FAQ’S
1. What is the New Jersey Foreclosure mediation program all about?
In January of 2009, the New Jersey Judiciary started a statewide multi-agency mortgage foreclosure mediation program because there was a massive number of foreclosure cases filed. The high property taxes and the massive loss of jobs in the Garden State has caused an avalanche of foreclosures. New Jersey has the highest property taxes in the United States. Many strapped homeowners simply can’t keep up with their mortgage payments and the high property taxes. Consequently, today foreclosure mediations are routinely held in all of the county court houses. In many respects a homeowner has a better chance to save his home through a foreclosure mediation than in a bankruptcy. In a chapter 13 bankruptcy there is a 80% failure rate. Moreover, mortgage arrears are not reduced or forgiven in a chapter 13 case. I have seen some very desperate homeowners obtain substantial arrears reductions and/or debt forgiveness via a loan modification obtained in the foreclosure mediation process. Meanwhile, in my experience the filing of a chapter 13 only really buys a homeowner some more time to catch their breath. If a homeower can’t afford to make the mortgage payments, then how can he or she make a plan payment under a chapter 13 case and also make the mortgage payments. Therefore, foreclosure mediation often provides a distressed homeowner with much better odds of saving his home.
2. Who is eligible to participate in foreclosure mediation?
The goal of the foreclosure mediation program is to provide a court setting between the lender and borrower to try to work out an agreement(s) to try to avoid a foreclosure. The major requirement is that the homeowner/borrower must live in the home as the primary residence. However, in certain circumstances the clerk may be convinced to liberally construe this threshold requirement. Although all contested foreclosures are automatically referred to mediation, only about five percent of the foreclosure filings are considered to be contested. Still, many homeowners are unaware of the program and they miss a valueable opportunity to try to save their home. It is important to note that an incomplete mediation request(s), that may lack valuable contact information, could also jeopardize that your mediation application will be timely processed or considered.
3. How is a foreclosure mediation case started?
Once the court has entered a foreclosure judgment and the writ of execution has been issued, but before the sheriff’s sale has been held, a motion must be filed that seeks to obtain an order to stay the sheriff’s sale. This application must also request that the court refer the case to mediation. The sooner a foreclosure case is referred to mediation, then the greater the chance that the homeowner can save his home. In almost all of the cases a judge will grant a stay of the sheriff’s sale to permit the homeowners to engage in the foreclosure medation process.
To participate in the foreclosure mediation process, the homeowner must complete and send one original and two copies of the mediation request statement, a foreclosure mediation financial worksheet, and any required attachments. These documents are also listed on the Judiciary website at www.judiciary.State.nj.us/civil/foreclosure/index.htm.
The financial worksheet is a critical document and it provides the lender with important info to review any loan modification application(s). It is important to fill out the financial worksheets as correctly as possible. If there are any mistakes in reporting expenses and liabilities, for example using weekly instead of monthly income figures, then this error could hurt any chances to have a loan modification application approved.
The foreclosure mediation program also requires the production of copies of the latest federal tax return filed, a few months of pay stubs, proof of income, a few months of recent bank statements and the past six months’ profit and loss statements for self-employed workers. These are only the bare essential documents that may be requested. Other documentation is almost alwaysrequired for the bank to review any other modification, forbearance or reinstatement analysis.
The foreclosure mediation request statement is essentially a brief synopsis of the case and it must include the homeowner’s plan to save the home. All paperwork should be completed as thorough and as accurately as possible. The foreclosure unit then forwards these materials to the local county court staff for scheduling. Moreover, a copy is also sent to the lender’s legal counsel.
It is important to emphasize that homeowners who apply for foreclosure mediation are advised that mediation requests will not stop the foreclosure case. Defense counsel and homeowners must attentively monitor and address pending sheriff sale dates that may be set prior to scheduled mediations. However, in my experience most lenders will not schedule a sheriff sale if a foreclosure mediation is pending. Instead, most lenders will adjourn a sheriff sale date under the foreclosure mediation process is complete.
4. How can I prepare for the foreclosure mediation process?
The foreclosure mediation process can be very useful to enable you to save your home. However, don’t expect miracles. If you are not working and if you have no source of income, then there is very little chance that you can save your home and/or modify your mortgage. The lenders are primarily concerned that the homeowner has a source of income. It is also very important for the homeowner to provide income verification in foreclosure mediation.
Any loan modification application requires the timely submission of several documents, and they include the following: a request for modification and affidavit (RMA) form; an IRS 4506T-EZ or 4506-T form; program acceptable documentary evidence of all income; the last two years signed tax returns; two months of all bank statements; profit and loss statements for self-employed homeowners; a recent utility bill establishing residency; a hardship letter; and contribution letters, if applicable. The RMA, IRS 4506T-EZ and 4506-T forms can be found at www.HMPadmin.com. Many lenders also use their own modification request forms and affidavits in lieu of or in addition to the RMA.
All homeowners should be advised to bring updated financial information with them to their mediation sessions, even if they or their attorneys have forwarded the information to the lender or to lenders’ counsel on various occasions. Given the large number of foreclosures, there are often internal communication disconnects within the lending institutions. Documents sent to one section may not be shared with the current processing unit. Some lenders are establishing centralized processing websites to address this concern.
Any information exchange is a two-way process in mediation. The foreclosure mediation program requires that at the minimum the lenders must provide homeowners with current reinstatement and pay-off figures. Sometimes more detailed payment histories are required. In some cases, the lender may have secured broker’s price opinions (BPO’s) on the appraised value of the property at issue. Having this information prior to a mediation session enables your lawyer to explore realistic options with their clients.
Given the logistical difficulties in having lenders participate in person, the foreclosure mediation program permit lenders’ to participate telephonically and require their lawyers to provide speaker phone capability.
5. How is the foreclosure mediation process conducted?
All foreclosure mediation hearings are conducted at the county court houses, and they are often scheduled in one-hour intervals. Foreclosures are consistently among the most emotionaslly charged type of cases to be mediated. Thus, every foreclosure case should be approached on an individual basis. Providing the proper documentation at mediation is very important. Exchanging financial information consists of essentially 90% of the mediation process.There are currently three possible program forms that can be prepared at the mediation hearing. The mediation continuation accord (MCA) outlines specific steps that must occur on a given time line prior to a follow-up mediation date, and it also indicates whether or not sheriff’s sales are stayed. The interim provisional settlement (IPS) provides for a trial payment period, usually three to six months, after which a permanent loan modification determination will be made. Typically in these cases the foreclosure action continues but the sheriff sales are postponed either monthly after receipt of each trial payment, or for a set period of time that depends upon the circumstances or county practice.
The foreclosure mediation settlement memo outlines the terms of a final resolution, that includes any forbearance agreements, permanent loan modifications, loan reinstatements, repayment plans, and mutually agreed upon exit strategies. It is very important that these agreements are prepared accurately and have sufficient detail. Any additional agreements that are effectuated over the phone should also be written on these court forms.
Should I File for Bankruptcy?
Is the endless barrage of calls that you receive from your creditors driving you to drink? Are your on the verge of losing your car or home? Are you about to lose your mind because of the stress of being under a mountain of debt that is suffocating you. Thankfully, the New Jersey Bankruptcy Center is here to help you and to get you back on your feet. How much would your life change if you could get some breathing room from your creditors. Your creditors don’t want to give you any type of break at all. They don’t want you to get the fresh start that is provided by the Bankruptcy Code. The last thing that your creditors want to do is to help you. The debt collectors who are calling you 24/7 couldn’t care less about whether you have lost your job or have gotten sick. They are like terminators and they have one goal and that is to make you pay your debts.
Well, I want to help you, and I understand fully how scared and uncertain you are feeling right now. I know that you feel very embarrassed about considering filing for bankruptcy. However, I am here to inform you that the majority of people who file for bankruptcy are just like you. They are good hardworking people who have lost their job, gotten divorced, or who were just careless with their spending. They are hardworking people who just want to provide for their families and to keep a roof over their head. They are not trying to beat the system by not paying their bills. On the contrary, they want to pay their bills, but they find themselves in a series of events that is simply too overwhelming.
If you read this website, it is important to emphasize that you have options if you are in massive debt. One of these options is to file for bankruptcy. Contrary to what you may have heard you can still file for bankruptcy. Thousands of New Jersey’ites are filing every day. Moreover, close to one million Americans filed for bankruptcy in 2009.
Do Not Feel Guilty
Bankruptcy is about starting over fresh. It is about getting back in control of your financial future. Don’t feel any shame for considering bankruptcy. In today’s economy many people from all walks of life are in your situation. I have had clients who were making $150,000 plus last year and who used to live in very expensive homes. In a blink of an eye these same clients are down to collecting their last unemployment checks, and they don’t know where there next dollar is going to come from. Hard times can hit anyone, any time, and anywhere. In the modern world we have many young people who are in their early twenties who start out in life with $25,000 in debt (thanks to MasterCard/Visa/American Express) because of so called ”free” credit cards. Who gives an such young kids $5,000 credit lines? The credit card companies certainly do!
Mr. Sliwinski, Esq. has handled almost two thousand bankruptcy since 1991. He has not once ever had a client who advised him that he regretted filing for bankruptcy.
Bankruptcy Is Not Your Fault
Take control and feel no shame about filing for bankruptcy. Filing for bankruptcy is not your fault. You can’t control the terrible economy, your job situation, your health, or that terrible divorce that has ruined your life. We live in a consumer society. The entire society has been brainwashed to charge away like a drunken sailor. However, you can now take back control of your life by contacting the New Jersey Bankruptcy Center. Stop the harassment! Stop the 10 to 20 calls a day that you receive from the obnoxious debt collectors! Stop the endless collection letters that change color ever month! Personally, I would get sick of receiving red colored letters every day.
The Credit Card/Debt Trap
The credit card companies have been begging you to charge up at 23% (some 24.99%) for many years. How many “account balance” transfer offers have your received? How many new extensions of credit have you received? Here’s the trap, after you have established a decent payment history with a credit card company, they up the credit limit. “Congratulations,” they say. Now that you have more credit of course you spend it. They will keep upping that credit limit until you can barely make the minimum payment. Now they own you. Now you must make the minimum payment on your MasterCard or Visa and you will be paying that debt for the next 35 years or more.
Don’t feel any shame about taking back control of your life. The only thing the credit card companies have to fear is the United States Bankruptcy Code and bankruptcy lawyers. That is why they lobbied Congress and spent more than twenty five million to get the bankruptcy laws changed to protect them protect.
Credit Card Debt Management and Consolidation Services
Credit card counseling and debt management services – I don’t buy it. Countless clients have come to my office after using a debt management company. Most have advised me that these companies are scam artists. Many clients have come to me and they have asked me to try to get back their money from the credit counseling companies. Many clients have also advised me that the credit counseling company charged them more than a lawyer would have, and that they received no benefits by using the consumer credit counselor.
Please be further advised that if you break your contract with a credit counseling company, then you will lose all the benefits that you have gained – penalties and interest all gets put back. They are right there on your credit report as Credit Counseling Company. A negative mark that tells creditors that you are a bad credit risk. Consumer bankruptcy attorneys are about empowering you and letting you live again in peace. Stop hiding. Don’t you want to be able to answer your phone again, without fearing that it could be another collection call?
Obtaining Credit After Filing for Bankruptcy
Are you concerned about the state of their credit after filing bankruptcy? It is a hard cold fact that a bankruptcy discharge will appear on your credit report for 10 years following a discharge. This does not mean that you will not get a credit card, buy a home, or car for 10 years. Far from it, creditors want you to borrow. Shortly after your bankruptcy discharge, it is almost a certainty that you will receive a credit card offer. You will get credit following your bankruptcy.
Once a person files bankruptcy then they will have more disposable income. Therefore, many credit card companies, and car dealership will provide a debtor credit after they file. The reason why a debtor can restore their credit after they file is because; 1) The person no longer has a large debt load after the filing; 2) The person now has an ability to repay any new debts because their disposable income has been “freed up” and 3) the person can can’t declare bankruptcy a chapter 7 again for eight years. Further, the probability of a consumer declaring bankruptcy a second time in their lifetime is very low.
Consumer Bankruptcy – Chapter 7 or Chapter 13?
The choice of the chapter depends on many factors individual to your situation, and is one of the most important reasons to get good legal advice before filing. Which chapter is best depends on the nature of your debt and the nature and value of your assets.
Chapter 7
Chapter 7 is the most common type of bankruptcy. Here, the debtor receives a discharge of most his unsecured debts only within several months of the filing the case. If the debtor’s income appears high enough to permit some repayment of debt, then the trustee or the court may move to dismiss the case for “substantial abuse.” The underlying theory is that to permit someone with the ability to repay to file chapter 7 and avoid repayment abuses the bankruptcy system. This is termed “substantial abuse” – a catch phrase with the U.S. Congress.
If your debt is mixed business and consumer then it is important to know what the legal form of the business is. A sole proprietorship is treated for bankruptcy purposes as just one kind of asset of the individual who owns them; thus the owner of a troubled business must file an individual bankruptcy, including all of his assets and liabilities, personal and business, to obtain bankruptcy court protection.
Chapter 13
Chapter 13 is frequently a better choice if you have debts that are not dischargeable in chapter 7; if you are in default on mortgages or car payments; if you have more property than can be exempted from creditors in a chapter 7; or if you owe taxes or other debts that are not dischargeable in chapter 7.
To be eligible for chapter 13, you must have regular income and debts below a certain level.
Debtors choose to file a repayment plan under Chapter 13 when:
- They owe debts not dischargeable in chapter 7 (such as taxes, child support, fraud judgments).
- They have liens that are larger than the value of the assets securing the debt.
- They have years of unfiled taxes.
- They are behind on car or house payments.
- Their assets are worth more than the available exemptions.
1. I am now in massive of debt. What will happen if I simply ignore the credit card companies and hope that they go away?
If you learn one lesson from reading my website it is that if you blow off your financial problems then they will only get worse. Financial problems are like an infection and if they they go untreated they can kill you, ruin your marriage, and/or get you fired. If you are way behind on your bills, then you are going to be going to be charged interest and late fees that will make you feel sick. Moreover, if you blow off your bills then your phone will start ringing off the hook, and it will explode from receiving all of the collection calls. The debt collectors really only have limited power and that is to harass you. Debt collectors can’t seize your bank account, they can’t garnish your wages, and they can’t file a lawsuit against you.
All a debt collector can do to you is to call you morning, noon and night. Debt collectors will call you at your home and at job. They will call your cell phone if they have it. They will call you as early as 8:00 a.m. and as late at 9:00 p.m. If you gave personal references when you applied for your loan or credit card they may even call your references. The only way a debt collector can make you pay is to harass or embarrass you into paying. They believe that they can harass you into paying. Sometimes this method works, but most of the time it does not. Unfortunately, no matter how many times a debt collector calls, a pot of gold is not going to magically appear in your bank account to help you pay your bills. No matter how many times they call you, it is not going to get you a better job, cure your illness or medical condition, bring your spouse back to life, or solve your marital problems. In summary, your creditors simply don’t care why you can’t pay their bill. The creditors are like terminators and all they care about it getting their money. Once you are far behind on your credit card payments, then you will start receiving red colored letters and nasty calls from collection agencies. The collection agencies also charge high fees that will get passed onto you. Consequently, your debt to VISA, MasterCard, American Express and to Discover will only get even higher if it goes into collection. Not only will you be charged interest but you will be charged for collection fees as well.
If the debt collector is unsuccessful in getting you to pay the debt, then either the collection agency or the bank who issued the credit card to you will then sue you. Unfortunately, it is very difficult for a debtor to successfully defend against a collection lawsuit. Most judges simply rubber stamp motions for summary judgment and enter a judgment against the debt. Moreover, if you lose the lawsuit or if fail to respond, then a judgment will be entered against you for the amount of the debt, interest, attorney’s fees and court costs. Once a judgment is entered against you, then your creditor can garnish your paycheck, seize bank account, place a lien on your home, and ruin your credit report. It is important to emphasize that during this entire time, interest will continue to accrue until you pay off the judgment in full.
If you default on a mortgage, then the bank will eventually foreclose on your home. If you should default on an auto loan, then the finance company can send the repo man to snatch your vehicle. Get the picture, dealing with life while in massive debt is miserable. Moreover, the longer that you are in debt, the more miserable the complications will become. Your credit report is ruined. Your paycheck will be garnished. Your bank account could be seized by creditors. Your home could be foreclosed. You may be denied a promotion or “shot down” for a new job because your credit report is the pits. In summary, the longer you delay filing, then the longer you will have to live this life of misery. Bankruptcy is perfectly legal and it is a beginning and not an end!
2. Should I try to use debt counseling services instead of filing for bankruptcy?
In an effort to avoid dealing with creditors and collection agencies, many debtors try to use credit counseling instead of filing for bankruptcy. Credit counseling companies try to negotiate with the credit card companies to reduce your debt, to lower your interest rates, and to reduce your monthly payments. In summary, your credit card debts will be consolidated, and you will then be required to make one payment to the credit counseling company. Thereafter, the credit counseling company will then distribute your monthly payments to your creditors.
The major problem with these companies is that very often fail to pay your creditors from your monthly payment. Many credit counseling companies also charge very high rates, and your payments are first applied to their bill. Only after the credit counselors are paid off in full then your payments will be applied toward your credit card debts. Moreover, credit counselors very often sell client accounts to other companies, and because of poor record keeping, many debtors don’t get the proper credit for all their payments. I have had countless clients who come into my office and advise me that credit counseling was a total scam and a waste. It is important to emphasize that in the majority of the cases, your payments won’t be applied to your credit card debts only until the credit counseling company is fully paid off for their thousands of dollars of fees. The internet adds that praise the benefits of credit counseling are not accurate and they are misleading. The only tried and true method to obtain legitimate debt relief is to file bankruptcy. It is not that difficult to repair your credit after your file for bankruptcy. Therefore, you should really think twice before you embark on a very lengthy repayment plan with a credit counseling company.
3. What is so dangerous about using payday loans and auto title loans?
It is not uncommon for debtors who are struggling to pay their bills to obtain a payday loan. At a first glance these type of loans may seem like a quick and easy solution to solve your current financial problems. However, payday loans have extremely high interest rates and very short payment terms. These types of loans are not a viable or realistic option for most desperate debtors who are “in debt up to their eyeballs.” Generally, payday loans are due within 14 to 30 days and they carry interest rates of 15%. This may not sound that onerous at first. However, if you borrow $300 and if you must repay the loan in 14 days, then the annual percentage rate calculates to almost 1,200%.
Auto title loans are just as miserable as payday loans. These loans usually mature in thirty days and can have interest rates as high as 500% or more. Most title loans also have a rollover option that allows you to extend the term of the loan for another thirty days. The extension of auto loans is how most people get themselves into deep financial trouble. Unless you pay the loan off at the end of the first thirty-day term, any future payments that you make will only be applied only to interest until you are able to pay the loan in full. If you fail to repay the loan, then the lender can repossess the car and sell it to recover the amount of the loan plus any interest and fees. In summary, it is critically important that you take immediate action as soon as you realize that you are in sinking like quicksand from financial trouble. If you simply ignore your problems then they will only get worse and you could soon face a foreclosure, a repossession, or a wage garnishment.
1. I am in so deep in debt that I feel like jumping off a bridge. What can filing for bankruptcy do for me?
Bankruptcy is designed to give financially overwhelmed debtors fresh start. However, many people are embarrassed and humiliated at even the thought of filing for bankruptcy. Everyone wants to pay their bills. However, if there is a choice between paying for your rent or paying your VISA bill, then you have no choice. You can’t live in the woods or in your neighbor’s garage. My bankruptcy clients are not dishonest people who are looking for the quick and easy way out. They are hard-working people who are living in the hardest times since the great depression. They are looking for some relief from the miseries of life. It is embarrassing your boss sees that your paycheck is now being garnished. It is mortifying to open up the newspaper and see that your home is listed in the classified and listed for a Sheriff sale. It is downright humiliating to see strangers drive past your home and then try to inspect it so that they can buy it at a Sheriff’s sale. Finally, it can cause you major headaches if your creditor zaps a bank levy on your checking account and seven of your checks then bounce. The nightmares never end when you are living like a gerbil on a treadmill on the never-ending cycle of debt.
Bankruptcy is not a fun experience at all! Of all my hundreds of clients, not one of them enjoyed the bankruptcy filing process. In fact many of my clients cry in my office and they feel shameful about filing. Most people earnestly believe that they have a moral obligation to repay their debts. Most hard working New Jersey’ites honestly believe that since they borrowed the money they should repay the money. Because of these beliefs, many people have a very difficult time coming to terms with even the thought of filing bankruptcy.
However, I am here to advise you that filing for bankruptcy is perfectly legal. Therefore, until it becomes illegal to file for bankruptcy, there is absolutely no reason not to file if you are living on the brink of a financial disaster. You deserve the fresh start that bankruptcy offers. You deserve the peace of mind and relief from the endless barrage of phone calls from your creditors. You deserve to know that you’ll be able to feed and clothe your children and keep a roof over their heads while you get your financial life back in shape.
2. What are the basic requirements for a person to be permitted to file for bankruptcy?
Pursuant to the Bankruptcy Code, a chapter 7 case allows debtors who qualify to discharge most of their unsecured debt. Prior to October, 2005, it was much easier for a debtor to file chapter 7. The BAPCPA now requires anyone seeking to file a chapter 7 to satisfy a certain threshold called the means test. The means test requires any prospective debtors to have an annual income of less than the state median income for a family of the equivalent size. The U.S. Census Bureau maintains a list of the median incomes for each state.
If a prospective debtor’s annual income is more than the median income for a family of the same size in his state, then there is a presumption that he can afford to pay at least a portion of what he owes to his unsecured creditors. Therefore, before he can file a chapter 7 case, he must demonstrate to the court that his monthly expenses for housing, transportation, utilities, etc. are within the national and local standards as determined by the IRS and that once he pays those expenses, he has nothing left to pay into a chapter 13 plan. If he can’t satisfy this second requirement of the means test, then the debtor will have to pay at least $100 per month into a chapter 13 plan for five years.
Does this legal process sounds complicated? Yes, the means test certainly is complicated. The bottom line is that you have to speak to an experienced bankruptcy lawyer to determine if you can qualify for a chapter 7 or 13. The main goal of the BAPCPA is to push debtors into a chapter 13 if they can afford to repay some of their debt. However, the legal process to determine which debtors can repay a portion of their debt is a very complicated process. Moreover, the answer to this question can only be answered with the assistance of a qualified bankruptcy lawyer who is “in the know” about how the system works.
3. What is a chapter 13 bankruptcy?
Chapter 13 bankruptcy is a debt consolidation plan that allows a debtor to restructure his debt and pay it over a three to five year period. In some cases, debtors who have planned on filing chapter 7 are forced to file a chapter 13 because they cannot satisfy the means test that is required of chapter 7 debtors.
To file a chapter 13 case, a debtor must have enough income, after paying all monthly expenses, to pay into the chapter 13 plan. These funds that are then paid into the plan and are used by the trustee to pay the administrative costs of the case, the debtor’s attorney’s fees, priority claims such as taxes and child support, secured claims such as mortgage arrears and auto loans, and unsecured claims such as credit cards and medical bills.
To determine how much a debtor can afford to pay into the chapter 13 plan, the bankruptcy attorney reviews the debtor’s income from all sources and subtracts the debtor’s monthly expenses from his net monthly income to arrive at his net monthly disposable income. The bankruptcy code requires that 100% percent of a debtor’s net monthly disposable income must be paid into the chapter 13 plan. If a married debtor is filing bankruptcy without his spouse, then his spouse’s income and expenses must also be considered to formulate the chapter 13 plan.
Once the court approves or confirms the debtor’s chapter 13 plan, the debtor must continue to make his plan payments and to comply with the other terms of the plan. If the debtor’s financial circumstances should change, then he should notify his bankruptcy attorney immediately so that he can advise him, and to file any motions that may be necessary to protect his interests.
1. How does a typical person get into massive credit card debt?
There are many different roads in life that can cause a person to file for bankruptcy. For some people it is the loss of a job, the death of a spouse, the illness of a spouse or a child, or a divorce. Meanwhile, for other people it is poor money management and spending money like a drunken sailor. I just cringe when I prepare bankruptcies for clients and I see Burger King meals and other frivolous fast food places charged. Unfortunately, you wind up paying twice as much for the lousy burger if you use a credit card.
Most people initially incur credit card debt with the good faith intention of repaying for it. However, when life throws curve balls at you then paying your credit card bills can often seem like climbing Mount Everest. When people find themselves trapped in the never ending New Jersey rat race, they often begin using their credit cards to pay for their groceries, utility bills, or to pay for their other credit card bills. After most New Jersey’ites pay off their quarterly property taxes they have little if any disposable money to live on. I often see that many people take out a second mortgage or a home equity line of credit just to pay off their credit cards and for other unsecured debt. Converting unsecured debt into mortgage debt is often a disaster because if you don’t pay off your credit bills you can still keep your home. A credit card company can’t take your home away from you. However, if you convert credit card debt into mortgage debt, then you can lose your home if you default. Does this type of madness sound familiar to you? Unfortunately, for most people these are only short-term solutions. In my experience many people use their home equity line of credit to pay off credit card debt. Sadly once the credit card debts are paid off, many misinformed debtors start to charge up those same credit cards only within a few months time. In closing all these debtors have accomplished is to rack up additional debt for themselves. Unfortunately, this is more debt that most people can simply afford to pay.
2. Who is responsible for the financial mess that many consumers now find themselves in?
The credit card companies and mortgage companies are largely responsible for the financial crisis that many consumers now find themselves in. Most credit card companies charge outrageous interest rates, late fees, and over-the-limit fees. The different types of fees that credit card companies charge is never ending. The credit card companies are now even charging fees if you don’t use your credit card. Moreover, many credit card companies punish their customers by raising interest rates if a debtor makes a few late payments. Some credit card companies will even raise the interest rates if the customer makes a late payment on a credit card from another bank. The cold hard reality is that many people simply can’t get out of credit card debt, and they are trapped in this mess forever.
Many other people are in financial trouble because of the predatory loans that they have obtained over the past five to ten years or so. I can’t tell you how many clients I have represented who have maxed out their home equity with second mortgages. It is really easy to spend the money that you borrow from a home equity line of credit. The banks give the consumer a check book to use their equity line of credit. Consequently, many people do not even realize that they were spending money when they used these checks. Nonetheless, paying back this second mortgage is harder than ever in these hard economic times. Most people can barely make their payments on their first mortgage.
In summary, most people want to pay their bills, but due to unforeseen circumstances, such as the loss of a job, the death of a spouse, or unexpected medical expenses, this becomes an impossible task. Bankruptcy is one of the major stresses that can happen in your life along with filing for divorce, suffering from a major illness, the death of a loved one, and/or loss of a job. I have never represented a client who enjoyed filing for bankruptcy. It can be demoralizing and embarrassing! However, the decision to file for bankruptcy is really a simple choice of survival in this day and age.
3. What are the major indicators that I should consider when deciding whether to file for bankruptcy?
There is no set formula or computer program to determine if you should file for bankruptcy. Each decision is a personal decision and should only be made with the consultation of an experienced bankruptcy lawyer. However, there are some clear cut indicators that may convince you to file:
a. Do you live paycheck to paycheck?
b. Do you routinely pay your bills late?
c. Are you constantly juggling bills to keep creditors off your back?
d. Do you routinely overdraw your checking account?
e. Do you have more than three credit cards?
f. Are all of your credit cards maxed out?
g. Are you paying late fees and/or over-the-limit fees on all or most of your credit cards?
h. Do all of your credit cards have double-digit interest rates?
i. Are you at least one month behind on your mortgage payment?
j. Are you at least one month behind on your car payment?
k. Do you now or have you within the past three months obtained a title loan or a payday loan?
l. Are you using your credit cards to pay for necessities like groceries, prescriptions, and gasoline?
m. Are you dipping into your savings or retirement accounts to pay bills?
n. In the past three months, have you borrowed money from family or friends to pay your bills?
o. Do you know exactly how much you owe on all your bills?
p. Do you make only the minimum payment on your credit cards each month?
q. Are you receiving telephone calls or letters from collection agencies?
r. If you own a home, are you in pre-foreclosure?
s. Have you recently had a vehicle repossessed?
t. Is your auto finance company threatening to repossess your car?
u. Are you upside down in your auto loan?
v. Have you been denied credit, insurance, employment, or a security clearance because of poor credit?
If you have answered yes to any of these questions, then it is time that you take control of your life and to file. Filing for bankruptcy can help you stop worrying about paying for all of your debts. Moreover, you can finally be able to afford to put food on your table, buy your much needed medication, pump gas into your car, heat your home this winter and not freeze to death, and buy Christmas gifts this year. Bankruptcy can help you get your life back! Bankruptcy can get those nasty bill collectors to stop calling you. It is time for you to get the fresh start that you deserve! I have handled approximately two thousand bankruptcy cases in my career. I have never had one client call me to complain that he or she regretted filing.
4. How can bankruptcy help me regain control of my life?
One of the major benefits of filing bankruptcy is psychological. Many of my clients inform me that filing for bankruptcy is very similar to the feeling/rush of getting out of jail. Many of my clients come into my office shaking like a nervous wreck. Filing for bankruptcy allows you to regain control of your life once again. If you are behind on your bills and if you have creditors are calling you 24/7 then you have no control over your life. How can you possibly perform adequately at your job if the credit card companies and the bill collectors are leaving nasty messages for you all day at work. It doesn’t stop here, once you get home from work the creditors will often leave about ten more messages for you. Consequently, you then start fighting with your husband and wife. Is this the American dream? I don’t think so, instead it is the American nightmare! The bottom line is that life in the United States is not as great as it used to be. Everything is so expensive, companies will fire you in a second, and you have to worry if your 401K plan will disappear if there is another Wall Street Meltdown. I may be nostalgic but I long for the 70′s and 80′s when times were simpler. Back in these days, when there was less credit cards around, and Americans simply spent less and lived more modestly.
The stress of constantly being trapped in massive debt is also one of the major causes of divorce. Filing for bankruptcy will let you sleep again at night without waking up and turning around and around. Filing for bankruptcy will also enable you to have a clear mind and permit you to focus better on your job and on your family.
5. Can bankruptcy stop the annoying calls from creditors and bill collectors?
Yes, one of the major benefits of filing for bankruptcy is that it will stop collection calls cold. How embarrassing is it to receive receive collection calls at work or at dinner with your kids each night. It is certainly demoralizing to watch your kids check the caller ID before answering the phone because they know mom does not want to talk to creditors? Thankfully, bankruptcy stops the endless harassment from your creditors. When you file for bankruptcy the automatic stay immediately goes into effect. The automatic stay prevents creditors from taking any collection efforts against you and this includes telephone calls, letters, lawsuits, garnishments, foreclosure, and repossession. Filing for bankruptcy is like a nuclear weapon against your creditors and it will immediately stop all of their harassing ways.
Many web surfers are living through very tough financial times and they have no choice but to file for bankruptcy. Bankruptcy is embarassing but so is losing your girlfriend to another guy, so is getting fat, so is saying something stupid to your boss. Get the point, you have to deal with embarassment sometime in your life. A chapter 13 will remain on a person’s credit report for 7 years. However, the time the clock doesn’t start ticking until the chapter 13 repayment plan has been fully completed. Meanwhile, a chapter 7 filing will stay on your credit report for 10 years.
By far one of the most frequent questions that I receive at any initial bankruptcy consultation is how long does it will take for person to rebuild his credit after filing for bankruptcy? The answer to this question depends on many factors. The first major factor is what is the income of the debtor. If a debtor earns a nice salary then it will be much easier for him to rebuild his credit. The second major factor is how does the debtor pay his bills after he has filed. To help improve your credit score it is always advisable for a person to obtain a secured card and to pay it in full each month. You will have to deposit cash up to the amount of your credit line and you will have to pay a yearly fee (usually about $30), but it will appear on credit reports just like any card. If you have a secured credit card this will show to the credit world that you can responsibly use credit cards. Thereafter, your credit score should improve dramactically.
In about a year or two you will probably be able to apply for non-secured credit cards as your credit score inches back up. Typically, if you use this proven method then your credit score will go back to 650 to 680 within about three years. As the negative history (past late payments and written off accounts) starts to drop off completely your credit score will rebound even more.
The credit bureaus primarily review your last three to five years of credit history. Therefore, you can obtain a decent credit score after three years as long as you show to potential lenders that you can be an on time payer. It is important that you check your credit report on an annual basis to check for any errors. After you file for bankruptcy you should also make certain that all of the debts that were listed on your bankruptcy are listed as so on your credit report. Unfortuantely, many creditors still tend to continue to report bad debt even if it was discharged in a bankruptcy. In summary, if your credit card debt was wiped off then you must take steps to have these debts marked as discharged on your credit report. Most marks on your credit report for bad credit card debt will be removed from your credit report in 7 years.
If you have a foreclosure on your credit report then it will be much harder to obtain a new mortgage. A foreclosure mark on your credit report generally will be removed in 7 years. If you should decide that you want to purchase a new home before the foreclosure mark is removed, then you should talk with mortgage broker(s) before you even start to look for a home. A savvy mortgage broker can help you find a deal that you can live with. Generally, the mortgage rates after a bankruptcy are around 8% to 10%. However, if you have paid your mortgage payment on time, then you should be able to refinance for a lower rate in two years.
Finally, it may also be somewhat of a challence to obtain a new car loan. However, this still is not an impossible task. Typically, the interest rates for car loans after a bankruptcy run from 10% to 18%. The interests rates could be lower if the borrower finds a co-signer. The downside of having such high interests rates is that it generally takes several more years to pay off the car loan.
The bankruptcy statistics in America are getting higher each year. Even the passage of the Bankruptcy Reform Act of 2005 could not slow the high rates of filing for bankruptcy. Following is a list of the most common causes of bankruptcy.
1. Medical Bills
Medical bills are a major cause of many bankruptcies. I had one case wherein one of my debtors had a stroke and he had $950,000 of medical bills. He could not afford to pay for these bills. How could a person possibly recover from such a serious medical condition by dealing with such outrageous debt. Severe injuries or serious diseases can easily result in hundreds of thousands of dollars of medical bills. These medical bills can quickly wipe out your life savings, retirement accounts, college education funds and your home equity. Once these assets have been wiped out, then the desperate debtor is forced to rack up thousands of dollars of medical bills. The debtor has no choice but to rack up these high medical bills or he will become even sicker or possibly could die.
2. Loss of a Job
Whether due to a layoff, termination or resignation, the loss of income from a job can be equally disastrous. Only a few of the lucky unemployed Americans are fortunate to receive severance packages. Unfortunately, most of the unemployed sadly find their pink slips on their desks or lockers and they receive very little notice. Most debtors have no emergency fund to live on and they are forced live on credit cards. This is no way to live and it is a recipe for disaster. If you use your credit card to pay for McDonalds and for your everyday living expenses it will sooner or late cause many once responsible people to file for bankruptcy. The interest rates on credit cards rack up balances much more quickly than the average American can pay off the card. Furthermore, the loss of health insurance coverage and the cost of paying for COBRA insurance also makes the life of the unemployed even more miserable. Many debtors who are who are not able to find a decent job for a long period period of time are simply not able to recover financially.
3. The Overuse of Credit Cards and Home Equity Loans
Many debtors simply can’t control their lavish and careless spending habits. You can’t live like a rap star if you only earn $50,000 per year. Credit card bills, taking out home equity lines of credit, car loans and student loan payments can eventually spiral out of control and ruin your finances. Many debtors can’t keep up with all of these debts, and they are not even able to make the minimum payment on their credit cards. For many debtors they feel like they are a gerbil on a treadmill, and they eventually can’t keep running forever. It is important to note that most debt-consolidation plans also fail for many reasons. Most debt consolidation plans only delay a debtor from eventually filing for bankruptcy.
4. Divorce/Separation
The big divorce also frequently creates a financial disaster for both spouses. Legal fees can be substantial in a contested divorce case. Moreover, many separated couples who were used to living on two incomes are in for quite a financial shock when they try to make their bills by living only on one paycheck. Additionally, high child support and alimony payments often force a payor spouse to file for bankruptcy.
5. Unexpected Expenses
The loss of your home or your personal property caused by theft or casualty, such as floods, storms, or a storm for which the owner is not insured can force some people into bankruptcy. Thousands of Americans who lived in the the Gulf Coast states were forced to file after Hurricane Katrina. Many homeowners are unaware that they must take out separate insurance coverage for certain events such as floods. Those who do not have insurance coverage for this type of casualty can face the loss of not only their homes but most or all of their personal possessions as well. Not only must they then pay to replace these items, but they must also find a way to pay for food and shelter to try to “eke out a living.”
1. I am losing my home in foreclosure. What can I do to try to save my house?
The possibility of losing your home because you can’t make the mortgage payments can be terrifying. Perhaps you’re having trouble making ends meet because you or a family member lost a job, or you’re having other financial problems. Or maybe you’re one of the many consumers who took out a mortgage that had a fixed rate for the first two or three years and then had an adjustable rate – and you want to know what your payments will be and whether you’ll be able to make them.
Regardless of the reason for your mortgage anxiety, there are many avenues you can take to save your home, and to avoid foreclosure scams.
2. Why is it important to know your mortgage?
Do you know what kind of mortgage you have? Do you know whether your payments are going to increase? If you can’t tell by reading the mortgage documents you received at settlement, contact your loan servicer and ask. A loan servicer is responsible for collecting your monthly loan payments and crediting your account.
Here are some examples of types of mortgages:
Hybrid Adjustable Rate Mortgages (ARMs): Mortgages that have fixed payments for a few years, and then turn into adjustable loans. Some are called 2/28 or 3/27 hybrid ARMs: the first number refers to the years the loan has a fixed rate and the second number refers to the years the loan has an adjustable rate. Others are 5/1 or 3/1 hybrid ARMs: the first number refers to the years the loan has a fixed rate, and the second number refers to how often the rate changes. In a 3/1 hybrid ARM, for example, the interest rate is fixed for three years, then adjusts every year thereafter.
ARMs: Mortgages that have adjustable rates from the start, which means your payments change over time.
Fixed Rate Mortgages: Mortgages where the rate is fixed for the life of the loan; the only change in your payment would result from changes in your taxes and insurance if you have an escrow account with your loan servicer.
If you have a hybrid ARM or an ARM and the payments will increase – and you have trouble making the increased payments – find out if you can refinance to a fixed-rate loan. Review your contract first, checking for prepayment penalties. Many ARMs carry prepayment penalties that force borrowers to come up with thousands of dollars if they decide to refinance within the first few years of the loan. If you’re planning to sell soon after your adjustment, refinancing may not be worth the cost. But if you’re planning to stay in your home for a while, a fixed-rate mortgage might be the way to go. Online calculators can help you determine your costs and payments.
3. What should I do if I am behind on my mortgage payments?
If you are having trouble making your payments, contact your loan servicer to discuss your options as early as you can. The longer you wait to call, the fewer options you will have.
Many loan servicers are expanding the options available to borrowers – it’s worth calling your servicer even if your request has been turned down before. Servicers are getting lots of calls: Be patient, and be persistent if you don’t reach your servicer on the first try.
You may qualify for a loan modification under the Making Home Affordable Modification Program (HAMP) if:
* your home is your primary residence;
* you owe less than $729,750 on your first mortgage;
* you got your mortgage before January 1, 2009;
* your payment on your first mortgage (including principal, interest, taxes, insurance and homeowner’s association dues, if applicable) is more than 31 percent of your current gross income; and
* you can’t afford your mortgage payment because of a financial hardship, like a job loss or medical bills.
If you meet these qualifications, contact your servicer. You will need to provide documentation that may include:
* information about the monthly gross (before tax) income of your household, including recent pay stubs.
* your most recent income tax return.
* information about your savings and other assets.
* your monthly mortgage statement.
* information about any second mortgage or home equity line of credit on your home.
* account balances and minimum monthly payments due on your credit cards.
* account balances and monthly payments on your other debts, like student loans or car loans.
* a completed Hardship Affidavit describing the circumstances responsible for the decrease in your income or the increase in your expenses.
4. How can I avoid defaulting on my mortgage and losing my home in foreclosure?
If you have fallen behind on your payments, consider discussing the following foreclosure prevention options with your loan servicer:
Reinstatement: You pay the loan servicer the entire past-due amount, plus any late fees or penalties, by a date you both agree to. This option may be appropriate if your problem paying your mortgage is temporary.
Repayment plan: Your servicer gives you a fixed amount of time to repay the amount you are behind by adding a portion of what is past due to your regular payment. This option may be appropriate if you’ve missed a small number of payments.
Forbearance: Your mortgage payments are reduced or suspended for a period you and your servicer agree to. At the end of that time, you resume making your regular payments as well as a lump sum payment or additional partial payments for a number of months to bring the loan current. Forbearance may be an option if your income is reduced temporarily (for example, you are on disability leave from a job, and you expect to go back to your full time position shortly). Forbearance isn’t going to help you if you’re in a home you can’t afford.
Loan modification: You and your loan servicer agree to permanently change one or more of the terms of the mortgage contract to make your payments more manageable for you. Modifications may include reducing the interest rate, extending the term of the loan, or adding missed payments to the loan balance. A modification also may involve reducing the amount of money you owe on your primary residence by forgiving, or cancelling, a portion of the mortgage debt. Under the Mortgage Forgiveness Debt Relief Act of 2007, the forgiven debt may be excluded from income when calculating the federal taxes you owe, but it still must be reported on your federal tax return. For more information, see www.irs.gov. A loan modification may be necessary if you are facing a long-term reduction in your income or increased payments on an ARM.
Before you ask for forbearance or a loan modification, be prepared to show that you are making a good-faith effort to pay your mortgage. For example, if you can show that you’ve reduced other expenses, your loan servicer may be more likely to negotiate with you.
Selling your home: Depending on the real estate market in your area, selling your home may provide the funds you need to pay off your current mortgage debt in full.
Bankruptcy: Personal bankruptcy generally is considered the debt management option of last resort because the results are long-lasting and far-reaching. A bankruptcy stays on your credit report for 10 years, and can make it difficult to get credit, buy another home, get life insurance, or sometimes, get a job. Still, it is a legal procedure that can offer a fresh start for people who can’t satisfy their debts.
If you and your loan servicer cannot agree on a repayment plan or other remedy, you may want to investigate filing Chapter 13 bankruptcy. If you have a regular income, Chapter 13 may allow you to keep property, like a mortgaged house or car, that you might otherwise lose. In Chapter 13, the court approves a repayment plan that allows you to use your future income toward payment of your debts during a three-to-five-year period, rather than surrender the property. After you have made all the payments under the plan, you receive a discharge of certain debts.
To learn more about Chapter 13, visit www.usdoj.gov/ust; it’s the website of the U.S. Trustee Program, the organization within the U.S. Department of Justice that oversees bankruptcy cases and trustees.
5. What type of information should I have readily available to me before I contact my loan servicer?
Before you have any conversation with your loan servicer, prepare. Record your income and expenses, and calculate the equity in your home. To calculate the equity, estimate the market value less the balance of your first and any second mortgage or home equity loan. Then, write down the answers to the following questions:
* What happened to make you miss your mortgage payment(s)? Do you have any documents to back up your explanation for falling behind? How have you tried to resolve the problem?
* Is your problem temporary, long-term, or permanent? What changes in your situation do you see in the short term, and in the long term? What other financial issues may be stopping you from getting back on track with your mortgage?
* What would you like to see happen? Do you want to keep the home? What type of payment arrangement would be feasible for you?
6. I am now dealing with the bank to try to save my home. What should I do throughout the foreclosure prevention process?
* Keep notes of all your communications with the servicer, including date and time of contact, the nature of the contact (face-to-face, by phone, email, fax or postal mail), the name of the representative, and the outcome.
* Follow up any oral requests you make with a letter to the servicer. Send your letter by certified mail, “return receipt requested,” so you can document what the servicer received. Keep copies of your letter and any enclosures.
* Meet all deadlines the servicer gives you.
* Stay in your home during the process, since you may not qualify for certain types of assistance if you move out. Renting your home will change it from a primary residence to an investment property. Most likely, it will disqualify you for any additional “workout” assistance from the servicer. If you choose this route, be sure the rental income is enough to help you get and keep your loan current.
7. What type of housing and credit counseling is available to me to help me contest the foreclosure of my home?
You don’t have to go through the foreclosure prevention process alone. A counselor with a housing counseling agency can assess your situation, answer your questions, go over your options, prioritize your debts, and help you prepare for discussions with your loan servicer. Housing counseling services usually are free or low cost.
While some agencies limit their counseling services to homeowners with FHA mortgages, many others offer free help to any homeowner who is having trouble making mortgage payments. Call the local office of the U.S. Department of Housing and Urban Development (www.hud.gov) or the housing authority in your state, city, or county for help in finding a legitimate housing counseling agency nearby. Or consider contacting the Homeownership Preservation Foundation (HPF) at 888-995-HOPE or www.hopenow.com. HPF is a nonprofit organization that partners with mortgage companies, local governments, and other organizations to help consumers get loan modifications and prevent foreclosures.
When choosing a counselor, beware of anyone charging large up-front fees or guaranteeing you a loan modification or other solution to stop foreclosure. They shouldn’t be charging you high fees or making any guarantees. Take your business elsewhere.
8. I simply can’t save my home. What other types of options do I have available to me?
Not every situation can be resolved through your loan servicer’s foreclosure prevention programs. If you’re not able to keep your home, or if you don’t want to keep it, consider:
A. Selling Your House: Your servicers might postpone foreclosure proceedings if you have a pending sales contract or if you put your home on the market. This approach works if proceeds from the sale can pay off the entire loan balance plus the expenses connected to selling the home (for example, real estate agent fees). Such a sale would allow you to avoid late and legal fees and damage to your credit rating, and protect your equity in the property.
B. Short Sale: Your servicers may allow you to sell the home yourself before it forecloses on the property, agreeing to forgive any shortfall between the sale price and the mortgage balance. This approach avoids a damaging foreclosure entry on your credit report. Under the Mortgage Forgiveness Debt Relief Act of 2007, the forgiven debt on your primary residence may be excluded from income when calculating the federal taxes you owe, but it still must be reported on your federal tax return. For more information, see www.irs.gov, and consider consulting a financial advisor, accountant, or attorney.
C. Deed in Lieu of Foreclosure: You voluntarily transfer your property title to the servicers (with the servicer’s agreement) in exchange for cancellation of the remainder of your debt. Though you lose the home, a deed in lieu of foreclosure can be less damaging to your credit than a foreclosure. You will lose any equity in the property, although under the Mortgage Forgiveness Debt Relief Act of 2007, the forgiven debt on your primary residence may be excluded from income when calculating the federal taxes you owe. However, it still must be reported on your federal tax return. For more information, see www.irs.gov. A deed in lieu of foreclosure may not be an option for you if other loans or obligations are secured by your home.
9. What types of scams should I be aware of during the foreclosure process?
Scam artists follow the headlines, and know there are homeowners falling behind in their mortgage payments or at risk for foreclosure. Their pitches may sound like a way for you to get out from under, but their intentions are as far from honorable as they can be. They mean to take your money. Among the predatory scams that have been reported are:
A. The foreclosure prevention specialist: The “specialist” really is a phony counselor who charges high fees in exchange for making a few phone calls or completing some paperwork that a homeowner could easily do for himself. None of the actions results in saving the home. This scam gives homeowners a false sense of hope, delays them from seeking qualified help, and exposes their personal financial information to a fraudster.
Some of these companies even use names with the word HOPE or HOPE NOW in them to confuse borrowers who are looking for assistance from the free 888-995-HOPE hotline.
B. The lease/buy back: Homeowners are deceived into signing over the deed to their home to a scam artist who tells them they will be able to remain in the house as a renter and eventually buy it back. Usually, the terms of this scheme are so demanding that the buy-back becomes impossible, the homeowner gets evicted, and the “rescuer” walks off with most or all of the equity.
C. The bait-and-switch: Homeowners think they are signing documents to bring the mortgage current. Instead, they are signing over the deed to their home. Homeowners usually don’t know they’ve been scammed until they get an eviction notice.
1. I have just been served with a lawsuit. I am being sued by one of my credit card companies that I owe approximately $10,000. What should I do now?
If you are served with a collection lawsuit, and if you believe you have a defense to the case, then you should file an answer to the case. You are legally required to file an answer with the clerk within 35 days from the date when you received the complaint. If you do not file a written answer within the 35-day time period, then the court could enter a default judgment against you. You are also required to pay a filing fee when you file your answer. It is important to emphasize that before a judgment can be entered against you, New Jersey law requires that the creditor must verify proof of the debt. The creditor must either submit affidavits and copies of any credit card bills to establish that the veracity of the debt. Credit card debt is constantly brought and sold. Therefore, if you have legal counsel then he may be able to object to the creditor’s proofs when they are submitted at any proof hearing. At the very least, these objections may provide a debtor with some meritorious legal arguments to use in any settlement negotiations.
2. If one of my creditors obtains a judgment against me, what can they do against me?
If one of your creditors obtains a judgment against you, then the Sheriff or a Constable may be able to levy or seize your checking and savings accounts or to garnish your wages. In a wage garnishment a creditor simply obtains a court order that permits it to deduct approximately 10% from your wages. The garnishment may not legally exceed 10% of your gross salary. Additionally, any monies may not be withheld if disposable weekly earnings are less than $154.50 per week or $309.00 every two weeks. If a debtor has more than one creditor who has obtained a wage execution order they will be applied in turn. A debtor can only be garnished by one judgment creditor at a time.
In some default cases the court will set the case down for a proof hearing. In these cases, the court may not be able to enter a judgment without some type of testimony from the creditor as to the nature of the debt, and the amount due and owing. At the proof hearing the creditor will submit proofs to the court to establish the debt and how much is still outstanding. However, in the majority of book accounts or credit card cases, the judgment will simply be entered on the papers. The creditor will simply submit detailed legal paperwork to the court that verifies the debt.
3. Does filing for bankruptcy stop a wage garnishment and/or bank levy?
Yes, one of the best advantages of filing for bankruptcy are that it will stop a wage garnishment and a bank levy. When a person files for bankruptcy it automatically stays (stops) any and all collection activity against a debtor. The main purpose of the bankruptcy is that it gives a debtor some breathing room, and it also gives him a fresh start. Moreover, many debtors are absolutely petrified at the prospect of having their paycheck garnishment. Many of my clients advise me that they would get fired if their employer had to garnish their paycheck. Many debtors also will have their bank account frozen or levied by their creditors. This can be an ultimate disaster! Many debtors live pay check to pay check. If their bank account is levied, then their rent payment is lost. A bankruptcy will stop a bank levy. However, in my experience it normally takes four to five weeks before a bank will release a levied bank account back to a debtor. The Constable freezes and levies bank accounts in massive numbers. If your lawyer sends a bankruptcy notice to a Constable to release a levied account, unfortunately they do not take efforts immediately to release his levy. It normally takes four to five weeks to have the monies released from a levied bank account. Therefore, a distressed debtor should not wait until the last minute to file for bankruptcy.
Covered in this Article:
- What is a chapter 7 bankruptcy?
- What happens after a person files for bankruptcy?
- What are the most common reasons for a chapter 7 bankruptcy?
- Is it moral to file for bankruptcy?
- What can a bankruptcy do for me?
- What can’t a bankruptcy do?
- What are the different types of bankruptcy cases that I should consider?
- What is a chapter 7 (Straight Bankruptcy)?
- What is chapter 13 bankruptcy? (Reorganization)
- What does it cost to file for bankruptcy?
- Where is a chapter 7 case filed?
- How long does the chapter 7 process last?
- What are the benefits of filing for bankruptcy?
- What are the limitations of filing for bankruptcy?
- Is a chapter 7 (straight bankruptcy) bankruptcy the right choice for a debtor?
- Is a chapter 13 bankruptcy (Reorganization) the right choice for the debtor?
- Who pays for a person’s debts when they file for bankruptcy?
- Are the names of persons who have fild under chapter 7 published?
- What else should I know about filing for bankruptcy?
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Covered in this Article:
- Can a debtor re-file for a chapter 7 if he needs to do it again? And is there a limit to a person re-filing for bankruptcy?
- When is the best time to file under chapter 7?
- Can I file for bankruptcy protection if I own a business?
- Will filing for bankruptcy make the IRS go after me?
- Do I have to file bankruptcy on all of my credit card accounts or can I keep some?
- What if forgot to include a debt on my schedule? Can I do it later?
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Covered in this Article:
- How can a person stop his creditors from harassing him?
- How long after the bankruptcy filing will my creditors stop calling me?
- Can a bankruptcy filing stop a debtor from being sued or from receiving harassing phone calls?
- Will filing a bankruptcy stop a wage garnishment?
- Does filing for bankruptcy stop lawsuits?
- Does the automatic stay protect the debtor’s bank accounts?
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Covered in this Article:
- Will bankruptcy wipe out all my debts?
- Will I have to go to court?
- What happens to property with liens on them? Are these debts also discharged?
- Can a debtor still file a chapter 7 if they own a house?
- What if the debtor fails to pay their mortgage payments due to circumstances beyond his control?
- What happens if the debtor forgot to list a creditor in their bankruptcy schedules?
- Can a debtor just list and discharge the “bad” debts, and keep the “good debts”?
- Can filing for bankruptcy help a person get his New Jersey driver’s license back?
- I have decided to file for bankruptcy, should I max out my credit card, and go on a spending spree before I file?
- Will I still owe taxes after I file for bankruptcy?
- What if a person committed fraud, would his debts still be discharged in bankruptcy?
- Can a debtor be discriminated against for filing bankruptcy?
- Which debts will I still owe after I file for bankruptcy?
- Will I still owe secured debts (mortgages, car loans) after bankruptcy?
- Can more than one creditor sue me at a time?
- Can my car be repossessed without any warning?
- The principal signor on a loan filed bankruptcy. Now the creditor is coming after the co-signor. Can they do that?
- When does a debtor have to stop using their credit cards if he wants to file for for bankruptcy?
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Covered in this Article:
- Collection agencies have been calling me all hours of the day and night. Can I get them to stop contacting me?
- I am getting calls from the collections department of a local merchant I did business with. Can I tell that collector to stop contacting me?
- A bill collector insisted that I wire the money I owe through Western Union. Am I required to do so?
- Can a collection agency add interest to my debt?
- A collection agency sued me and won. What collection measures can it now take against me?
- Can a creditor continue to contact a debtor after they have filed for bankruptcy?
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Covered in this Article:
- What are my bankruptcy exemptions?
- In New Jersey what property can I retain?
- What will happen to my home and car If I file bankruptcy?
- Can I own anything after bankruptcy?
- Can I protect some assets, such as a vacations home, by transferring the home to one of my relatives before I file for bankruptcy?
- Will a debtor lose his retirement account(s) or payment(s) from social security?
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Covered in this Article:
- Can a debtor file by himself even if he is married?
- Does my spouse and I have to file a joint bankruptcy?
- My spouse has a lot of debts but I do not have much. Will my spouse’s bankruptcy damage my credit score?
- Under what conditions should a husband and wife both file under chapter 7?
- What happens if one spouse files for bankruptcy and not the other?
- Does a divorce judgment protect a person from creditors if his ex-spouse files for bankruptcy?
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Covered in this Article:
- What is a bankruptcy trustee, and who will be appointed?
- Will the trustee take a debtor’s property if they file for bankruptcy?
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Covered in this Article:
- Does a debtor have to explain themselves in court?
- What should I bring to my meeting of creditors?
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