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Essex County Bankruptcy Law Blog

It may not be enough to stop harassing phone calls from creditors

Debt collectors will do just about anything to convince consumers to pay a debt -- even if it does not belong to them, but, instead, to a deceased relative. Many New Jersey residents do well just to stop harassing phone calls from creditors, but, now that one company has gone digital with its collection efforts, it may become more difficult to escape the harassment. A consumer alert in another state brings attention to a fraudulent email being sent to its residents that makes threats that may be in violation of the law.

The email threatens legal action if the recipient fails to pay an old debt. The company, ACS Incorporation Collection, does not have a good reputation. In fact, the Better Business Bureau gives the company an "F" rating and an alert to stay away from it due to hundreds of consumer complaints.

Credit card pitfalls could signal the need to file bankruptcy

Every single day, some New Jersey residents looking to buy their first home are turned down by lenders. The reasons for the denials could be a warning sign that they are in -- or headed for -- serious financial trouble. These individuals could be at a tipping point where bankruptcy protection may offer an effective means for regaining financial stability.

Many believe that because they are able to manage the minimum monthly payments on their credit cards, they do not have financial issues. Even if some of those payments are late, or an occasional payment is missed, an individual may not see what the mortgage lender apparently saw with regard to his or her financial situation. When a budget is stretched thin and a person is forced to eliminate luxuries and cut corners wherever possible, it may be time for corrective action.

Chapter 13 bankruptcy could eliminate a second mortgage

Most of the attention during the housing crisis rightly went to first mortgages. However, numerous New Jersey homeowners also took out second mortgages in better economic times. In the aftermath of the Great Recession, those second mortgages add to the overwhelming amount of debt threatening to consume some residents. Fortunately, Chapter 13 bankruptcy could eliminate that second mortgage, along with residents' other debt.

Lien stripping is how the process of eliminating a second mortgage in a Chapter 13 is described. When the outstanding balance of a filer's first mortgage lien is more than the appraised value of the home, a second mortgage loan -- and any additional mortgage loans on the home -- are considered by the Bankruptcy Court to be unsecured debt. This changes the nature of the debt and how it is handled by the court.

Mortgage debt still a problem for New Jersey homeowners

Regardless of the fact that most information shows the economy is steadily recovering, foreclosure and mortgage delinquency numbers do not paint as optimistic a picture. Between Oct. 2014 and Nov. 2014, delinquent mortgage debt rose approximately 11.8 percent. That percentage equates to nearly 400,000 mortgage loans, which makes the total about 3.9 million nationwide. Many of the homes that are in jeopardy of being foreclosed are here in New Jersey.

The percentage of loans that are at least 30 days delinquent, but have yet to enter foreclosure, was above 6 percent in Nov. 2014. The last time the percentage was that high was in Feb. 2014. The bottom line is that there are still millions of homeowners struggling to keep pay their mortgage loans and keep their homes. However, the numbers are still better than they were in Nov. 2013.

Misconceptions New Jersey residents have about filing bankruptcy

Every day, New Jersey residents struggle to make ends meet and pay their bills. Yet, many of them do not think about filing bankruptcy because they have misconceptions about the process and may fear what it means for their futures. Some people even think that filing means they are not trying hard enough to pay their bills.

In most cases, people end up with an overwhelming amount of debt due to a catastrophic event such as a medical event, divorce or a job loss. Here in New Jersey, Superstorm Sandy caused many people to lose everything. Bankruptcy is there to protect you from the financial devastation that follows these types of life events.

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.