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Essex County Bankruptcy Law Blog

What happens after bankruptcy?

In the past, people were supposed to be ashamed of filing for bankruptcy. Fortunately, filing for bankruptcy has become more acceptable -- especially since the recession. Unfortunately, this acceptance has not eliminated misconceptions about life after bankruptcy.

Most New Jersey residents receive a clean financial slate since most, if not all, of their debts are discharged or paid off, depending on whether a Chapter 13 or a Chapter 7 was filed. Even though your credit score will be impacted by the bankruptcy, you can recover over time. This is because creditors know that a successful bankruptcy means your debt has most likely been reduced significantly, leaving with you with a more desirable debt-to-income ratio.

New Jersey legislature may help stop foreclosure on some homes

Most New Jersey residents are keenly aware that the devastation caused by Superstorm Sandy continues to wreak havoc on people's lives. In response, the New Jersey legislature is working to temporarily stop foreclosure on homes that were damaged in the storm. If the legislation is passed, affected homeowners would receive a three-year moratorium on foreclosure.

Even though the measure was unanimously supported by the New Jersey Senate Community and Urban Affairs Committee, there is a concern regarding whether it should apply to second homes. The primary consideration for most people is whether they can stay in the home that they live in with their families. However, the point was made that second homes also stimulate the economy in the area, which is greatly needed in some areas.

People near bankruptcy became victims of debt relief scheme

The Consumer Financial Protection Bureau (CFPB) takes complaints from consumers about financial institutions and their products. This includes consumers here in New Jersey and around the country who are dealing with debt relief companies, creditors and collection agencies. For the first time since its creation, the CFPB was instrumental in bringing to justice people involved in a debt relief scheme who were taking advantage of people who were near bankruptcy.

No fewer than 1,200 people reported a company, Mission Settlement Agency, to the CFPB. Like other legitimate debt relief agencies, clients were promised help with payment of their debts to lending institutions and credit card companies. However, over the course of approximately five years, the company took money from people under the guise of settling their debts. Fees were collected, but the customers' debts remained.

New Jersey man's mortgage debt wiped out by judge

A New Jersey man facing foreclosure decided to fight his mortgage lender in an effort to keep his home. Recently, the judge decided that the lender was not entitled to proceed with the foreclosure because it waited too long to pursue an action to collect the mortgage debt. The statute of limitations to bring an action for foreclosure is six years.

The judge's ruling means that the man is entitled to keep his home, and the $520,000 mortgage loan was nullified. Therefore, he now owns his home free and clear. This may be the first case in New Jersey of a court voiding a mortgage loan based on the statute of limitations. It is not yet known whether the mortgage holder will appeal the court's decision.

More seniors may be eligible to file bankruptcy than in the past

As New Jersey residents age, they are taking more and more debt into retirement than in the past. Some of those people are not able to pay the debts that have followed them into their later lives. As a result, it is possible that more seniors are eligible to file for bankruptcy.

Those reaching retirement age are not only dealing with credit card, mortgage or even student loan debt. As healthcare needs increase, so do the amount of medical bills that need to be paid. Many older New Jersey residents are not able to pay those bills now that they are on a fixed income. In addition, as family members begin to pass away, they may have unpaid bills that debt collectors insist should be paid by surviving family members. In most cases, however, the debts of deceased loved ones are not the responsibility of surviving family members.

Stop harassing phone calls from creditors

Debt can be an overwhelming burden for any New Jersey resident. It is difficult enough not to be able to pay the bills, but then creditors and collections agents begin calling. Your hardship does not matter to the voice on the other end of the line -- he or she is only interested in getting money from you that you do not have. Filing for bankruptcy can stop harassing phone calls from creditors, along with other creditor actions.

Every consumer has rights when it comes to the actions of creditors and debt collectors, but many of them know what their limits are and will push or even exceed them. Once a bankruptcy is filed, all collection actions must stop -- at least temporarily -- in accordance with the automatic stay. Any court proceedings initiated by a creditor for garnishment, foreclosure or repossession are also stopped during the bankruptcy proceedings.

Keeping a secured piece of property in a Chapter 7 bankruptcy

Filing for bankruptcy in New Jersey can cause a great deal of trepidation when it comes to being able to keep your furniture, television and other items. In a Chapter 7 bankruptcy, you are permitted to keep property that falls within certain exemptions. However, property that serves as collateral for an outstanding debt does not fall under any exemption.

Loans taken out to purchase passenger vehicles, household goods (furniture and appliances) and recreational vehicles such as boats are typically considered secured debt because the item purchased is usually also the collateral for the loan. If you are unable to make the payments on these items, the lender may be entitled to repossess them. When a bankruptcy is filed, the contract with the lender is considered to have been breached. If you want to retain the property, you may attempt to reaffirm the debt.

Is debt settlement an alternative to bankruptcy?

At the end of last year, Americans carried nearly $11.63 trillion in personal debt. Sources indicate that the average amount of credit card debt is over $7,000. When the debt becomes overwhelming for New Jersey residents, several debt relief methods are available, such as debt settlement or bankruptcy.

For some people, debt settlement may be the appropriate remedy. Before making the decision, however, a consumer should take the time to weigh out whether it is actually a viable solution. Since the Federal Trade Commission (FTC) strengthened the rules imposed on debt relief services, it may be easier for consumers to locate a reputable service. Beyond that, the pros and cons of their use must be explored before any agreements are signed.

Bankruptcy could be a solution for overwhelming debt

In 2012, the Network Branded Prepaid Card Association and the National Foundation for Credit Card Counseling conducted a survey that revealed that nearly four out of every 10 people in this country have credit card debt. Many of them struggle just to keep up with the minimum payments, if they can pay at all. For New Jersey residents who are drowning in credit card debt, a multitude of advice is available for paying off that debt, which may work for some people. However, others may need to find relief in the Bankruptcy Court.

Some people recommend that a consumer should pay off the card with the highest rate of interest first, but this can take a significant amount of time. Another recommendation is to start with the smallest debt, which would give an individual a sense of accomplishment as each successively larger debt is paid off. It may also work to spread any extra money over each card. Someone who is already struggling just to meet the monthly bills may not be able to sustain extra payments required for these plans to work.

New Jersey residents lured with promises to stop foreclosure

Years after the official end of the recession, many New Jersey residents are still facing the threat of losing their homes. Some homeowners became desperate enough between 2006 and 2009 to believe a company's promises to stop foreclosure. Recently, the architects of what federal officials believe was a lease buyback scam were arrested, which may leave many homeowners wondering what happens next.

The alleged scam involved homeowners signing over the equity in their homes to the company, which was supposed to be kept in an escrow account used to make payments on a new mortgage. The home would remain in the owner's name but would essentially be leased from the "investors" who supposedly provided the funds to refinance the home. The owner would then be eligible to "repurchase" the home the following year.