Chapter 7 Bankruptcy, can it help you?

Chapter 7 Bankruptcy in New Jersey

A Chapter 7 bankruptcy is a liquidation bankruptcy that can help you keep your home and your car, stop creditor harassment and garnishments, but most of all, gives you a fresh start.

What is a Chapter 7 Bankruptcy?

Chapter 7 is a liquidation bankruptcy meaning it can eliminate most types of unsecured debt. Examples of unsecured debt are credit cards and medical bills.

How can Chapter 7 Bankruptcy help you?

Keep your Home and your Car
Besides eliminating your debt, you will, under most circumstances, keep your home, your car and your personal belongings. This will allow you to eliminate your debt and get a fresh start.

Stop Creditor Harassment
Are creditors calling you at home and at work? Are they contacting your friends and family members? Put an end to your creditor harassment.. Once you retain our office, you will be able to refer your creditors to us. The creditor harassment will stop immediately.

Stop Garnishments
Are you currently experiencing garnishment of your wages? Have you been notified that garnishment may soon begin on your wages? A Chapter 7 bankruptcy is one of the most effective ways to stop garnishments.

Eliminate Debt
Debts like credit cards, pay-day loans, medical bills, law suits, utility bills, repossessions, or foreclosure deficiencies can be completely eliminated without payment to your creditors.

If you are feeling overwhelmed with your debts, we urge you give us a call and come meet with our bankruptcy specialist who will carefully analyze your case and help you determine if bankruptcy is right for you. Call us at today 201-326-4045

Mortgage Forgiveness Debt Relief Act expired, what is the IRS “insolvency clause” and how could this help you?


The Mortgage Forgiveness Debt Relief Act expired December 31, 2013. The Act prevented homeowners who go through a short sale or foreclosure from being taxed on the amount of their mortgage debt that has been forgiven. the debt that is forgiven is normally considered taxable income. The good news is there is still a way to avoid paying income tax on forgiven debt.

Many Homeowners are not aware that they may still qualify for tax relief via the IRS “insolvency clause”. The clause states that a seller is exempt from paying tax on any forgiven debt to the extent that they are insolvent.

What does it mean to be insolvent?
Insolvent is when the borrower’s debts and liabilities exceed their assets by more than the amount of debt forgiven. In this case the borrower would not have to pay taxes on the forgiven debt.

How to calculate insolvency:

Add up all of your debts/liabilities in one column and all of your assets in another.the IRS wants you to include the mortgage debt as a liability, and the fair market value of your house as an asset. Let’s say you have $500,000 in assets and $600,000 in debts/liabilities. You are insolvent by $100,000.


$500,000 – $600,0000 = [ $100,000 ]

Since your insolvency amount of $100,000 equals the forgiven debt amount of $100,000, it will be considered even and you will not have to pay taxes on that forgiven debt.

Likewise, if let’s say you were only insolvent by $80,000. In that case, you would still have to pay income tax on the remaining $20,000 of forgiven debt.

If you have any questions of this law please contact or feel free to comment below.