The Law Offices of Roger J. Yehl updated their website address.
Where Experience, Quality and Compassion Intersect! We provide bankruptcy services for individuals
The Law Offices of Roger J. Yehl updated their website address.
How to File for Bankruptcy Without Losing Your Home!
Quite often, I receive a phone call asking, “If I file for Bankruptcy, will I lose my home?” Well, the short answer is -- No, you will not lose your home if you plan accordingly.
What does this mean?
Typically, most of my clients do not have enough equity in their home to worry about this issue. However, if you do have significant equity in your home, there may other options. Further, the bankruptcy laws permit individuals to protect a certain of equity in their home. This typically covers most of my clients.
However, if there is equity over and beyond the amount allowed to be protected under the bankruptcy laws, then we devise a plan to file either a Chapter 7 or Chapter 13. In a Chapter 7 scenario, we would need to have some money or a relative that would be willing to pay the amount of unprotected equity. In a Chapter 13 scenario, we would need to pay the amount of unprotected equity over a period of 3-5 years or 36-60 months.
Let’s look at some examples:
If our home is valued at $100,000.00 and we have a mortgage of $70,000.00, the typical analysis would be:
100,000.00 Value of Home
- 10,000.00 permitted 10% reduction for cost of sale
90,000.00 Value after 10 reduction for cost of sale
- 70,000.00 Amount of Mortgage
$20,000.00 Amount of Equity
The Bankruptcy Laws allow Protections or Exemptions depending upon your state. Because we are in New Jersey, we will be looking at the Federal Exemptions as they are available for New Jersey residents filing for Bankruptcy protection.
**Note** The exemption is available for each and every owner of the property. For example, each owner is allotted their own exemption.
Utilizing the above example, the house would be completely protected because 11 USC 522(d)(1) allows each individual homeowner to protect up to $25,150.00 of equity in their property. If the home is owned by a Husband and wife, they could each claim the $25,150 allowing them to protect a total of $50,300.00 of equity in their property.
As such, since there is only $20,000.00 of equity in the above example, a debtor in bankruptcy would claim an exemption of $20,000.00 which is less than the allotted amount permitted under the bankruptcy code.
Now let’s see a different example where the equity exceeds the exemption amount:
100,000.00 Value of Home
- 10,000.00 Cost of Sale permitted deduction
90,000.00 Value after 10% reduction for cost of sale
- 50,000.00 Balance owed on mortgage
40,000.00 amount of equity in property
Now, if the house is individually owned, since the equity exceeds the exemption of $25,150.00 for an individual, there would be $14,850.00 of unprotected equity in the house.
**Note** If the property is jointly owned, the home would be protected since the $40,000.00 of equity is less than the combined exemption amount of $50,300.00. However, if the property is individually owned, the following analysis is applicable.
In order to protect this equity and still qualify for bankruptcy, the debtor filing bankruptcy would likely choose to file a Chapter 13. In the Chapter 13 Bankruptcy Scenario, the debtor would need to pay $14,850.00 to their unsecured creditors over a period of 3-5 years.
Why would someone choose to file for Chapter 13 and be required to pay this amount? Because if the debtor has $20,000 or $30,000 or $40,000 or more in unsecured debt, they would only be required to pay the $14,850 and discharge the balance of the debt upon completion of the plan. Further, in New Jersey, the debtor will not be paying interest on the debt. As such, the debtor would only have to repay a portion of the total unsecured debt.
If you would like to learn more or schedule an appointment, please feel free to contact us at 877-606-1222 or send us a message at our Contact page.
Will I Have To Pay Income Taxes On Discharged Debt In A Bankruptcy?
Income taxes will not have to be paid on discharged debt in a .
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How Long Does A Bankruptcy Stay On Someone’s Credit Report?
A will remain on a person’s credit report for a period of 10 years. A will remain on a person’s credit report for a period of seven years.
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What should I Do Before Filing For Bankruptcy?
Prior to filing for , an individual should find the right and gather all of the necessary documents, including at least six months of paystubs, tax returns for the preceding two or three years, evidence of any real estate they own and the value of that real estate, proof of identity, their driver’s license, and their social security card.
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What Happens If I Fall Behind On My Payments After Filing A Chapter 13 Bankruptcy?
If someone falls behind on their payments to the Chapter 13 trustee, then the trustee will likely file a motion to dismiss the Chapter 13 bankruptcy.
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What Are The Eligibility Requirements To File For A Chapter 13 Bankruptcy?
There must be some form of income in order to qualify for a , because payments will have to be made to the Chapter 13 trustee.
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What Is A Chapter 13 Bankruptcy?
A is known as a wage-earner’s bankruptcy or a repayment bankruptcy. In essence, a Chapter 13 bankruptcy is the repayment of debts.
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How Long Does A Chapter 7 Bankruptcy Typically take?
The typical timeframe for a regular is about 90 days. A hearing date will be assigned by the court judge and will take place 30 to 45 days after the case is filed.
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What Are The Eligibility Requirements To File For A CHAPTER 7 Bankruptcy?
In essence, anyone is eligible to file a , but there are certain code requirements that may come into play based on the person’s income. Read More https://bit.ly/2zNaEC3
What Debts Will Be Released By A Chapter 7 Bankruptcy?
The debts that will be released by a Chapter 7 include credit card debts, medical bills, unsecured personal loans, secured credits, and debts to family or friends. Read More https://bit.ly/2zPyiy0
What Exactly Is A Chapter 7 Bankruptcy?
A Chapter 7 is essentially a liquidation bankruptcy, and is usually filed by a debtor who has determined that they are overwhelmed by their debts and in need of help.
Read More -----------> https://bit.ly/2PSqhCy
Our practice focuses on providing exceptional Services for our Clients!
The Law Offices of Roger J. Yehl 12 Christopher Way, Eatontown, NJ 07724 We are here to review each client’s financial circumstances and help guide them with...
Roger Yehl is the founder and managing attorney at the Law Offices of Roger J. Yehl. Roger founded his firm in 2004 while also working as staff attorney to a trustee in bankruptcy. In this capacity, Roger processed thousands upon thousands of bankruptcies.
What Makes Attorney Roger Yehl Uniquely Qualified To Defend You? Roger Yehl is the founder and managing attorney at the Law Offices of Roger J. Yehl. Roger founded his firm
The Law Offices of Roger J. Yehl's cover photo
What are the advantages of filing for Chapter 13 Bankruptcy?
Stop Foreclosure and Save Home
Restructure Car loan including interest rate
Can possibly remove 2nd lien on home.
Can pay from 0% to a low percentage of unsecured creditors
Fix IRS and Tax Issues
Eliminate Unsecured Debt
And many additional benefits
If you would like a free consultation to discuss bankruptcy and the alternatives to bankruptcy, please feel free to contact us for a phone evaluation or in-person appointment.
What are the Advantages of Filing for Chapter 7 Bankruptcy?
Eliminate Credit Card Debt
Release Frozen Bank Account
Eliminate Medical Debt
Walk away from home and mortgage
And many additional benefits
Bankruptcy is usually considered as a last resort. However, if you are struggling and losing sleep, you should consult a BK attorney before taking other measures. There are many debt settlement and debt consolidation companies who have a great sales pitch but emphasize profit rates over your interests. But ultimately, the decision is left to you as the consumer. However, having a free consultation from an experienced professional might be the best place to start.
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