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Essex County Bankruptcy Law Blog

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.

Recent study's data shows people fare better after bankruptcy

New Jersey residents have experienced numerous economic setbacks in recent years from which many people are still attempting to recover. Bankruptcy is an effective option that helps families and individuals who are unable to pay their debts. In fact, a recent study indicates that people who do file bankruptcy and receive a discharge fare better than those who continue to struggle to pay their bills.

Where people who attempted to deal with their financial issues without filing bankruptcy were not offered new credit, those who received a discharge received multiple offers. Within a year, obtaining good rates on car financing is possible. Just two to three years post-discharge, some people are able to qualify for a mortgage loan at decent rates.

Divorce and filing bankruptcy in New Jersey

As is the case around the country, up to one-half of the married couples in New Jersey will divorce. Ending a marriage can take a financial toll on both parties even if their financial situation was good prior to the divorce. In some cases, money problems are what lead to the parties going their separate ways. Bankruptcy could be a way to alleviate financial problems.

The question could be whether to file before or after the divorce. If financial issues exist during the marriage, it may be advantageous to file a bankruptcy prior to filing for divorce. This way, the parties can eliminate as much debt as possible before beginning their separate lives. Further, neither party will be held liable for any debts that are discharged through a joint filing.

Stop harassing phone calls from creditors and debt collectors

Any number of reasons can cause a New Jersey resident to get behind on his or her financial obligations. When that happens, debt collection actions begin. Under the Fair Debt Collection Practices Act (FDCPA), it is possible to stop harassing phone calls from creditors and debt collectors. In fact, some of the practices used by debt collectors are illegal under the Act, and consumers need to know what some of those illegal practices encompass.

One of the tactics some debt collectors use is misrepresenting who they are to consumers. Some will say they are lawyers, law enforcement and/or make other false representations in an attempt to pressure an individual into paying a debt -- often through the use of threats of incarceration or litigation. The FDCPA requires that debt collectors accurately identify themselves and the company for which they work.

Chapter 13 may be right for many New Jersey residents

A New Jersey resident can quickly become overwhelmed by debt after a divorce, job loss, accident or illness. Under these circumstances, filing for bankruptcy may be an easy decision. However, deciding whether to file a Chapter 13 or Chapter 7 bankruptcy -- the most commonly filed by individuals -- may not be quite as easy.

Each type of bankruptcy has its own filing requirements and benefits for the petitioner. A Chapter 7 is a liquidation of the petitioner's assets to pay his or her debts. In a Chapter 13, however, an individual's debts are restructured. Payments are made each month for anywhere from three to five years under court supervision.

Divorce and other issues led to David Cassidy's bankruptcy

Divorce alone can have a devastating effect on anyone's finances -- even those of celebrities. When divorce is coupled with other challenges, filing for bankruptcy may be able to help New Jersey residents get back on their feet financially. For instance, David Cassidy -- who starred in the 1970s television series "The Partridge Family" -- recently filed for bankruptcy after his divorce and after spending some time in rehab.

According to court documents, Cassidy has $10 million in debt and $10 million in assets. He has filed a Chapter 11 bankruptcy in order to reorganize his finances. His situation reportedly stems from credit card debt, attorneys' fees and other debts, including a line of credit that appears to be for a mortgage loan. In addition, there seems to be a dispute regarding some horses that he co-owns.

Despite low unemployment claims, many still face bankruptcy

Recent reports indicate that the week ending on Jan. 24 saw the fewest unemployment applications since April 2000. However, the data may be skewed by the fact that the Martin Luther King holiday occurred at the beginning of that week. Even though claims dropped to 265,000 across the country, many of those people -- some of which may be here in New Jersey -- may be considering bankruptcy due to unemployment.

An economist from RBS Securities, Inc. expressed his opinion that,based on the data, there is nothing wrong with the economy at present. In fact, he argues that nearly everything is going right. Those people in New Jersey who are out of work and struggling to support their families may disagree. Considering that the data focuses on new unemployment claims, it fails to account for people who are still unemployed or underemployed across the United States.

Millions are filing for bankruptcy due to medical debt

Medical expenses are often due to unexpected accidents or illnesses. As any New Jersey resident who has experienced a sudden illness or injury can attest, the costs quickly run into the thousands of dollars and higher -- even with medical insurance. By 2013, the rising costs of health care resulted in medical debt being the number one reason why people are filing for bankruptcy.

In 2014, nearly 64 million people in the United States were burdened with medical bills they struggled to pay -- if they could pay at all. Even though some people are optimistic that this number is down approximately 10 million from 2012, the reasons the number dropped are unclear. As experts sift through the relevant data, insurance deductibles continue to rise, which could send the number of those owing thousands of dollars out-of-pocket to rise above past numbers.

Many New Jersey homeowners unable to stop foreclosure in 2014

Between the Great Recession and Super Storm Sandy, the New Jersey housing market was hit particularly hard in comparison to the rest of the country. While foreclosures dropped in 2014 for the nation as a whole, they rose to 71 percent in the state. That means that an abundance of homeowners were unable to stop foreclosure proceedings from being filed by their lenders.

New Jersey is ranked number two for all foreclosure filings across the nation. It came in number five on the list of states with the most completed foreclosures. This means that lenders repossessed 34 percent of the homes in the state.

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.