Hackettstown New Jersey Legal Blog

A survey focused on health care costs in New Jersey and across the country found that only 45% of respondents had the money in savings or other sources to cover medical expenses during the prior year. The survey was conducted by Freedom Debt Relief and also found that 42% of respondents had to charge medical bills to a credit card in order to cover them. Nineteen percent had to borrow money from friends or family to cover medical expenses.

Additionally, only 35% of respondents would have sufficient funds in available cash or savings to cover an emergency medical expense costing $2,000. More than half of Americans have medical debts of $1,000 or more, and 10% of Americans have medical debts of $20,000 or more. Failing to pay medical expenses can hurt a person's credit as much as failing to pay phone or electric bills. Paying medical bills with a credit card is not ideal as the person may incur significant interest charges by paying over time.

When a person files for Chapter 13 bankruptcy in New Jersey, part of the process is a requirement that the filer, also called the petitioner, submit a repayment plan to the bankruptcy court. Unless the court grants the petitioner an extension, he or she must submit the repayment plan within 14 days after the petition is filed. The repayment plan may be submitted at the same time as the petition. The submitted plan must provide for payments to be made to the bankruptcy court in fixed amounts on a regular basis.

Typically, the plan will set out payments to be made either monthly or biweekly. After each payment is made, the bankruptcy trustee will distribute the funds to the petitioner's creditors according to the plan's terms. In a Chapter 13 bankruptcy, the creditors might not be entitled to collect the full amounts of their debts. There are three different kinds of claim that a creditor may have: secured, unsecured and priority.

Many individuals in New Jersey and around the country who had some of their mortgage debt cancelled or forgiven after losing their homes due to a foreclosure or short sale now find themselves owing tens of thousands of dollars in taxes. For the last 10 years, up to $2 million in forgiven or cancelled mortgage debt was deductible thanks to provisions introduced in the wake of the 2008 financial crisis, but those tax breaks expired at the end of 2017.

Hopes that Congress would act to extend the tax breaks are dwindling as lawmakers turn their attention to impeachment proceedings and other matters, but relief is available under other parts of the U.S. tax code for individuals who are insolvent or going through a bankruptcy. However, individuals who hope to avoid tens of thousands of dollars in taxes by filing for bankruptcy may be wise to act quickly as the rules for discharging these obligations become far more complex once taxes have been assessed.

One of the more common questions that those seeking Chapter 7 bankruptcy protection in Hackettstown have is whether o not filing for bankruptcy will force them to forfeit their personal assets. For those facing seemingly insurmountable debts, the appeal of bankruptcy comes from not having to worry about creditors continuing to seek action against them (thus driving them further and further into debt). Yet when faced with the prospect of potentially losing their homes and/or other valuable assets, many might choose to abandon the idea of bankruptcy altogether. 

Whether one will be forced to part with any of their personal property in a bankruptcy case depends on the bankruptcy exemptions available to them. The law allows debtors to exempt a certain portion of the equity they have in their property from being seized by creditors. For example, if a person has $12,000 of equity in their home, and the law allows them to exempt up to $15,000, then that means that their home cannot be sold to repay creditors as part of a bankruptcy case. However, if the law only allows them to exempt $10,000, then they will be given that $10,000 by their bankruptcy trustee, and then the house will be sold.