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Essex County Bankruptcy Law Blog

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.

Soaring medical debt may lead to more bankruptcy filings

Even as New Jersey residents continue to recover from the recession, the cost of living continues to rise. Even with the new health insurance policy, many people are still unable to pay for the rising cost of medical care. As the amount of medical debt increases, so may the number of bankruptcy filings.

Estimates indicate that somewhere in the neighborhood of 51 million people nationwide have medical debts in collections. This number equates to approximately one out of every five Americans. A study done regarding the cost of 100 of the most commonly performed procedures at hospitals across the country revealed that New Jersey is one of two states where the debt is the highest.

Knowing the law can stop harassing phone calls from creditors

Being behind on the payment of debts can be overwhelming and stressful for any New Jersey resident. It does not help that debt collectors will use any number of tactics in addition to the numerous phone calls they make. Knowing the law can stop harassing phone calls from creditors.

Some debt collectors will threaten to contact family members or an employer.  These threats are designed to shame a person into paying the debt. Under the law, creditors and debt collectors are not allowed to disclose any information regarding an individual's debts to family members, friends or employers. In fact, debt collectors may not make contact at a person's work if he or she relays that phone calls at work are prohibited.

New Jersey's poverty rate may lead to more bankruptcy filings

Newly released census data indicates that 998,549 people in New Jersey are living at or below the poverty rate last year.  The 11.4 percent poverty rate makes the state one of three that experienced an increase.  This could mean more people will file for bankruptcy.

Even as the economy improves for the rest of the country, people in New Jersey are struggling.  Between Hurricane Sandy and a rise in foreclosures, there are concerns that the numbers from the new census are actually an underestimate.  It is surmised that even as the unemployment level in New Jersey decreases, even newly employed people are still living at poverty level.  

Credit card issues that can lead to bankruptcy

It can be easy to get into trouble with credit cards.  In many cases, the recession put many New Jersey residents in the position of having to use their credit cards in order to stay afloat.  Even if your financial situation has improved, the debts created during a difficult time can still be overwhelming.  Bankruptcy may be a way to eliminate those debts and obtain a fresh financial start.

If you are only able to make minimum payments, and even making those payments is a struggle, that could be a sign that your budget it stretched to its limit.  Even making payments on time -- if at all -- can become difficult.  Meanwhile, the interest rates you may have enjoyed may have gone up, only adding to the balances.