The Cassidy Law Firm Blog

Wednesday, June 25, 2014

Mortgage Reaffirmation in a Chapter 7 Bankruptcy

If you are one of the millions of Americans struggling with debt that you have no realistic way of paying off it may be time to consider filing for bankruptcy protection. Over the last several years the number of bankruptcy petitions filed in the United States has reached historic levels, sue in large part to the recession the country as a whole has suffered through. If you have been reluctant to consider filing bankruptcy because you are concerned you will lose all your hard-earned assets in the process it is time to learn more about chapter 7 bankruptcy and the New Jersey exemptions. Once you understand how the exemptions can be used to your benefits you will likely be ready to pursue bankruptcy as a possibly long-term solution to your financial problems.

Most individual (or married) debtors file bankruptcy using either chapter 13 or chapter 7. For those who qualify, chapter 7 bankruptcy is typically the preferred option because chapter 7 bankruptcy results in a discharge, or elimination, of most debts in a relatively short period of time. A chapter 13 bankruptcy, in contrast, requires the debtor to repay certain debts over a period of time usually between 3-5 years. To file a chapter 7 bankruptcy though a debtor must pass the “means test” which compares the debtor’s income to that of similarly situated debtors in the same geographic area. If the debtor’s income is at, or below, the median for the area the debtor qualifies to file a chapter 7 bankruptcy.

In a chapter 7 bankruptcy the bankruptcy trustee is authorized to seize non-exempt assets of the debtor and sell them, using the profits to repay creditors. Exempt assets, however, are protected from sale. In New Jersey, a debtor may choose between using the New Jersey or the federal exemptions to protect assets during bankruptcy. Some commonly used New Jersey exemptions include:

  • Homestead – New Jersey doesn’t have a traditional homestead exemption; however, the survivorship interest of a spouse in property held as tenancy by the entirety is exempt.
  • Personal property — $1,000 in household goods, $1,000 in personal property, and all clothing.
  • Pensions and retirement benefits – Public employee pensions are 100 percent exempt.
  • Unemployment and workers’ compensation – 100 percent
  • Cemeteries and burial funds – most is 100 percent exempt

If you have specific questions of concerns about whether or not an asset is covered in the New Jersey exemptions, contact one of our experienced New Jersey bankruptcy attorneys at The Cassidy Law Firm for a free consultation.


*We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

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