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Essex County Bankruptcy Law Blog

Woman found a way to stop harassing phone calls from creditors

It is most likely a safe bet that no New Jersey consumer is fond of debt collectors. The practices used by debt collection agencies and other creditors bend -- if not break -- the limits placed on them under the Fair Debt and Collection Practices Act (FDCPA). One woman from the Midwest managed to find a way to stop harassing phone calls from creditors attempting to collect a debt from her that she did not even owe.

She filed a lawsuit against a debt collection agency called Portfolio Recovery Associates LLC for malicious prosecution. Even though she repeatedly told the company that she was not the person who owed the debt, a lawsuit was filed against her. The original lawsuit went on for approximately 15 months before it was dismissed. However, the company threatened to re-file at a later date.

Legislators look to stop foreclosure actions from taking so long

Here in New Jersey, foreclosure proceedings can take nearly three years to complete on average. This means that homeowners may be kept in limbo for several years -- from the day the lender's notice of intention is filed through the completion of the sheriff's sale. Legislators have decided to attempt to stop foreclosure actions from taking so long to complete.

The bill is not meant to replace the New Jersey Fair Foreclosure Act but to supplement it instead. If the proposed legislation becomes law, it will reduce the normal foreclosure process to approximately five months. In addition, if the homeowner does not contest the foreclosure, the home may go directly to auction.

Basics of a Chapter 7 discharge

When a New Jersey resident receives a discharge in bankruptcy, he or she is no longer liable for the debts affected. Further, the creditors to which those particular debts were owed may not attempt to collect them from the individual. However, certain financial obligations cannot be discharged in a Chapter 7 bankruptcy, and under certain circumstances, a discharge can be denied.

Fortunately, 99 percent of the time, a filer will be granted a discharge in a Chapter 7. Unfortunately, a discharge can be denied if the court determines that financial records are inadequate or a satisfactory explanation is not given for lost assets. In addition, an order denying a discharge can be entered if the filer commits perjury or fails to obey a lawful order of the court. Hiding, destroying or transferring assets could also result in the denial of a discharge. For many ordinary filers, however, a discharge is most often denied because the required financial management course was not completed.

Filing for Chapter 7 bankruptcy does not need to be a last resort

Conventional wisdom tells New Jersey residents that they are obligated to struggle in order to pay off their debts, regardless of how overwhelming their financial situations are for them. People are often discouraged from filing bankruptcy out of a false sense of moral obligation to faceless corporations. In fact, filing for Chapter 7 bankruptcy does not need to be a last resort, it can be the first step toward a better financial future.

The Internet offers a plethora of advice on how to pay off debt. New Jersey residents are encouraged to spend less and put more money toward paying off bills. However, this advice does not take into consideration the fact that many people are already stretching every dollar they have just to keep a roof over their heads and food on their tables. No amount of advice regarding paying off debts is going to work under these conditions.

Even if medical billing errors are fixed, bankruptcy may be best

Any New Jersey resident who has been to the doctor lately is painfully aware of the fact that the cost of health care is on the rise. To make matters worse, it is estimated that nearly 49 percent of medical bills sent to patients contain errors. Even if these errors are corrected, patients could still owe a substantial amount to doctors, hospitals and other medical providers, which still makes bankruptcy a viable option for many people to use to eliminate this type of debt.

Medical bills often contain charges for services that were not performed and tests that were not done. Moreover, some charges are duplications and should not be on the bill either. New Jersey patients can dispute the charges, but a resolution may not come for months. During that time, the disputed balance could end up on a person's credit report showing as past due.

Feds stop harassing phone calls from creditors who violate laws

The Fair Debt Collection Practices Act requires creditors to adhere to certain guidelines when it comes to collecting consumer debts. Unfortunately, as many New Jersey residents have experienced, not all companies follow these guidelines when dealing with consumers. When it is discovered that debt collectors are using unscrupulous tactics to collect debts, certain agencies within the federal government often step in to stop harassing phone calls from creditors.

Recently, the Consumer Financial Protection Bureau and the Federal Trade Commission announced the settlement of claims against Green Tree Servicing LLC, a company accused of using abusive and illegal tactics in its attempts to collect debts. The company allegedly failed to honor agreements between consumers and former loan services that modified their loans. Further, it was claimed that the company was not exactly truthful about the amounts consumers owed.

Increase in consumer spending could lead to more bankruptcy

Not since July 2011 have consumers spent more money on non-revolving debt than they did in February of this year. Even as revolving debt around the country -- including here in New Jersey -- is dropping, the number of loans for items such as automobiles and student loans is on the rise. This new pattern of spending could lead to more people filing for bankruptcy.

Concerns about the economy since the recession have made consumers hesitant to spend money on revolving debt such as credit cards. There is speculation that people are waiting for increases in job opportunities and wages could be the reason. The way that millions of Americans look at spending changed during the recession.

Bankruptcy and the student loan debt crisis

By now, many New Jersey residents are aware that hopeful college students have incurred more than $1 trillion in student loan debt across the nation. Students are borrowing more than just the actual money -- they are borrowing against their future as well. Unfortunately, many people are unable to make their student loan payments. This debt cannot be discharged in bankruptcy, but that does not mean that filing will not help with the burden.

Student loan companies offer borrowers the ability to put off paying their loans for years. Even when a borrower is forced to begin paying the loans, it is possible to do so at reduced payments. However, what many graduates may not realize is that any unpaid interest continues to accumulate and can become part of the principal balance over time.

For some, bankruptcy is the only way to stop foreclosure

The crash of the housing market back in 2008 is still affecting millions of homeowners across the country. Many New Jersey residents who hoped their homes would increase in value when they bought them before the housing crisis are still struggling with declining home values. For some of them, bankruptcy could be the only way to stop foreclosure.

Some people are lucky enough to be able to keep their heads above water even though their homes are underwater, which means the homes are worth less than the current balances on their mortgage loans. Data indicates that many of these properties are considered starter homes -- houses purchased by first-time buyers. Even as researchers say that home values are improving across the country, the owners of these homes are typically not seeing an increase.

Filing bankruptcy could save your house and stop harassment

When a New Jersey resident encounters financial difficulties, it can feel overwhelming. Creditors who are calling you constantly, threatening to foreclose on your home and garnish your wages often compound the concern. Fortunately, filing for bankruptcy can provide a way to get out from under most -- if not all -- of your debt.

One of the reasons that people file for bankruptcy is because they are behind on their mortgage loans and facing foreclosure. The majority of people who file for Chapter 13 bankruptcy (debt reorganization) are able to keep their homes. Under particular circumstances, a Chapter 7 filer (debt liquidation) might also be able to keep his or her home.