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Don’t File the Wrong Bankruptcy – You May Not Get a 2nd Chance

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It is critical that an Attorney looks at all your assets and your entire financial situation before he/she recommends whether you should file a Chapter 7 or a Chapter 13 Bankruptcy.    An experienced bankruptcy attorney will ask to meet with you and review your situation before giving any recommendations.  In addition, an attorney will have a clear understanding of your goals.

Recently, there was a case wherein a couple filed for Chapter 7 bankruptcy.  In this case, they would not be keeping their home.   The Trustee filed a motion for turnover of their home.    Two days later the debtors filed a motion to convert their case to a Chapter 13.   The Debtors decided that they did not want to move and wanted to keep their home.   That motion to convert was denied by the Bankruptcy Court.

The debtors filed again to convert the case from a Chapter 7 to 13.

Courts reasons for denial:

  • Promises from a friend of the family and their son to contribute to the monthly Trustee payments were insufficient. It was indicated in the proposed Plan that “if necessary” the friend /son would contribute.    That proposal in the Plan did not indicate:  “an unqualified commitment to make contribution to the Plan, in a specific amount, or for the duration of the plan.”
  • Proof of two tenants signing a one-year lease was insufficient since there was no history of payments from these tenants.
  • Debtors did not have a stable and reliable source of financial support.

Moral of the Story:   Be sure you know whether you want to keep your home before you file for bankruptcy.

No one has ever “lost” their home under my watch.   Seek good sound legal advice from me, a Board Certified Bankruptcy Attorney specializing in NJ Bankruptcy Law.