Disposing of Property Before You File for Bankruptcy

When you are struggling to get your finances in order, you may choose to sell assets that you don’t need, with the hope that you can make enough money to resolve your problems. You may be tempted to “gift” items of value. If you find that you still need to seek bankruptcy protection, you may face questions from the bankruptcy court or trustee about the disposition of those assets. We tell our clients that “bankruptcy is a fishbowl…it is safest to be able to be transparent”. You must always take care to avoid the appearance that your actions involved a fraudulent transfer.

Taking the Right Steps to Avoid Potential Problems

The most important thing to do is make certain that any sale is clearly what would be considered an “arm’s-length transaction.” This essentially means that the terms of the transaction do not reflect that the parties have common interests or that any favoritism was involved because of the relationship of the parties. The classic example of a fraudulent transfer is the sale or gift of extremely valuable property to a family member or friend for far less than its market value. One of the best ways to show this is to get a fair-market appraisal or some other reliable evidence of value of the goods sold. For cars, sites like www.kbb.com are good. For other property besides real estate, EBay or Craigslist may provide evidence of possible market value.

You need to be careful as well with gifts to charitable organizations, from a church to a soup kitchen or other nonprofit. You may be required to show that the organization is bona fide and that you make similar donations on a regular basis. You may also be required to show that you will not be a primary beneficiary of the donation. For example, it may be considered a fraudulent transfer if you donate a piano to your church when you are the church pianist.

Regardless of how you distribute property before a bankruptcy, it is critical that you keep accurate records. Ideally, your records should show what you sold or gave away, who the recipient was, the goods’ fair market value and whether there were other potential buyers.

If you are in such a situation, you should not delay in getting early qualified legal advice, in case a bankruptcy or similar action becomes necessary.

Contact Us

We provide a free initial consultation to every client. We do, however, reserve the right to charge a fee to review any work done by another attorney. For an appointment, call our office at 856-596-2828 or send us an e-mail. Evening and weekend appointments are available upon request.



What to Do If You Expect Your Vehicle to Be Repossessed

Protect Your Rights When You Fear Repossession of a Vehicle

It happens to a lot of people — you encounter financial difficulties and find yourself behind on your financial obligations. You may be in arrears on the payment for your car or truck, and may have received notice of a potential repossession. What are your rights and what can you do to protect yourself?

When a repossession can take place without court order.

As a general rule (in New Jersey) your lender or their agent (a repo man) may not “breach the peace” without a court order. This means they cannot use or threaten physical force, and they cannot come into your home, garage or a locked closed area to repossess your vehicle without a court order or without your consent. They may, however, repossess the car on the street, in an open driveway, in front of your house or in any other public place without a court order and without notice to you.

It’s also important to understand that if your car is repossessed with personal items inside of it, you risk never seeing those items again. Accordingly, if you anticipate that your vehicle may be repossessed and you must leave it in a public place, you should take care not to leave any valuables in it.

In New Jersey, as long as the license plates are on the car, you remain potentially liable as the owner for any injury or damage someone operating the car may cause, and you need to keep the car insured. You might consider taking the tags off the vehicle and leaving it in front of your home or in some public place. However, when you do, you will be considered to have abandoned the vehicle and may be cited by police for violating the law.

If you file a bankruptcy case, the automatic stay will protect you from repossession for a limited time. If you file a Chapter 13 case, you may be able to bring the loan current through payments under a bankruptcy plan over 3 to 5 years, or you may have other options through the “cramdown” provisions of the Bankruptcy Code. However, if you know that you won’t be able to bring the account current and want to avoid the fear and hassle involved with an actual repossession, we recommend making arrangements to voluntarily surrender the car to the lender at an agreed location (which may be an area dealer). When you do, be sure to remove the license plates when you get to the drop off location. If you are a New Jersey resident, you should surrender them to the nearest DMV office, where you will get a receipt that you can use to remove the vehicle from your auto insurance.

Reliable transportation to get to and from work is often essential to getting back on your feet financially. When this is threatened, getting qualified legal advice and doing some careful planning is essential.

Contact Our Office

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

Representing Clients across South Jersey



Bankruptcy and Divorce — Which Comes First?

Far too often, the underlying cause of divorce is financial difficulty. Even if financial problems are not the cause of a divorce, they can arise when you no longer have two incomes to pay for your lifestyle or when, having separated, the spouses now have two households to support. If you are considering filing for divorce or if you know that your spouse plans to seek a divorce, a personal bankruptcy filing may become necessary. So a key question is the timing and order of these proceedings. Should you file for bankruptcy first? If so, what will be the impact on your divorce and on your soon-to-be ex-spouse?

Unfortunately, the interplay of divorce and bankruptcy is complex and very much dependent on the facts and circumstances. But a few things are generally true. First, getting early advice from an experienced bankruptcy attorney about how a bankruptcy may impact a divorce is essential. Bankruptcy counsel and divorce counsel should confer at key points in the process.

Bankruptcy or Divorce first? Don’t do them together if possible.

We generally recommend completing the bankruptcy or the divorce first rather than having both in play at the same time. That said, which should be done first depends on the parties and how well they get along, as well as the financial situation and the financial pressure being exerted by creditors. All things being equal, we generally recommend filing the bankruptcy first, but this is not always best. And in some cases, it makes good sense to file a bankruptcy even though a divorce is pending (eg. To discharge debts that are making it hard to settle the divoce. Again, “the devil is in the details”. We can also say that in most instances, using bankruptcy as a litigation tactic against a spouse is ineffective and can backfire.

If you finalize Your Divorce First

If you finalize your divorce before filing for bankruptcy, a lot of ambiguities and complexities may be done away with. Property will generally have been divided, and the amount due for child support, alimony or equitable distribution will have been decided. Unless there has been fraud or collusion, bankruptcy courts generally honor the results of a previous divorce judgment. But, while child support or alimony obligations [“Domestic Support Obligations”] cannot be discharged in a bankruptcy proceeding, in a Chapter 13 bankruptcy equitable distribution or other non-DSO obligations owed to the ex- spouse who is not filing, can be discharged. These can include unpaid attorneys fees owed to your own divorce attorney. If you agreed to pay some of your ex-spouse’s debts for her, this also might end up being non-dischargeable. There are other potential complications that are too fact based and complex to go into here. Anyone doing this needs to review a potential divorce settlement with bankruptcy counsel.

If You File for Bankruptcy First

If you are married when you file for bankruptcy, you can choose to file bankruptcy individually or jointly. If you file individually, you will receive the protections afforded under the law — prohibition of calls, letters or legal action by creditors — but your spouse will not. Because your spouse won’t be protected, he/she may be subjected to harassment by creditors and may be liable for the full amount of the debt. If you file jointly, you will both be protected, but you will both take a hit on your personal credit rating.

A Chapter 7 filing prior to a divorce can simplify the divorce proceedings, as most all debts will be discharged. A joint bankruptcy filing by a husband and wife (either with the same attorney or with separate bankruptcy counsel) may be wise. Spouses who work together can generally fare better than those who do not. A Chapter 13 bankruptcy may help under certain circumstances, even though such cases take 3 to 5 years to complete.

Contact Neuner & Ventura, LLP

We offer a free initial consultation to every potential bankruptcy client. We do, however, reserve the right to charge a fee to review any work done by another attorney or under unusual circumstances. To schedule an appointment, call our office at 856-596-2828 or send us an e-mail. Evening and weekend appointments are available upon request.

Representing Clients across South Jersey



Filing for Bankruptcy Again — Do You Still Get Protection from Creditor Harassment?

The Impact of a Second Bankruptcy Filing on the Automatic Stay

Under the federal bankruptcy laws, when you file for protection in bankruptcy, whether under Chapter 7 or Chapter 13, you are immediately entitled to the benefits afforded by the “automatic stay.” The automatic stay prohibits creditors from calling, writing or taking any other action to collect the debt from you, other than through the proceedings in the bankruptcy court. There are situations in which, even though you have the right to file for bankruptcy protection, you may be denied the protection of the automatic stay. This blog post provides an overview of those circumstances.

Actions that Can Cause You to Lose the Automatic Stay

When you file a new bankruptcy petition, whether or not you are eligible for the automatic stay will depend on how your prior bankruptcy case was resolved. If you had one bankruptcy case dismissed in the past 12 months (unless the dismissal was because you did not qualify under the “Means Test” or because your budget left you the ability to pay something meaningful to your creditors) the automatic stay will only last 30 days. To keep it you have to show the bankruptcy court that you are re-filing in good faith. This usually requires a satisfactory explanation for the previous dismissal, and a showing that “things are different now”. If you have had two dismissals in the last 12 months, there is a presumption of bad faith, and no automatic stay goes into effect. To get the benefit of the automatic stay you have to overcome this presumption and convince the bankruptcy court that your third filing in 12 months was in good faith..

The “takeaway” lesson here is not to let a bankruptcy case be dismissed if you can avoid it. If you filed under Chapter 13 and it is not working out, you are better off converting to Chapter 7 in most cases. Better yet, make sure you and your attorney have carefully analyzed your options so that you do not end up in a bankruptcy that is not right for you. As always, having the right advice from an experienced lawyer is critical.

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. We do, however, reserve the right to charge a fee to review any work done by another attorney. For an appointment, call our office at 856-596-2828 or send us an e-mail. Evening and weekend appointments are available upon request.

Representing Clients across South Jersey



Filing for Bankruptcy Again — Rights and Restrictions

Filing Bankruptcy a Second Time

The bankruptcy laws were enacted to give people a second chance, in recognition that circumstances or poor decisions can lead to situations that can only be remedied by the discharge or reorganization of debt. But what if you get a few years down the road from a bankruptcy and find yourself in the same situation again? The cause could be something completely out of your control — an injury, illness or divorce. Can you seek bankruptcy protection again? If so, what are the limitations?

Multiple Bankruptcy Filings

Under the Bankruptcy Code, you can almost always file another bankruptcy after having previously done so. There are no prohibitions against filing a Chapter 7, Chapter 11 or Chapter 13 bankruptcy more than once. Unless the previous bankruptcy was dismissed within 12 months before, a new bankruptcy will provide you protection from creditors through the “automatic stay”. This protection ends when the case is closed or when a court enters an Order granting “stay relief” to a creditor (generally limited to creditors with collateral, called “secured creditors”

The lasting protection from bankruptcy comes through the bankruptcy discharge, and this is not available if you have filed too soon after a previous bankruptcy where you received a discharge. If your previous case was filed under Chapter 7 bankruptcy and you got a discharge, you won’t be eligible for another discharge in Chapter 7 for eight years from the date of the first filing, or four years if you choose to file a new case under Chapter 13. If your first filing was a Chapter 13 bankruptcy, you can qualify for discharge with another Chapter 13 once two years have passed since your first filing. If, however, you want to file a Chapter 7 petition after a prior Chapter 13 bankruptcy, you must wait a minimum of six years from the date of the first filing to have the right to discharge your debts.

Sometimes a bankruptcy without a discharge can still be a good idea.

Sometimes a new bankruptcy that does not end in a discharge can still be a valuable tool. Typically, this will be a Chapter 11 or Chapter 13 case where the goal is not to discharge new debts, but instead to use the bankruptcy to bring a mortgage current, pay off taxes or other debt, or even to force creditors to accept payment terms. This is a whole new subject we have covered elsewhere (see articles and blogs on Chapter 20 bankruptcy)

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. We do, however, reserve the right to charge a fee to review any work done by another attorney. For an appointment, call Neuner & Ventura at 856-596-2828 or send us an e-mail. Evening and weekend appointments are available upon request.

Representing Clients across South Jersey



How to Find a Good New Jersey Bankruptcy Attorney

If you have decided that bankruptcy is the best option to resolve your financial challenges, you may have discovered that there is no shortage of bankruptcy attorneys in New Jersey. The obvious question then becomes—how do you find the one that will best meet your needs? It’s a very important decision, as your future financial well-being may depend on it.

The Key Factors When Looking for a Bankruptcy Lawyer

When evaluating potential bankruptcy counsel, you want to examine three important components:

  • What is the quality of the attorney’s work?
  • What level of customer service can you expect?
  • To a lesser extent, how much will it cost you?

It’s extremely important that consider more than one bankruptcy attorney. You may like the first one you contact, and you may end up hiring that person. But you need to have a comparison to know that you are getting the most skill and customer service for the most reasonable price.

Evaluating the Attorney’s Skill Level

You should look at your initial meeting with an attorney as being an interview for both parties. Pay attention to the types of questions the attorney asks you—how detailed are they? Some of the questions you want to ask:

  • How many bankruptcies has the attorney handled? How many years has the attorney been practicing in the bankruptcy courts? Is bankruptcy the focus of the attorney’s practice?
  • Is the lawyer listed in public or professional directories? What is the attorney’s rating with Avvo or other services?
  • What certifications does the lawyer have? The American Board of Certification issues these certifications to those who pass a qualifying examination, remain in good ethical standing, and maintain at least 20 hours per year of continuing legal education in the field for which certification is given. (Steven R. Neuner is now certified as a Business Bankruptcy Specialist and has held this certification for 20 years)

Determining How You Will Be Treated

The most skilled lawyer in the world can still leave you stressed out or anxious if the level of customer service is lacking. How interested does the attorney seem in your case? Does the lawyer spend time personally asking you questions or are you simply given a form to complete? In addition, how easy was it to get through to the attorney? If you left a message, how quickly did the attorney return your call?

Confirming the Cost of Bankruptcy

If you are considering filing for bankruptcy, it’s not generally in your best interests to simply look for the least expensive bankruptcy counsel. There is a lot at stake and your biggest concern should be value for what you need to spend, not the total cost. You need to have confidence in the other two factors—the attorney’s competence level and willingness to provide a high level of customer service—otherwise, you may save money with a “bargain basement” firm or “bankruptcy mill”, but you will increase your stress and anxiety, and you may end up not getting the outcome you want or need. This is a field where the cost of mistakes can be high.

Confirm with the attorney whether you will pay a “target” or flat fee for your bankruptcy, or whether you will be billed by the hour. “Target” or flat fees are generally available and allow you to reasonably predict your costs. If your case is complex or the time and complications are not predictable, this may not be advisable. But most responsible attorneys can and should explain how they arrive at their fees.

Also, do not forget costs. Filing a bankruptcy and doing it properly includes costs for filing fees and two required courses. A careful attorney will want to get a judgment search, a credit report and other “due diligence” to make sure that nothing important is missed. These costs are generally not great. You do not want to end up being “low balled”. Ask what costs are included.

Contact Neuner & Ventura, LLP

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



Post petition payments and the “New Value” defense to preference suits-Third Circuit Court of Appeals holds they do not affect the outcome

One of the simplest ways for a defendant to defeat a preference lawsuit in bankruptcy is to show that after the defendant received the payments that the suit is trying to recover, it gave “new value” to the debtor which remained unpaid (or was paid by another avoidable payment). The defense, codified at 11 USC 547(c)(4), is intended to avoid penalizing creditors who continue to deliver value to a struggling debtor in the months leading up to bankruptcy. In essence, a creditor who, though paid, delivers new goods or value for which it remained unpaid can offset that “new” value against the amount it otherwise would have to pay back. The beauty of this defense is that the proofs are simple and the result has a mathematical certainty.

In a December 2013 ruling, the Third Circuit Court of Appeals in In re Friedmans’s Inc. held that whether “new value” was given is determined as of the Petition date, and that payments the creditor/defendant received after that date which reduced its unpaid balance are not a factor in applying the defense. The creditor, Roth Staffing, had supplied staffing services to the debtor. In the 90 days pre-bankruptcy, it had been paid $81,997 but had thereafter supplied over $100,000 in new services that were unpaid on the Petition filing date. By itself, this would be a complete defense to a preference action, since Roth had added more value than it had been paid for and as a result was worse off on the Petition date then before receiving payments. What made the case unusual is that post-petition, the debtor obtained a “Critical Vendor” order that authorized it to pay down Roth’s debt, in order to encourage Roth to keep the flow of critical staffing continuing. Under this order, Roth received another $72,413.00.

The debtor’s successor in interest filed a preference action against Roth. The issue was whether Roth had a complete defense based on the unpaid $100,000 when the bankruptcy was filed, or whether this was reduced by the $72,413 in additional payments it had received after the bankruptcy filing. The Third Circuit, affirming the District Court, held that Roth had no liability since as of the Petition date its payments received were less than the new value it had provided. In a matter of first impression on this issue, it held that the $72,413 paid post-petition was properly disregarded for purposes of the “new value” defense.

The Court supports its holding in a lengthy and interesting analysis of the preference statute and the policies behind it. For anyone facing a preference action and intending to use the “new value” defense, the case is a “must-read”.



Taking Advantage of New Jersey’s Generous Bankruptcy Exemptions

How Soon Can You Take Advantage of New Jersey’s Bankruptcy Exemptions?

When individuals file for protection under Chapter 7 of the federal bankruptcy laws, they are entitled to claim some of their property as exempt from the claims of unsecured creditors or from sale in the bankruptcy. Normally, the bankruptcy exemptions or state law exemptions available in the state of current residence are the ones that apply. But for people who have moved from one state to another in the past 2 years, this may not be the case. Determining exactly what exemptions are available is a major consideration for those seeking a fresh start in bankruptcy. Some states, like New Jersey and Pennsylvania, have kept the fairly liberal federal bankruptcy exemptions. But others have “opted out” and set up their own bankruptcy exemptions. This can be a problem if you did not have your current state of residence as your domicile for all of the 2 years before filing bankruptcy. If that is true, then the exemptions that will not necessarily the ones that apply in the state where you now live. Instead, the exemptions that will often apply are those for the state where you were domiciled for most of the period from 2 and 2 ½ years before filing. Some states impose residency requirements for bankruptcy exemptions, and if these would their use by someone who has moved out of state, the federal exemptions will still apply. Just be aware of this issue if you have moved. Applying this rule is tricky and needs careful analysis by an experienced bankruptcy lawyer.

Individuals filing for bankruptcy can also choose the applicable state’s “non-bankruptcy” exemptions which determine outside of bankruptcy what people with judgments against them can protect from a Sheriff levy. In New Jersey and Pennsylvania, most people choose the bankruptcy exemptions which are far more libieral than the state law exemptions. But in some special cases there may be a good reason to opt for state law such as where the non-bankruptcy protection of a particular asset such as a home ore life insurance cash value is significantly better. This option, however, applies across the board. You have to pick either the bankruptcy or non-bankruptcy exemption system for all your property. You are not permitted to “pick and choose”.

Contact Neuner & Ventura, LLP

At 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. We do, however, reserve the right to charge a fee to review any work done by another attorney.

For an appointment, call Neuner & Ventura at 856-596-2828 or send us an e-mail. Evening and weekend appointments are available upon request.

Representing Clients across South Jersey



How Soon Can You File for Bankruptcy in New Jersey

Filing for Bankruptcy in New Jersey—How Soon Can You Do It?

If you are struggling financially, and have just moved to New Jersey, perhaps to get a fresh start, you may have concluded that a personal bankruptcy filing is the best way to address your financial concerns. Because bankruptcy law is federal, you may believe that the location of your filing doesn’t matter. This is not entirely true, though, as individual states have their different exemption schemes which determine what property an individual debtor in bankruptcy can keep free and clear of claims of unsecured creditors. Here’s how the bankruptcy residency requirements work.

The Effect of Residency on Bankruptcy Filings

The residency requirements do not prohibit you from filing for bankruptcy protection—they only have an impact on where you can file your petition. A bankruptcy can be filed in the federal court district where you have (A) resided or (B) had your principal place of business or (C) had your “domicile” for all or the greatest portion the past 6 months (180 days). A domicile is where you intended to be your permanent residence. This can be determined by various factors such as where you had your property, voted or had your driver’s license. But if you moved, you may be able to file in as little as 91 days.

Moved in that past 2 years? It could affect what you will be able to keep.

For many people who have moved from one state to another in the past 2 years, the more important question is what exemption scheme will apply. Some states, like New Jersey and Pennsylvania, have kept the fairly liberal federal bankruptcy exemptions. But others have “opted out” and set up their own bankruptcy exemptions. This can be a problem if you did not have your current state of residence as your domicilefor all of the 2 years before filing bankruptcy. If that is true, then the exemptions that will not necessarily the ones that apply in the state where you now live. Instead, the exemptions that will apply are those where you were domiciled for most of the period from 2 and 2 ½ years before filing. Just be aware of this. Applying this rule is tricky and needs careful analysis by an experienced bankruptcy lawyer.

Contact Neuner & Ventura, LLP

At 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. We do, however, reserve the right to charge a fee to review any work done by another attorney. For an appointment, call us at 856-596-2828 or send us an e-mail. Evening and weekend appointments are available upon request.

Representing Clients across South Jersey



The Best Option in Bankruptcy When You Have Student Loans

Overwhelmed by Student Loans? What’s Your Best Bankruptcy Option?

So you borrowed a lot of money to provide yourself with a college education, then you went out into the real world and found that getting a job can be tough. Maybe you experienced health problems, or went through a divorce. You may have considered bankruptcy as a way to get a fresh start, but you are uncertain whether you can use a bankruptcy petition to either discharge or restructure your student loans.

The General Rule

As a general rule, almost all student loan debts are not dischargeable in a bankruptcy proceeding. You can, however, seek to pay and satisfy student loan debt through a Chapter 13 filing. ,Your student loan debt will be treated as non-priority unsecured debt, similar to medical bills or credit card obligations. As such, when you put together your reorganization plan, during the 3 to 5 years of your Chapter 13 Plan your student loan creditors must accept the same pro-rata share of the amount you are able to pay all creditors. Unfortunately, if your plan does not provide for full payment of all unsecured debt, when the Chapter 13 bankruptcy period is over, you will still owe any remaining balance on your student loans. During the period of the bankruptcy, though, you may be able to delay or reduce student loan payments, and you won’t have to worry about any collection attempts.

The Hardship Exception

If you can show that you would incur an undue hardship if you have to pay your student loans, you may be able to have some or all of them discharged in a Chapter 7 proceeding. Most courts follow the Brunner test, a decision from New York, which allows discharge of student loan payments in bankruptcy only if you can show that you cannot maintain a minimal standard of living for you and your dependents if forced to pay your student loans, that your current financial condition is likely to continue for most of the repayment period, and that you have made a good faith effort to repay your student loans. In practical terms, this standard is hard to meet. The realityis that most federal bankruptcy courts take a conservative approach and discharge of student loan debt is extremely rare.

People who have student loans from schools that closed before the student completed studies, or made false certifications about the benefit of the program may have other means of getting a discharge of the student loan debt. Usually, these are trade and vocational schools.

Discharge and income based repayment plans available for most federal program student loans.

A better option for many people is to explore the programs available for most federal program student loans. The options here can include income based repayment plans or loan foregiveness after a period of years. People working for qualifying non-profit organizations or for certain government or public service fields may be eligible for a public service loan foregiveness. Death or disability are also possible grounds for loan foregiveness.

Whatever your situation, it is critical to collect together all the information about the type of loan program, the loan terms, and the account history. Hopefully you kept all this information. If not, try reaching out to the original school’s financial aid office.

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



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