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Essex County, New Jersey Legal Blog

Some still cannot stop foreclosure despite economic growth

The most recent data regarding foreclosures across the country, including here in New Jersey, indicates that numbers have finally fallen to pre-mortgage crisis levels. Much of this is attributed to economic growth and the fact that lenders are clearing out foreclosed inventory. Despite these encouraging statistics, there are still numerous homeowners who cannot stop foreclosure proceedings from being filed against them.

As of the end of March, there were "only" 631,000 active foreclosures across the country. This is reportedly the lowest that number has been since Oct. 2007. Of course, when this is compared with the nearly 1.2 million active cases in 2010, that is a significant decline. During the 2010 height of the foreclosure "boom," people were mailing the keys to their homes to their lenders -- essentially raising their hands in defeat instead of fighting to keep the homes that they were no longer able to afford.

Bankruptcy can stop harassing phone calls from creditors and more

Many New Jersey residents find themselves in financial distress for one reason or another. By the time they consider filing bankruptcy, creditors could be calling incessantly and demanding payment. Fortunately, one of the benefits filers enjoy is that filing for bankruptcy can stop harassing phone calls from creditors.

The stay that goes into place upon filing a bankruptcy petition prevents creditors from pursuing any actions to collect the debt. This also prohibits the filing of any lawsuits, garnishments and levies against a New Jersey resident as well. Furthermore, at the end of the process, many of your debts could be discharged, which means that you will no longer be responsible for paying them.

U.S. District court reverses ruling on Chapter 13 plan

In many instances, appeals of an order entered in a U.S. Bankruptcy Court here in New Jersey or elsewhere are heard by the U.S. District Court in the same geographic area. Recently, a ruling that approved a Chapter 13 bankruptcy plan was reversed by an out-of-state court. The issue was whether the filer was allowed to pay his attorneys' fees before his mortgage under the plan.

The Bankruptcy Court judge approved the plan, which allowed the debtor to pay the attorney prior to resuming mortgage payments. One section of the U.S. Bankruptcy Code does allow for the priority payment of "administrative fees," which includes fees paid to an attorney. However, another section does not allow the interference with the rights of a mortgage lender when the property securing it is the filer's primary residence. 

The truth about Chapter 7 bankruptcy

When New Jersey residents are in financial distress, they might begin to think that bankruptcy would be a viable way to deal with the overwhelming amount of debt they incurred for whatever reason. Unfortunately, there are so many myths surrounding Chapter 7 bankruptcy that some people might not file for fear that those myths are true. However, understanding the facts about bankruptcy can help dispel those myths.

Many New Jersey residents are under the impression that they will lose their homes, cars and other personal property when they file. In many cases, that does not happen. The U.S. Bankruptcy Code and New Jersey law allow for certain assets to be retained by a filer so long as their value does not exceed prescribed amounts. This means that most people get to keep their property.

You may keep some property, and some debts, in bankruptcy

New Jersey residents could have some misconceptions regarding bankruptcy. Many people believe that the court will require them to give up all of their property. Others believe that they will be able to discharge all of their debts. Neither of these statements about bankruptcy is true.

When it comes to keeping property after filing a Chapter 7 bankruptcy, the U.S. Bankruptcy Code allows certain property to be retained up to a certain value. Depending on the circumstances, you could be able to choose between using the federal property exemptions or the New Jersey property exemptions. If it appears that you could be forced to sell some of your assets under a Chapter 7, filing a Chapter 13 might be a better solution.

Should bankruptcy be an option for student loan debt relief?

This question seems to be gaining some traction in political circles. With nearly $1.5 trillion dollars in student loan debt across the country, some sources say that something needs to be done before another nationwide economic crisis occurs. Re-instituting bankruptcy as a way for financially struggling college graduates to obtain student loan debt relief could help remove at least some of the pressure that students here in New Jersey and around the country feel when they are unable to repay their loans.

Currently, it is nearly impossible to discharge student loans in a bankruptcy. However, it did not always used to be that way. Congress passed legislation restricting the discharge of student loans based on a belief that once students graduated, they were filing bankruptcy in order to avoid repaying their loans. In hindsight, it has been revealed that only around one percent of graduates were actually doing that.

Medevac helicopter rides can push people into bankruptcy

Any New Jersey resident who has been involved in a serious accident or suffered from a medical emergency knows how high the medical bills and other expenses can get. Many of those people have filed bankruptcy in order to be free from the overwhelming amount of health care expenses -- even if they had medical insurance. The cost of a medevac helicopter alone can be overwhelming.

For example, a heart attack victim in one state was flown 85 miles to a hospital that saved her life. When she received the bill for the flight, she was flabbergasted. The total cost of the flight was $46,800, and her portion of the bill is almost $39,000. That does not count any medical care she received at her destination.

Understanding the Chapter 7 bankruptcy process

Once a New Jersey resident has decided to file for bankruptcy, it will be helpful to understand how the process works. A Chapter 7 is a liquidation, which means that the trustee could sell any non-exempt assets in order to pay creditors. In many cases, all of a filer's property falls under an exemption, and qualifying debts are discharged.

Before that, however, a potential filer will need to undergo a means test to verify that he or she qualifies for a Chapter 7. While information regarding all debts, including lawsuits, garnishments or other legal actions, is gathered, a credit counseling course will need to be completed before the petition can be filed. After the petition is filed, another course will need to be completed before a discharge can be issued. It should be noted that certain debts are not generally subject to discharge, such as student loans, taxes and child support, among others.

Mortgage underwater and do not want to keep your home? Now what

This might seem like an odd question, but it is one that many people ask themselves. Not everyone in who owns a home here in New Jersey or elsewhere wants to fight to keep it. If your mortgage is underwater and you do not want to keep your home, you could be asking yourself what to do about it.

Many New Jersey residents realize that even if they had no other debt, they could no longer afford to make the payments on their mortgage loans. Still others could be so far behind that no matter what kind of deal could be made with the lender, they would never get caught up. Selling the home might be an option, but there is no guarantee that it would happen quickly, if at all.

Filing bankruptcy can stop a multitude of creditor actions

Many New Jersey residents find themselves in financial distress for a variety of reasons. Regardless of what caused them to be unable to pay their bills, creditors' responses are often similar. Filing for bankruptcy can stop creditor actions since an "automatic stay" goes into effect that restricts creditors from attempting to collect a debt.

Once the petition is filed and creditors receive notice of the filing, wage garnishments are put on hold, along with bank levies. If your mortgage lender has initiated foreclosure proceedings, that court case will stop during the bankruptcy, unless the lender receives permission from the court to continue. New Jersey residents who are in jeopardy of losing their vehicles -- or other personal property that secures a debt -- can keep the property from being repossessed as well.


At the law offices of Minion & Sherman, our New Jersey bankruptcy attorneys have been providing families with real solutions for more than 20 years.

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