The abandonment of a home by the trustee in a chapter 7 bankruptcy is a good thing!

When someone files a chapter 7 bankruptcy, they are actually allowing a trustee to step into his or her shoes regarding ownership of assets. This is because a chapter 7 is actually a "liquidation bankruptcy," in that the trustee will review the debtor's assets to see if there is anything worth enough to sell to raise money to pay creditors. In over 90% of New Jersey bankruptcies, however, this does not happen because of exemption laws that allow debtors to keep assets up to a certain value.

In the case of a home, usually a debtor's biggest asset, the trustee will do what is called a "liquidation analysis" to see if it is worth selling. When this results in his "abandoning his interest," this means he is ceding ownership back to the debtor because he does not want to sell it! Good news! Unfortunately, despite my best efforts to explain it in advance, many of my clients panic when they get this in the mail, thinking that they have to abandon the home! Nothing is further from the truth. Debtors in bankruptcy should see this as cause for celebration, not concern, and as a milestone towards their fresh start, which they so desperately need.

Looking for more information about bankruptcy? Get the answers to the most frequently asked questions by downloading my free book, Top Questions People Ask About Filing Bankruptcy in New Jersey. It will give you the answers you need all in one place. Then contact my office for an appointment for a free consultation to discuss your case.

The Law Office of Steven J. Richardson serves New Jersey, including:  Gloucester, Camden, Burlington, Salem, Cumberland and Atlantic Counties and surrounding New Jersey communities, including Woodbury, Colonial Manor, North Woodbury, Woodbury Heights, Deptford, Thorofare, Gloucester City, Washington Township, Blackwood, Brooklawn, Westville and Pitman.

Richardson Law Offices
40 Newton Avenue
Woodbury, NJ 08096
Phone: (856) 686-9910
Fax: (856) 686-9911