Brenner Spiller & Archer

New Jersey Bankruptcy Depends on the Details

New Jersey Chapter 7 or Chapter 13 bankruptcy petitions are complex matters. Bankruptcy is never a DIY task.

That’s why New Jersey clients need an experienced bankruptcy attorney. Late last year, a case filed in the 6th Circuit of the Bankruptcy Appellate Panel (In re: McCoy, 6th Cir. 2016) demonstrates why.

Importance of Case Preparation in Bankruptcy

When a bankruptcy petitioner owns real property in New Jersey, his or her attorney must research public records regarding judgment and other liens on it. Even when each judgment lien is known and the petitioner lists all on the bankruptcy petition, the McCoy case shows what happens when the Chapter 7 bankruptcy lawyer doesn’t make use of the client’s rights and available remedies during Bankruptcy Court proceedings.

McCoy Bankruptcy Example

Judicial liens, or creditors’ judgments on the debtor’s property, are real estate liens. Bankruptcy discharge doesn’t automatically discharge judicial liens when they exist. Under bankruptcy law, the debtor may remove judicial real estate liens or liens on other property. For instance, use of the federal homestead exemption [11 U.S.C. § 522(d)(1)] says that a single debtor can safeguard $23,675 of principal residence equity. Married couples can protect twice that amount.

That’s a significant amount of financial protection for most New Jersey homeowners. It’s up to the New Jersey bankruptcy attorney to file a motion to avoid (remove) a judgment lien that impairs the equity exemption. In a Chapter 7 case, the attorney files the motion after the case is filed in bankruptcy court. In a Chapter 13 case, the attorney must file separate motions to remove judicial liens as part of the Chapter 13 bankruptcy plan.

In the case example, the bankruptcy attorney for McCoy didn’t file the necessary motions during the case. Almost four years later, Mr. McCoy wanted to refinance his home mortgage and he couldn’t do that without paying judgment liens beforehand.

Contact an Experienced New Jersey Bankruptcy Lawyer

If you’re considering bankruptcy, it’s probably a decision of last resort. Bankruptcy is a complex process that requires painstaking attention from your bankruptcy law firm. Contact Brenner Spiller & Archer for a New Jersey bankruptcy case review.