I Filed Bankruptcy And Received A Notice Of Abandonment From The Trustee In Bergen County. Do I Need to Leave My Home?

One of the most frequently asked questions by debtors who have filed bankruptcy is, “What does the Notice of Proposed Abandonment Mean That I Received From The Court?”  The word “abandon” sounds alarming to someone who is unfamiliar with the bankruptcy process.  Most debtors do not read beyond the heading and go directly into panic mode.  The notice actually states that the trustee has determined that the “property of the estate described below . . . [is of] inconsequential value.”  Put another way “your stuff was not valuable enough.”

The Notice of Proposed Abandonment is a form notice that trustee’s have to file usually at the conclusion of a bankruptcy case to formerly release his/her interest in the debtor’s property.  It is not something to be afraid of as it simply means that that the trustee doesn’t want to sell your home, etc. The trustee  has determined that your property (i.e., real estate) does not have enough equity  to pay a meaningful dividend to your unsecured creditors.

Abandonment in a bankruptcy is a good thing.  There is nothing to be afraid of as the abandoned property becomes yours again.

Abandonment in a bankruptcy is a good thing. There is nothing to be afraid of as the abandoned property becomes yours again.

Although unsecured creditors could object if they believe there is something of value that should be liquidated it is extremely rare.  Trustee’s are experienced at valuing assets and through an analysis of your case make a determination as to whether the property being abandoned could have netted proceeds for unsecured creditors if sold.  Let’s not forget, trustees make a commission on selling assets which are part of a bankruptcy estate.  The trustee is not going to abandon his/her interest in something valuable.

Upon abandonment the property being abandoned becomes yours again to do as you see fit.  So if you just received the Notice of Proposed Abandonment you are one step closer to discharge and your fresh start.

I Want To File Bankruptcy But My Child Is Attending A Private Catholic School In New Jersey. Is That A Problem?

The answer is maybe.  In the last several years Chapter 7 bankruptcy trustee’s have become hungrier and have had to search a little deeper to net a dividend to unsecured creditors.  A bankruptcy trustee is a person, very often an attorney, is appointed to over see your Chapter 7 case and to ensure there are no unprotected funds that could be used to pay your creditors.  In recent years, Chapter 7 trustee’s have began pursing tuition payments already made by parents through a process called a claw-back.  In essence, the trustee could you previous paid tuition money to pay your unsecured creditors.  Even more recently Chapter 7 trustee’s have gone even further trying to claw back payments made for debtors’ children’s college tuition.

Bankruptcy can sometimes effect student's tuition payments made by their parents.

Bankruptcy can sometimes effect student’s tuition payments made by their parents.

A trustee can bring suit to recover money paid to third parties by a debtor if the debtor did not get “reasonably equivalent value” for the money that the debtor paid. The Bankruptcy Code does not define the term “reasonably equivalent value,” giving trustees some leeway when it comes to pursuing what they may consider to be improper pre-bankruptcy payments or transfers of money.  The Chapter 7 trustee’s position is that the payments qualify either as a gift, which allows for a 1 year look back period or a fraudulent transfer which encompasses a look back period that can range from 4-6 years.

Congressman Chris Collins Republican representative for the 27th district of New York, has introduced the Protecting All College Tuition (PACT) Act which aims to amend the Bankruptcy Code Section 548. Its stated purpose is to stop trustees from “clawing back tuition money from universities,” although there is a school of opinion that believes trustees will still be able to sue under various individual state’s “fraudulent transfer” statutes to recover money previously paid out in the form of fees.

If the PACT Act is not adopted, or if it proves to be inadequate in terms of stopping bankruptcy trustees from targeting universities, institutions might start demanding that students or approved third party funds or trusts take legal responsibility for tuition payments. Alternatively they might demand that parents responsible for fees provide financial statements when the make payments. This would aim to verify that the payee was solvent when the payment was made.  This is absolutely something that parents should be aware of if they are starting to navigate college payment options with their children.

There are things that can be done through a process known as bankruptcy estate planning which can help you strategize prior to filing bankruptcy so that your children’s education can gone on as uninterrupted as possible.  If you are considering filing bankruptcy and have children in either private school or in college be sure to consult with experienced bankruptcy counsel.

 

When Was The Last Time You Requested A Copy Of Your Chex Systems’ Report?

Have you ever tried to open a checking or savings account only to have been denied?  It could be because of what is on your Chex Systems’ Report.  Bergen County New Jersey residents are denied requests to open accounts with financial institutions daily.

Chex Systems, Inc. (ChexSystems) is a nationwide specialty consumer reporting agency under the federal Fair Credit Reporting Act (FCRA).  ChexSystems’ clients regularly contribute information on closed checking and savings accounts.

 

You must routinely check your credit reports to ensure accuracy.

You must routinely check your credit reports to ensure accuracy.

Chexsystems’ clients regularly contribute information on closed checking and savings accounts. ChexSystems provides services to financial institutions and other types of companies that have a permissible purpose under the FCRA. ChexSystems’ services primarily assist its clients in assessing the risk of opening new accounts.  According to its website its current practice is to retain record of reported information for a period of five years from the report date unless the source of the information requests its removal or ChexSystems becomes obligated to remove it under applicable law or policy.

Even if a delinquent account was paid the source of the information is under no obligation to remove an accurate report of account mishandling.  However, the source of information is obligated to update the report with a paid in full or settled in full date when applicable.

Under the Fair and Accurate Credit Transaction Act (FACTA) amendments to the Federal Fair Credit Reporting Act (FCRA), you are entitled to a free copy of your consumer report, at your request, once every 12 months.  You may request a copy of your consumer disclosure report through any of the methods listed below.  The report will be sent to you, free of charge, via U.S. mail within five business days of receiving your request.  You can request a copy of your report by completing this form.

You can click on this link to view a sample report.  This report is something we should all be monitoring just like our other credit reports.

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