adversary proceedings”) with a few exceptions.

In mediation, the parties to a dispute use a neutral third party to facilitate the resolution of the problem. The mediator is not a judge and cannot rule upon or force a particular outcome. Instead he/she is tasked with helping the parties work cooperatively to identify and implement a solution that is mutually beneficial. The mediator may brainstorm with either or both parties to determine what each party needs and what may be conceded.

In addition, the mediator doesn’t take testimony from witnesses or make determinations about what is or is not admissible. The mediator is not allowed to act as legal counsel to either of the parties, and should not have served in that capacity in the past.

A major advantage of mediation is that the parties can speak privately and in confidence to the mediator about their situation and concerns. The mediator can use this on both sides to try to get the parties to a “win-win” (as opposed to a “win-lose”) outcome.

One of the principal advantages of mediation is that it empowers the parties to resolve the dispute. As a participant in mediation, you always have the right to reject any proposed resolution, and you can always make a counter-proposal. Unlike litigation, you don’t have to wait and hope that the court found your arguments persuasive. If the other party to mediation agrees to the proposed settlement, a “mediation settlement agreement” is signed and becomes legally binding.

Mediation generally moves faster than litigation and with significantly less expense.
Most importantly, it helps the parties and their attorneys to see their situation through the eyes of an experienced neutral third party. This can often open their eyes to the risks to them (including the future cost in time, money, and emotional drain) of not reaching a settlement.
It has been said that “a case settled is a case well-tried”. Mediation is a good way to achieve that.

In New Jersey, the court has a panel of mediators, but the parties can choose anyone else in whom they have confidence as a mediator. Both Steven Neuner and Joanne Ventura are trained mediators with experience in civil, bankruptcy and divorce litigation.

Contact Neuner & Ventura, LLP

At Neuner & Ventura, LLP, we know that the bankruptcy process can be intimidating and confusing. We offer a free initial consultation to every client. For an appointment, call our office at 856-596-2828 or send us an e-mail. We do, however, reserve the right to charge a fee to review any work done by another attorney. Evening and weekend appointments are available upon request.

Representing Clients across South Jersey



Do You Qualify for Chapter 13 Bankruptcy Protection?

There’s a common misconception that, if you fail to meet the means test to file for protection under Chapter 7 of the bankruptcy laws, you can always file for debtor’s reorganization under Chapter 13, obtaining the benefit of the automatic stay and setting up new payment arrangements with your creditors. To the contrary, there are certain minimum requirements you must meet to be eligible for Chapter 13 bankruptcy protection.

You Must Be an Individual

Chapter 13 is not available to businesses of any kind. Even if you were running your business as a sole proprietor, you cannot seek protection under Chapter 13. All business reorganizations under the bankruptcy laws are under Chapter 11 (with extremely limited exceptions). If you own a business, but are not seeking to protect the business, you can qualify for Chapter 13 with respect to any business debts for which you are personally liable.

You Must Have Enough Income

This is essentially the flipside of the means test under Chapter 7. A Chapter 13 is a reorganization plan, where you make new agreements to repay your creditors. The bankruptcy trustee and the bankruptcy court won’t approve your plan if you can’t show that you’ll be able to make the proposed payments.

Your Debts Must Be Manageable, Based on Your Disposable Income

There’s a ceiling on the amount of debt that can be restructured through a Chapter 13 petition. Currently, you won’t qualify if your secured debt exceeds $1,184,200 or your unsecured debt is more than $394,725.

You Must Be Current on All Income Tax Filings

To qualify, you must verify that you have filed all state and federal tax returns for the last four years.

Contact Neuner & Ventura, LLP

At Neuner & Ventura, LLP, we provide a free initial consultation to every client. To set up a meeting, call Neuner & Ventura at 856-596-2828 or send us an e-mail. We do, however, reserve the right to charge a fee to review any work done by another attorney. Evening and weekend appointments are available upon request.

Representing Clients across South Jersey



U.S. Supreme Court to Hear Important Bankruptcy Case

Gavel on bankruptcy Law books

The U.S. Supreme Court is scheduled to hear arguments on a case that experts say could have far-reaching implications.

In the case of Czyzewski v. Jevic Holding Corporation, the court will determine how much power bankruptcy courts have to deviate from the priority rules established in the federal bankruptcy laws. Jevic Transportation Company was a New Jersey trucking firm that filed for bankruptcy protection in 2008. Employees of the company, including 1,785 drivers, say the bankruptcy was the direct result of fraud that was perpetrated as part of a leveraged buyout of the company in 2006. The employees sued for back wages under a federal law that mandates a 60 day notice when a company engages in mass layoffs.

The drivers and other creditors also filed a lawsuit alleging fraud, which the defendants settled, but only with the other creditors, leaving the drivers with nothing. As a part of the settlement, the bankruptcy action was dropped.

Under the bankruptcy code, creditors have the following priority:

  • Lenders with secured debt have top priority
  • Lawyers and other professionals who work on the bankruptcy are next
  • So-called junior creditors come next, starting with employees who are owed wages
  • All other creditors have less priority than employees to whom wages are owed

Advocates for the drivers say that, if the Supreme Court allows the settlement to stand, it could lead to situations where more powerful creditors in a bankruptcy collude to exclude other creditors, such as workers. Opponents argue, though, that it has long been the practice of the bankruptcy courts to permit these types of payments during the course of a bankruptcy proceeding and that forcing the courts to follow the priority rules would eliminate the flexibility often needed to resolve a bankruptcy without substantial loss of assets.

Contact Neuner & Ventura, LLP

At Neuner & Ventura, LLP, we know that the bankruptcy process can be intimidating and confusing. We offer a free initial consultation to every client. For an appointment, call our office at 856-596-2828 or send us an e-mail. We do, however, reserve the right to charge a fee to review any work done by another attorney. Evening and weekend appointments are available upon request.

Representing Clients across South Jersey



How the Bankruptcy Trustee Investigates Fraud Allegations

The federal bankruptcy laws are designed to give you a second chance. They’re not a sign of failure—some pretty famous and successful people have filed for bankruptcy—some more than once. But the laws are taken seriously. If the bankruptcy trustee has any suspicion that your claim is fraudulent or that you have misrepresented your true financial condition, there are specific steps the trustee can take to determine if there’s any merit to those concerns.

A Bankruptcy Rule 2004 Examination

Often, the first step the trustee will take is to request that a debtor submit to a Rule 2004 examination. Under this provision, a debtor may be required to testify and to produce documents.

In addition, the trustee may solicit testimony and documents from other parties to discern whether there has been fraud. Specifically, the rule allows a trustee to investigate:

  • Any matter that may affect the administration of a bankruptcy estate
  • Any matter related to or affecting a debtor’s right to discharge a debt
  • Any acts, conduct, property, liabilities or financial condition of a debtor

Adversary Proceedings

An adversary proceeding is essentially a lawsuit filed in the bankruptcy court. Typically, the adversary proceeding is brought against a debtor, but the trustee has the authority to bring such an action against anyone.

Temporary Injunctions

If the trustee obtains evidence that assets are being wrongfully depleted or other fraud is being perpetrated, the trustee may ask the court for an injunction. The injunction is an order of the court prohibiting a person from engaging in specific actions, such as the transfer of property.

Criminal Proceedings

Fraud is both a civil and a criminal offense. If there’s evidence that you have engaged in bankruptcy fraud, the U.S. Attorney’s Office can prosecute you for violation of federal law.

Contact Neuner & Ventura, LLP

At Neuner & Ventura, LLP, we provide a free initial consultation to every client. To set up a meeting, call Neuner & Ventura at 856-596-2828 or send us an e-mail. We do, however, reserve the right to charge a fee to review any work done by another attorney. Evening and weekend appointments are available upon request.

Representing Clients across South Jersey



The New Jersey Motor Vehicle Exemption in a Chapter 7 Bankruptcy

When you seek protection in bankruptcy under Chapter 7, the law allows you to permanently discharge certain debts in exchange for the sale of non-exempt assets. As a general rule, you can’t discharge student loan, tax and family law arrearages. In addition, you can choose either the New Jersey state exemption or the federal exemption, and you’ll be able to keep certain property.

Choosing the Right Exemption for Your Motor Vehicle

The state exemption in New Jersey allows you to keep some up to $1,000 of equity in your car, van, truck or motorcycle. If your equity in the vehicle is less than $1,000, the trustee cannot take your car and sell it. However, if you have more than $1,000 in equity, the trustee will likely choose to take your car, sell it and give you the $1,000 exemption, and use any additional proceeds to repay creditors. In New Jersey, if you file a joint personal bankruptcy protection, you can double that exemption to $2,000.

If, instead, you opt to use the federal exemption amount, you can protect up to $3,775 of the equity in your motor vehicle.

Determining the Equity in Your Vehicle

The equity in your vehicle is essentially that amount you would personally receive and keep if you sold the vehicle and satisfied any debts related to the vehicle. If you have paid off the loan on the vehicle or there’s no debt, the equity in the vehicle will be its fair market value (usually calculated using the blue book value). If there’s any amount remaining on your motor vehicle loan, the equity will typically be the fair market value minus any amount still owed.

It’s important to understand that it’s the equity in your vehicle that counts, not the fair market value. Accordingly, you could be driving an expensive vehicle, but if the amount you owe is more than you could sell it for, you have no equity and the bankruptcy trustee won’t be interested in it.

Contact Neuner & Ventura, LLP

At Neuner & Ventura, LLP, we know that the bankruptcy process can be intimidating and confusing. We offer a free initial consultation to every client. For an appointment, call our office at 856-596-2828 or send us an e-mail. We do, however, reserve the right to charge a fee to review any work done by another attorney. Evening and weekend appointments are available upon request.

Representing Clients across South Jersey



Can I Keep the Proceeds of Lawsuit if I File for Chapter 7 Bankruptcy?

Often, one of the consequences of a personal injury is a bankruptcy filing. You may be unable to work and meet your financial obligations and you may have no other sources of income. But what happens if you file for bankruptcy protection and then receive a settlement or a verdict in a personal injury lawsuit? What if your lawsuit is not resolved before the bankruptcy filing is finished? This blog outlines the rules governing if you can keep a settlement or verdict and, if so, how much you can keep.

When you file for protection under Chapter 7, you get to discharge certain debts, but you must also turn certain property over to the bankruptcy court, to be part of your bankruptcy estate. The proceeds of your bankruptcy estate are then used to pay part or all of the debt you owe your creditors.

If you have filed for protection under the provisions of Chapter 7 of the bankruptcy laws, any monetary award you receive, or will receive, becomes part of your bankruptcy estate. In fact, even if you have not filed a lawsuit at the time your bankruptcy is complete, if you are entitled to do so while your bankruptcy is in process, any money you would be entitled to receive in a lawsuit is the property of your bankruptcy estate.

The amount of the settlement or verdict that will be exempt from your bankruptcy estate depends on whether you choose the state or federal bankruptcy exemption. The New Jersey state bankruptcy exemption allows you to keep $1,000 of any judgment or settlement. The federal exemption is substantially higher–$23,675.

Contact Neuner & Ventura, LLP

We understand the stress, anxiety and confusion that can be associated with a potential bankruptcy filing. We offer a free initial consultation to every client. For an appointment, call Neuner & Ventura at 856-596-2828 or send us an e-mail. We do, however, reserve the right to charge a fee to review any work done by another attorney. Evening and weekend appointments are available upon request.

Representing Clients across South Jersey



Being sued on student loans? Demand documents to support the loan

A recent New York Times article reports that certain student loan creditors have had their cases dismissed because they could provide proof to support the loan, and to support that the plaintiff suing on the loan actually owned it. As Paperwork Goes Missing, 7-18-17, Private Student Loan Debts May Be Wiped Away . As the authors point out, these loans have been sold off or handed off to loan servicers who did not get and cannot find the supporting documents. Many cases have been dismissed. Nevertheless, many suits simply result in default judgments because the borrowers being sued did not bother to respond and demand paperwork, or go to trial. So the lenders may still file suit, to see what happens when they do.

The lesson? Demand to see the signed loan agreements, and the endorsed promissory notes or assignments to show who owns and has the right to sue to collect. Better yet, be sure to get or keep all your paperwork from the get-go, including documentation of all payments or notices of transfer.

A caution is in order here, though. Not all loans will suffer from this problem, and defending these cases will cost money. But it may often pay to demand that the lender provided the documents to support their claim in order to be paid. Many may ignore these requests. You have a right to see the documents.

Also, if you file a bankruptcy where creditors file claim, eg a Chapter 7 with “assets” or  a Chapter 13, you can challenge the student loan creditor’s claim and demand the same documents.

Since student loans are almost always non-dischargeable, it pays to make sure.



The New Jersey Bankruptcy Exemptions

When you want to liquidate debts in a bankruptcy proceeding—permanently discharge them so that you no longer owe anything—you must do so through a Chapter 7 petition. When you file, you’ll immediately get the benefit of the automatic stay, which prevents your creditors from calling, writing or taking any other action outside of the bankruptcy proceeding to collect the debt. You’ll be able to permanently discharge many debts—student loans, certain tax debts and family law arrearages are generally not subject to discharge. In exchange, you will be required to sell non-exempt property, with the proceeds used to pay your creditors, in part or in full.

The New Jersey Bankruptcy Exemptions

When you file a Chapter 7 bankruptcy petition in New Jersey, you have a choice—you can take the exemptions available under New Jersey law or under federal law. You can’t, however, pick and choose between the two. Here’s an overview of the New Jersey exemptions:

  • The Homestead Exemption — Most states allow you to exempt some equity in your home. New Jersey does not. If you want to claim a homestead exemption, you’ll have to use the federal exemption schedule.
  • Cemeteries and burial plots — Burial plots and cemetery property are fully exempt
  • Motor vehicles — You can claim up to $1,000 in equity (the difference between the fair market value and anything you owe on the vehicle) on a car, truck or motorcycle
  • Pension and retirement accounts — All public pension funds are fully exempt
  • Life insurance proceeds — These are exempt if there’s a clause in the insurance policy that prevents it from being used to pay the beneficiary’s creditors.
  • Personal property — There’s a $1,000 exemption for household goods and furnishings and all clothing is fully exempted

Contact Neuner & Ventura, LLP

We understand the stress, anxiety and confusion that can be associated with a potential bankruptcy filing. We offer a free initial consultation to every client. For an appointment, call Neuner & Ventura at 856-596-2828 or send us an e-mail. We do, however, reserve the right to charge a fee to review any work done by another attorney. Evening and weekend appointments are available upon request.

Representing Clients across South Jersey



The Homestead Exemption in a New Jersey Chapter 7 Bankruptcy

When you seek to permanently discharge debts in a Chapter 7 bankruptcy filing, part of the deal is that you get to claim some property as exempt, so that it can’t be taken by the bankruptcy trustee and sold to satisfy your creditors. The exemption customarily identifies how much equity can be protected in your home, as well as how much personal property can be kept. Each state has its own schedule of exemptions or you can choose the federal exemption.

The Homestead Exemption in New Jersey

Unlike many other states, New Jersey does not have a homestead exemption for people seeking bankruptcy protection under Chapter 7. Accordingly, if you want to protect any of the equity in your home during a Chapter 7 proceeding, you must choose the federal exemption.

That’s not to say, however, that a homeowner cannot protect any interest in a homestead in New Jersey, but it’s a fairly complicated legal process to do so. Under New Jersey law, a married debtor can claim an exemption for any survivorship interest in property, provided the property is held “by the entirety” with his or her spouse. “By the entirety” is a legal term that refers to a specific type of property ownership, where the parties are not allowed to sell or transfer their individual interest without permission from the other parties.

You can, of course, choose the federal exemptions, but you must use the federal exemptions for all your property (you can opt for the New Jersey exemption on some and the federal for other property). Currently, the federal homestead exemption amount is $22,975, but it is subject to change every three years. You can use the federal homestead exemption for a wide range of real property, including homes, co-ops, condominiums, mobile homes and even burial plots.

Contact Neuner & Ventura, LLP

At Neuner & Ventura, LLP, we provide a free initial consultation to every client. To set up a meeting, call Neuner & Ventura at 856-596-2828 or send us an e-mail. We do, however, reserve the right to charge a fee to review any work done by another attorney. Evening and weekend appointments are available upon request.

Representing Clients across South Jersey



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