People in the Camden, Gloucester, and Salem County, New Jersey, area thinking about bankruptcy are often worried that they will lose assets like their home or their car if they file. In a chapter 7 "liquidation" bankruptcy, however, this rarely happens (perhaps 5% of the time) because of exemptions provided for in the law that protect your property from the trustee. You can keep your stuff up to a certain value. But what if the exemptions are not enough to protect them?
Debts Are Capped in Chapter 13
This is where chapter 13 can come to the rescue by allowing you to "buy back" the asset by paying creditors over time what they would have received if the asset had been sold in a chapter 7. One barrier to this has been that there are debt maximums in chapter 13. In other words, if you owe too much money, you can't file a chapter 13!
Right now, if you owe more than $360,475 in unsecured debt (credit cards, medical bills, etc.) or $1,081,400 in secured debt (like mortgages or car loans), then you cannot file! You would have to go the more expensive chapter 11 route.
But the Caps Are Going Up
But that is going to change as of April 1, 2013, as it does every three years about this time. The last time this was done was in 2010. Now the limits are $383,175 in unsecured debt and $1,149,525 in secured debt. It might not seem like a lot, but it can make the difference between filing a chapter 7 and a chapter 13. Now, more those people can file a 7 to get a fresh start.
If you live in southern New Jersey and have been considering bankruptcy, but were afraid that you would lose your home or other cherished asset, or thought that you owed too much money for a chapter 13, you should reconsider. It could get easier after April 1.
Feel free to call my office at 856-432-4113 or contact me through this site for a free consultation to discuss your case. If you are looking for more information about bankruptcy, then download my free book,Top Questions People Ask About Filing Bankruptcy in New Jersey.