When Should I File For Bankruptcy? -'Tis The Season

Many individuals who are facing mounting consumer debt issues may begin to wonder: "When should I file for bankruptcy?" When it comes to filing for bankruptcy, as with many other legal proceedings, timing is a major factor and should be considered when deciding when is the right time to file for bankruptcy. Many debtors may substantially benefit from filing a bankruptcy petition in December rather than in January or other ensuing months. First, many employers give their employees annual bonus checks at the end of the calendar year to coincide with the holidays. The bonus money becomes part of an individual's income and is factored into the Means Test calculation if the debtor files in January. This may cause the debtor's average income amount, for the purposes of the test, to exceed the allowable amount thus disqualifying him from filing for Chapter 7 bankruptcy. Therefore, it would be beneficial for a debtor to file after he receives a bonus check, but before the income is used as part of the Means Test calculation. Next, if a debtor owes federal taxes and expects a tax refund, he can avoid a federal tax offset if he files before December 31st . The Bankruptcy Code permits a creditor to decrease the refund amount that is owed to a creditor by the amount that a debtor owes to that creditor. Stated differently, if the IRS owes a debtor a tax refund and the debtor owes the IRS a tax debt for a previous year, the IRS can keep that debtor's tax refund and use it to satisfy his tax debt, even with the automatic stay that bankruptcy provides to debtors. Although, there are some rules that the Bankruptcy Code includes, one being the "mutuality of the debts." As expressed in the court case, In re Meyer Med. Physicians Group, Ltd., 385 F.3d 1039, 1041 (7th Cir. 2004), most courts find that mutuality requires that: 1) the debts are held by the same parties; 2) in the same capacity; and 3) the off-setting debts are both either pre-petition or post-petition. A debtor's tax debt is a pre-petition obligation owed by the debtor to the IRS. If the debtor files for bankruptcy in December rather than in January, the income tax refund is a post-petition debt owed by the IRS to the debtor - as a refund for tax year 2013 is not owed by the IRS until after December 31, 2013. The Bankruptcy Code does not allow the IRS to take and apply your post-petition income tax refund to offset a pre-petition tax debt because there is no mutuality of the debts. If you are having trouble dealing with your consumer debt and are wondering when it would be the right time to file for bankruptcy it is imperative that you seek the advice of experienced legal counsel to advise you about the timing of your bankruptcy filing. For more information regarding when you should file for bankruptcy, Chapter 7 bankruptcy, Chapter 13 bankruptcy, foreclosure or any other consumer debt issues in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for informational purposes only and not intended to replace the advice of an attorney

Costs and Benefits of Bankruptcy Reaffirmation

Individuals usually choose to file bankruptcy to discharge debts that they simply are unable to pay but, because the process carries a risk of having to forfeit certain property they wish to retain, people may wish to reaffirm some of their debt as a means to keep certain items. It should be duly noted that bankruptcy reaffirmation comes both with costs and benefits. Filing for bankruptcy is usually a last resort for most people and for the vast majority of people the process allows them to start their financial lives anew and debt free. The first issue is that many are concerned that a bankruptcy filing will ruin their credit, however, those considering bankruptcy are likely substantially behind in their bills and their credit is already in bad shape. With a fresh start from bankruptcy, as long as filers begin making all payments on time thereafter, the former debtors will reverse the downward spiral and their credit will improve. Second, depending upon whether the debtor files for chapter 7 or chapter 13 bankruptcy, a great deal of their assets and property may be at risk of being taken by the bankruptcy trustee to sell to satisfy some of the debts. If a debtor decides that he or she would like to reaffirm a debt, they are effectively removing a particular debt from the bankruptcy discharge proceeding so that it may never be discharged. The reason that a debtor may elect to reaffirm a debt is so that he or she may keep a particular asset or piece of property. For instance, many people need a car to get to and from work and they do not want to risk losing the car in the bankruptcy proceedings, therefore they choose to reaffirm the debt they owe on the vehicle so that they do not lose it. The obvious benefit of reaffirming a particular debt is the debtor keeps that property. Upon reaffirmation, the debtor will immediately need to continue to make full and regular payments on the affirmed debt and satisfy any back payments on the debt that are owed that the time of the reaffirmation. When a debt is reaffirmed and thereby removed from the bankruptcy, the debtor may not later cease paying or pay late and may not reopen the bankruptcy to include the asset. As bankruptcy may be filed only once every 7 years, it is critical that you seek the advice of experienced counsel in the event you are considering bankruptcy and reaffirmation of certain debts. For more information regarding reaffirmation, Chapter 7 bankruptcy, Chapter 13 bankruptcy, foreclosure or any other consumer debt issues visit TheNJBankruptcyAttorney.com. This blog is for informational purposes only and not intended to replace the advice of an attorney.

Bankruptcy and Divorce

Although couples decide to get divorced for many reasons, disagreements over money and finances are one of the main reasons that people file for divorce in New Jersey, if the issue is the mismanagement of money, filing for bankruptcy and divorce simultaneously can be a dangerous combination if the individuals involved are not well informed. A couples' marriage and their finances go hand in hand. Most married couples share a residence, hold joint bank accounts, share jointly owned vehicles, share credit cards, and incur shared expenses. Therefore, in the event that a couple is contemplating a divorce and a bankruptcy at the same time, the process can become very complex. Filing for either a Chapter 7 or Chapter 13 bankruptcy or getting a divorce are each stressful and arduous processes by themselves, but combining both may seem unimaginable to some. Therefore, it is imperative that individuals who find themselves in this situation make sure that they are well informed about both divorce, bankruptcy, and the affect that one has on the other - before engaging the processes. First, the couple will need to decide whether they wish to file for bankruptcy prior to the divorce proceedings or following them. If the spouses file for bankruptcy before their divorce, they will have the option to file either jointly or singly. By doing this, the couple will be compelled to present the court and the bankruptcy trustee with all of their financial information - such as assets and other property. In the vast majority of cases, most of the couples' assets will be exempt, but non-exempt assets will become part of the bankruptcy estate and the uncertainty of their discharge may make divorce property settlement negotiations more difficult. Alternatively, filing for bankruptcy may settle many debt or property issues between the couple before divorce negotiations even begin, thereby easing the process. If a couple can anticipate an amicable divorce it may be within their best interest to file for bankruptcy before filing for divorce for this aforementioned reason, as issues regarding ownership and title of property will be settled during the bankruptcy. If the couple realize early in the process that their divorce will be contested by either or both spouses, they may want to distribute the marital assets first, through negotiation and agreement, and then deal with each of their respective debts later. If you have any questions regarding how filing for bankruptcy and divorce will affect each respective process, it is critical that you seek out the advice of an experienced bankruptcy attorney to assist you with your finacial issues and to advise you properly in regard to bankruptcy. For more information regarding Chapter 7 bankruptcy, Chapter 13 bankruptcy, foreclosure or any other consumer debt issues visit TheNJBankruptcyAttorney.com. This blog is for informational purposes only and not intended to replace the advice of an attorney.

Meeting Of Creditors Is Not What Most Debtors Expect

In New Jersey, when a debtor files for bankruptcy the process that follows may seem frightening and confusing for the debtor, especially when debtors learn that there is a meeting of the creditors that is held as part of the process. Most debtors who are filing for bankruptcy have recently experienced months or even years of badgering at the hands of harassing creditors who have sent many letters and made many phone calls in an attempt to get repayment. Therefore, the thought of having to confront these dunning creditors at a meeting during the bankruptcy proceeding could cause debtors to experience a reasonable degree of anxiety and distress. First, it should be noted that although this anxiety and distress is reasonable, it is usually unfounded because it is very rare that a creditor will attend the meeting of the creditors, and in the event that a creditor does attend - it is even rarer that the creditor would have direct contact with the debtor. In a Chapter 7 bankruptcy, this meeting of the creditors, called a 341(a) hearing, is mandatory. In a Chapter 13 bankruptcy, this hearing is the first hearing in the process. Typically, the only people who attend this hearing will be the debtor, the debtor's attorney, and the trustee. The only time that a creditor might appear at the 341(a) hearing is when a creditor is someone that has a personal involvement with the debtor such as a former business partner, an ex-spouse, or a landlord. Even in this very unusual and rare occasion, the creditor would only be given a very limited time to question the debtor. If you have any questions regarding the bankruptcy process including what you should anticipate, what you will need or other important questions it is critical that you seek out the advice of an experienced bankruptcy attorney to assist you with your consumer debt issues and to advise you property in regard to bankruptcy. For more information regarding Chapter 7 bankruptcy, Chapter 13 bankruptcy, meeting of creditors, foreclosure or any other consumer debt issues visit TheNJBankruptcyAttorney.com. This blog is for informational purposes only and not intended to replace the advice of an attorney.

Disposing of An Unaffordable Vehicle Through Bankruptcy

In the shadow of a tenuous economy, the vehicle that you leased or purchased can very rapidly become an enormous financial inconvenience, filing for bankruptcy may help individuals who find that their vehicles are not longer affordable within their current lifestyles. As one can easily imagine, banks and lending institutions are not typically amenable if one simply tries to give their vehicle back. If one falls behind on payments, usually the vehicle will be repossessed and sold at an auction and the debtor will owe the difference between the sales price and the amount that is still owed on the vehicle. If a debtor files for Chapter 7 bankruptcy, he or she can forfeit any property that serves as a security for a loan relinquishing any continuing obligation to repay the outstanding debt. When a debtor surrenders property during the pendency of bankruptcy proceedings, he or she is effectively discharged of any obligation to repay any remaining loan for that property. Any bank or lending institution is precluded from continuing to seek repayment from the debtor as soon as he or she files for bankruptcy. Although filing for bankruptcy will have a negative impact on a debtor's credit score, they will be relieved of their loan obligation instantly. Filing for Chapter 7 bankruptcy also provides a debtor with another option if he or she wishes to keep the vehicle. A debtor may be able to redeem his or her vehicle through a I.R.S.C. Section 722 redemption, in which a debtor is afforded the opportunity to pay off the actual value (or current fair market value) of the vehicle instead of the full balance of the loan. Filing for Chapter 13 bankruptcy may provide a debtor in this situation with another option. In a Chapter 13 bankruptcy proceeding, a debtor can cram down a secured debt, if the debt exceeds the value of the collateral. Therefore, if a debtor owes $15,000 on a vehicle that has an actual value of $8,000, the debt can be readjusted to conform the actual value of the car instead of the loan balance when the debtor's monthly repayment amounts are calculated by the court. If you believe you are in over your head due to a luxury vehicle or other luxury purchases and believe you need help, it is critical that you seek an experienced bankruptcy attorney to assist you with your consumer debt issues and advise you properly in regard to the bankruptcy. For more information regarding Chapter 7 bankruptcy, Chapter 13 bankruptcy, exemptions,foreclosure or other consumer debt issues visit TheNJBankruptcyAttorney.com. This blog is for informational purposes only and not intended to replace the advice of an attorney.

Bankruptcy Notice of Proposed Abandonment

Chapter 7 bankruptcy petitioners in New Jersey may receive a notice of proposed abandonment in the mail from the bankruptcy court, although this may seem foreboding, it may actually be something positive for the debtor. In New Jersey, a debtor filing for bankruptcy under Chapter 7 is advised that this process involves the liquidation of virtually any asset as a means to discharge the debts that are serving as major a impediment to his or her life. Unfortunately, and much to the chagrin of many debtors, this includes their house. Very often, mortgage payments represent one of the largest debts that a petitioner faces. In addition, an individual's house is usually the most valuable piece of property that he or she owns. Therefore, one of the first properties that a bankruptcy trustee will look to sell to satisfy major debts is a debtor's home. During the bankruptcy proceedings, a trustee will perform a liquidation analysis to ascertain whether or not there is enough equity in the home to warrant the sale of the property. Further, if through this analysis the trustee discovers that the home does not have any value or only has a nominal value, she must alert the court to his fact. When the trustee notices the court of the fact that she has decided to abandon her interest in the property at issue, she will issue a notice of proposed abandonment. If the trustee decides to abandon the property, it means that she does not want to exert the court's right to sell the property to satisfy bankruptcy debts and therefore ownership and control over the house returns to the debtor. Therefore, receiving a copy of a notice of proposed abandonment could prove to be a very good thing for the debtor. It is important to note that the issuance of a notice of proposed abandonment does not mean that the debtor automatically receives control over his or her house again. Any creditor or party has the right to file an objection to the court's abandonment of the property and receive a hearing before the court to voice an objection, although this is very rare. If no interested party voices an objection with the court by a specified date, the property abandonment takes place before the scheduled court date. In New Jersey, bankruptcy laws are very complicated, therefore it is strongly advised that a potential debtor seeks out the advice of an experienced bankruptcy attorney to assist him or her with bankruptcy matters. For more information regarding, Chapter 7 bankruptcy, Chapter 13 bankruptcy, foreclosure, or other consumer debt issues in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for informational purposes only and not intended to replace the advice of an attorney.

Foreclosure- Is Bankruptcy the Answer?

Debtors filing for Chapter 7 bankruptcy in New Jersey may be surprised to learn that even after they file for bankruptcy their homes can, and in many instances will, still be foreclosed upon by their lending banks. Most people file for Chapter 7 bankruptcy to discharge all or most of their debt, but filing for Chapter 7 bankruptcy does not automatically or necessarily allow a debtor to keep his or her home. Beyond this, even if a mortgage is one of the debts that is discharged upon the bankruptcy filing, the lender still retains the right to come in at a later time and re-possess the debtor's home. Typically, a bank or similar lender will re-possess a debtor's home using a deed in lieu of foreclosure or by a judicial or non-judicial foreclosure proceeding. A deed in lieu of foreclosure is used when a debtor relinquishes all of his or her interest in the home to the lender. This method reflects slightly better than a foreclosure on the debtor's credit report. A judicial foreclosure occurs when a bank petitions the court system to be awarded the legal right to take back a debtor's residence and/or property. In a non-judicial foreclosure, a bank will sell the debtor's property at a foreclosure auction without the need to petition a court for the right to do so. Although, in a non-judicial foreclosure, the lending bank must still abide by the New Jersey statutory foreclosure process before it can re-possess and sell a debtor's home at an auction. In some bankruptcy cases, the lending bank will not attempt to re-possess or sell the debtor's home until the bankruptcy proceedings have concluded. On the other hand, many banks will immediately petition the court to remove a debtor's home from the stay of bankruptcy protection so that foreclosure proceedings can commence. In New Jersey, bankruptcy laws are very complicated, therefore it is critical that debtors seek out the advice of an experienced bankruptcy attorney to assist them with bankruptcy matters. For more information regarding, Chapter 13 bankruptcy, Chapter 7 bankruptcy, foreclosure or other consumer debt issues in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for informational purposes only and not intended to replace the advice of an attorney.

Filing Bankruptcy and the Automatic Stay: A Method for Keeping the Dragons at Bay?

For a financially overwhelmed debtor, filing a chapter 13 or chapter 7 bankruptcy petition can keep creditors at bay. Once the individual files the petition an automatic stay is ordered and becomes effective immediately upon the filing of the petition. The stay prevents all of the debtor's creditors from continuing to seek repayments on their debts until the bankruptcy proceedings are concluded. To many people in bankruptcy situations, the automatic stay provides a saving grace and permits their lives to return to some semblance of normalcy until the conclusion of the proceedings when their financial situation has been improved by the bankruptcy. In addition, once a person files for either chapter 13 or chapter 7 bankruptcy, any and all lawsuits with regards to the debtor's debts are stalled and creditors cannot seek wage garnishments from the debtor. If the debtor files for bankruptcy after creditors were awarded wage garnishment, these garnishments immediately stop and any funds that were taken from the debtor he or she has filed the bankruptcy petition must be refunded to the bankruptcy estate. Further, once a bankruptcy petition has been filed, creditors cannot communicate or attempt to contact a debtor by phone, letters, or most other means of communication. This usually comes as a huge relief to debtors who typically find that they are inundated with constant phone calls and letter correspondence from creditors seeking repayments of debts. The following are just some of the other creditor actions that must stop when a person files for bankruptcy: applications for liens against property, mortgage foreclosures, termination of utility services such as electricity and phone, tax foreclosures, repossession of property, and eviction proceedings - just to name a few. Bankruptcy laws are very complicated, therefore it is strongly advised that debtors seek out the advice of an experienced bankruptcy attorney to assist him or her with bankruptcy matters. For more information regarding Chapter 13 bankruptcy, Chapter 7 bankruptcy, foreclosure or other consumer debt issues in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for informational purposes only and not intended to replace the advice of an attorney.

No NJ Homestead Exemption in Bankruptcy But There May Be Hope

New Jersey bankruptcy exemption laws do not include an exemption for the homestead, but there may be an option for people who find themselves in this precarious predicament. In some states, debtors can protect a limitless amount of home equity from the eager hands of creditors and the bankruptcy trustee during bankruptcy proceedings. Unfortunately, New Jersey is not one of those states. There may be hope for New Jersey residents filing bankruptcy who hope to keep their homes. New Jersey permits debtors the option of choosing between state and federal exemptions during a bankruptcy. Under the allowable federal exemptions, there is a $22,975 federal homestead exemption that would be available to people in New Jersey to take advantage of. In order to qualify for this federal homestead exemption a New Jersey resident must be filing for chapter 7 bankruptcy and must choose to use the federal bankruptcy exemptions, meaning they would use all federal bankruptcy provisions and would not be able to select other new Jersey provisions that may be favorable to their bankruptcy filing for other assets. Homestead exemptions provide debtors with the opportunity to protect their home equity when in bankruptcy by exempting the debtor's home equity from the reach of the bankruptcy trustee. During the proceedings, the interested parties are not concerned with the actual value of the home, but the debtor's home equity is what becomes the focus in a homestead analysis. For instance, a debtor's home may be worth $400,000, but if he or she still owes $380,000 on the house there is only $20,000 of home equity. The homestead exemption analysis is only concerned with the home equity amount for the purposes of the bankruptcy and the exemption. Therefore, if the home equity number falls to $22,975 or below (as in the example above), the debtor can choose to use the federal bankruptcy homestead exemption and shield his or her home from the trustee. It is important to note, that the debtor should be able to maintain his or her mortgage payments on the home if they plan on keeping their home in a chapter 7 bankruptcy proceeding, notwithstanding the federal homestead exemption. This exemption does not strip off the remaining debt but simply protects equity, up to the exemption amount, from being applied to payoff of creditors claims. If you are facing foreclosure or simply overwhelmed with debt and believe bankruptcy may be a solution you should be aware the rules of bankruptcy are very complex. It is imperative that you obtain experienced counsel to review your matter and represent you in your bankruptcy filing. For more information regarding, Chapter 7 bankruptcy, Chapter 13 bankruptcy, foreclosure or other consumer debt matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for informational purposes only and not intended to replace the advice of an attorney.

Options For Chapter 13 Debtors Who Cannot Make Re-Payments

Chapter 13 debtors who cannot make their required re-payments have options to assist them from becoming delinquent. The purpose of a Chapter 13 Bankruptcy is the re-organization of debts and assets and the judicial institution of a re-payment plan to allow a debtor to remain in possession of his or her assets. Since under Chapter 13, a debtor has the opportunity to potentially keep their property and/or assets it is an attractive option for many people facing debts that they have been delinquent in paying. Unfortunately, filing a Chapter 13 Bankruptcy petition may not be feasible for everyone facing substantial debts that he or she cannot pay. The Bankruptcy Court will not allow a debtor to proceed with a Chapter 13 petition unless the debtor can provide sufficient proof to the bankruptcy trustee that he or she is earning enough of an income to cover the court's mandatory monthly re-payment amounts. If a married couple reside together, both partners have to include their income and expenses on the Chapter 13 petition, despite who actually filed the petition. Further, any other individuals who live in the same household must also include his or her income and expenses on the petition. In the event that the debtor does not have enough household income to make the monthly payments to the trustee, the trustee may allow a non-household person, such as a relative or close friend, to make income contributions to assist the debtor in making his or her required monthly payments. Typically, a trustee will require that the person who is making income contributions to the debtor sign a legal document stating his or her intent to contribute a certain amount or a certain duration of time. Additionally, the individual who is making contributions will most likely have to submit proof of his or her earnings. If you are facing or considering bankruptcy the options and obligations can become confusing very quickly. Rather than making a life-changing decision without understanding your choices, you should consult with an experienced Bankruptcy attorney to gain more information or assistance with your individual situations. For more information about Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, debt relief, consumer debt, foreclosure or other bankruptcy matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for informational purposes and in no way intended to replace the advice of an attorney.

Cram Down Or Strip Off Options For Those Beneath The Water Line in NJ

By filing for Chapter 13 bankruptcy there may be some relief to those who face this situation in the form of a process called a "cram down" or "strip off." Ultimately, these options may provide a debtor with the chance to reduce or eliminate the payments that he or she owes on their secured mortgages and eliminate liens on their homes. In today's economic climate, an increasing number of homeowners are facing the grim realization of foreclosure. For most people this is an extremely upsetting circumstance, but there are options to help people keep their homes in the face of foreclosure. A "cram down" is a process where the court may reduce certain secured debts to the market value of the collateral that secures that debt and thus reduces the amount that a debtor must repay. This sounds complicated, but consider the following example for clarification. A person buys a brand new car for $30,000, by taking out a loan for $45,000 (which includes interest) to be paid back through specified monthly repayments. After a few years, this person files for Chapter 13 bankruptcy, and still owes $30,000 for the car even though the fair market value of the car has declined to $18,000. Under a Chapter 13 repayment plan, the court could “cram down” the loan to $18,000 thus reducing the amount that the debtor has to pay back each month, thus allowing the debtor to more easily make mortgage payments for his or her home. A “cram down” is typically only available for certain secured debts such cars, furniture, jewelry, computer, and rental homes (not primary residential homes). Sometimes the mortgage balance that people owe on their residence exceeds the current market value of that home. If this is the case, it is said that the home is “under water.” Under Chapter 13, a "strip off" may be an option to modify mortgage repayment amounts by “stripping off” or discharging the balances owed on second and third mortgages and reducing the homeowner’s overall mortgage balance. To accomplish this, a court may reclassify junior mortgages from a secured debt to an unsecured debt thus allowing these debts to be completely discharged or dramatically reduced. This results in an overall reduction in the mortgage balance that needs to be repaid which could, in turn, determine whether a homeowner can keep his or her home despite the threat of foreclosure. If you are facing bankruptcy and have investments or other property to which you believe a strip off or cram down may be applicable, you should consult an experienced attorney to protect your rights. For more information regarding cram downs, strip offs, debt reduction, foreclosure or other matters relating to Bankruptcy in New Jersey visit TheNJBankruptcyAttorney. This blog is for informational purposes only and not intended to replace the advice of an attorney.

Abandonment of Property By Bankruptcy Trustee

A Bankruptcy Trustee moved to sell the property of a debtor and the debtor cross-moved to compel abandonment of the property based on the debtor's reported transfer to another. Under Section 11 U.S.C. 554(b) of the Bankruptcy Code, the court may, upon request of an interested party and notice of hearing, "order the Trustee to abandon any property of the estate that is burdensome to the estate or that is of inconsequential value and benefit." The burden is on the party seeking to compel abandonment to show the property meets the criteria for abandonment. If the burden is met, then the burden shifts to the Trustee to show that the property is of value and can be utilized to satisfy a debt of the bankruptcy estate. The debtors in the matter of In re Taggart sought abandonment on the grounds that the real property was not part of the bankruptcy estate according to Bankruptcy Code Section 541(d) and that, if the real property is deemed to be property of the bankruptcy estate, a constructive trust should be imposed in favor of the disputed buyers. The debtor, Raymond Taggart, claimed the property was transferred to his brother and sister-in-law, Dennis and Kathleen Taggart, brother and sister-in-law of the debtor, prior to filing bankruptcy. Under the law, Raymond Taggart was without rights to transfer the property without assent of the mortgage holder. The Taggart's second argument was that a constructive trust in favor of the alleged buyers, Dennis and Kathleen should be imposed post-petition. Under Section 544(a) the trustee has power to avoid any transfer by the debtor or any voidable obligation incurred by the debtor. The Taggarts could not provide evidence they were bona fide purchasers for value and had not recorded any deed transfer. At best there was an agreement of sorts between brothers and perhaps there was intent to transfer the property to Dennis upon payment in full of the mortgage. Even if transfer to Dennis upon full payment was the intent, Dennis and Kathleen could have taken steps to obtain their own mortgage on the property in order to pay off the mortgage taken by Raymond. As long as Dennis and Kathleen could not obtain a mortgage, Raymond was not unjustly enriched by their payment of the carrying costs because it could be considered rent. For the foregoing reasons, the court finds that there was no basis to impose a constructive trust and the trustee was not required to abandon the property but rather could sell it for the benefit of the unsecured creditors. The manner in which property is titled and used by the debtor can affect the treatment of such property in the event the debtor files for bankruptcy. Knowing how your assets are likely to be treated in bankruptcy often makes a critical difference in the decision of whether to file. If you are considering bankruptcy you should consult with an experienced bankruptcy attorney immediately in order to protect your rights. For more information regarding foreclosure, bankruptcy or other consumer debt matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for information purposes only and in no way is intended to replace the advice of an attorney regarding your specific matter. Our law firm is a debt relief agency and helps people file for bankruptcy relief.

Chapter 13 Cram Down and Your Residence

While a first mortgage on a primary home cannot be "crammed down," if you have a second and third mortgage a Chapter 13 bankruptcy may allow you, the homeowner, to wipe out or strip the second and third mortgages. If you are like your fellow New Jersey neighbors you may owe more on your home than your home is now worth, often referred to as being "under water" or "upside down". When the home is worth less than what is owed on the first mortgage, and you have a second and third mortgage then you may be eligible for this cram down or strip off option. The Chapter 13 "Reorganization" bankruptcy allows the homeowner to catch up on the arrears on their first mortgage over a three to five year plan thus avoiding a foreclosure. The amount owed on the second or third mortgage that is above the value of the home is classified as "unsecured debt" and is then grouped with your other unsecured debt, such as credit cards and medical bills, which is treated differently than your first mortgage under the bankruptcy laws. How much you will have to pay back on this unsecured debt will be determined during the bankruptcy procedure and then you will be required to pay back only the amount determined within the three to five years of the repayment period. Debtors must show they have the means to make the payments to be eligible for approval of a Chapter 13 bankruptcy. At a minimum, this will require employment providing a steady cash flow which may be applied to payment of outstanding debts while leaving enough for basic living expenses. If you owe more than you can pay and have a second or third mortgage, you should consult with an experienced New Jersey bankruptcy attorney immediately to protect your rights. For more information regarding bankruptcy, foreclosure, student loans or other consumer debt related matters in New Jersey visit TheNJBankruptcyAttorney.com This blog is for informational purposes only and is in no way intended to replace the advice of an attorney regarding your specific matter. Our law firm is a debt relief agency and helps people file for bankruptcy relief.

Options For Handling Credit Card Debt

Many New Jersey residents have accumulated credit card debt they can no longer afford. Whether using credit cards to make ends meet due to a temporary loss of a job, unexpected medical expenses, damages due to Hurricane Sandy or simply as a result of increased monthly expenses, if the minimum payments are not paid there are options. One one option is to speak directly to the credit card companies for a forbearance, which temporarily suspends your payments for up to a few months, or negotiate to lower the interest rate and fees or a debt settlement of a lower amount than what is owed. If the credit card debts are overwhelming or the credit card companies are unwilling to negotiate another option is to file for bankruptcy. Filing a Chapter 7 allows for the elimination of dischargeable debts so that your personal liability for that debt ends and creditors cannot seek further payment. Not all debts are dischargeable however. Filing a Chapter 13 where a reorganization plan is created allows for the elimination of dischargeable debts when payment is complete so that your personal responsibility for that debt ends upon discharge. Before filing bankruptcy, it is important to meet with experienced legal counsel to discuss whether creditors may challenge your bankruptcy petition. A creditor may challenge the discharge of the debt by filing an adversary proceeding in the bankruptcy court if they believe the debt was incurred due to fraud, because the information provided for the credit application was not incorrect, the credit limit was exceeded purposefully, the credit cards were still being used close to the bankruptcy petition being filed, the types of purchases made were for luxury items, or cash advances taken, for which they have to prove in the court. Honest use of a credit card will be defendable against a challenge and permissible for discharge either under the Chapter 7 or Chapter 13 Bankruptcy. If you have outstanding credit card debts and want to discuss your options you should consult with an experienced bankruptcy attorney immediately in order to protect your rights. For more information regarding credit card debt, bankruptcy, foreclosure, or other consumer debt related matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for informational purposes only and is in no way intended to replace the advice of an attorney regarding your specific matter. Our law firm is a debt relief agency and helps people file for bankruptcy relief. Contributed by Tracy Luciano

Reaffirmation Lets You Keep Your Car After Bankruptcy

If you have a vehicle and are filing for bankruptcy, you may want to reaffirm the lease/loan so that you can keep the vehicle. Many people hesitate on filing for bankruptcy because they do not know what will happen to their car which is their primary means of getting around. People who have continuing and steady income may have the ability to repay their debts when a repayment plan is established allowing them to retain their vehicle under a Chapter 13, referred to as a reorganization bankruptcy. When people file for Bankruptcy under Chapter 7, known as a liquidation bankruptcy, the "non-exempt" assets are liquidated and the proceeds used to pay their debts. Eligible debts which cannot be paid are then discharged. If the eligible debt is secured by a vehicle then upon discharge the creditor will get the vehicle back. The Debtor has the option however of reaffirming the lease or loan which then becomes a new contract, which cannot be withdrawn. Through reaffirmation, the debtor enters into a new contract with the creditor to make payments in exchange for retaining the vehicle. Assumption of a vehicle lease or loan may or may not be allowed by the bankruptcy court, especially if it is a lease or loan payment that is not affordable. Assumption may be beneficial under certain circumstances. If the payments on the vehicle are current and the interest rate and the monthly payments are low and affordable which may not be available if dealing with a new creditor right after a bankruptcy. If it is a lease and the purchase price of the vehicle at the end of the lease contract is reasonable then an assumption may be beneficial. However, you may be better off walking away from the unexpired lease and allowing the vehicle to be taken if the permissible amount of mileage was exceeded and you cannot afford to catch up on the missed payments. If you are thinking about filing bankruptcy you should consult with an experienced foreclosure attorney immediately in order to protect your rights. For more information regarding bankruptcy and reaffirming your vehicle loan or lease, foreclosure, or other consumer debt related matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for informational purposes only and is in no way intended to replace the advice of an attorney regarding your specific matter. Our law firm is a debt relief agency and helps people file for bankruptcy relief.

Daughter Not Liable For Student Loan Taken By Father On Her Behalf

Creditor could not hold a former student liable for repayment of a student loan applied for by the former student's father (debtor) who was obligated under his Property Settlement Agreement at the time of his divorce to pay for her college expenses. Creditor produced loan documents which listed the former student as "borrower" and her father as a "co-signor" and which creditor claimed was executed by the former student. Creditor was successful in obtaining a judgment against the former student's father. The court however found the former student's testimony credible when she testified she had not signed the loan documents or had any knowledge of the loan. Her mother's testimony corroborated her testimony and her father was unable to identify the signature on the loan documents as that of his daughter and he claimed he did not know how the signature got on the documents. The court held that the father's testimony was not believable because he prepared the loan documents. The Appellate Court in its unpublished opinion of Educap Inc. v. Davis, upheld the lower court's opinion that the former student had neither expressly nor by implication agreed to repay the loan and though she benefited from the loan by being able to go to school it was the father's sole obligation to repay the student loan which he arranged for in compliance with his obligation under his divorce agreement. To hold the former student liable for her father's debt would be inequitable. If you are having problems with creditors due to student loan debt you should consult with an experienced consumer debt attorney immediately to protect your rights. For more information regarding student loans, bankruptcy, foreclosure, or other consumer debt related matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for informational purposes only and is in no way intended to replace the advice of an attorney regarding your specific matter. Our law firm is a debt relief agency and helps people file for bankruptcy relief.

Wells Fargo Internal Procedures Unfair To Debtor?

A bank, in following its own foreclosure procedures, does not necessarily rise to the level of good faith in the eyes of the court. Bergen Assignment Judge Peter Doyne has been drafting opinions with an eye in favor of the consumer. In Wells Fargo Bank v. Schultz, the judge decided that homeowners are entitled to appropriate treatment, whether qualifying for foreclosure or not. A debtor spent the better part of a year diligently working to submit documents to avail herself of Wachovia Bank's "Unemployment Program" following the loss of employment by both the debtor and her husband. She was repeatedly advised documents she submitted were not submitted and sent multiple copies thereof. The bank further suggested the debtor apply for the federal Home Affordable Modification Program (HAMP), when she also did. When Wells Fargo sent a determination letter to the debtor indicating she had submitted all required documents she was also notified that the loan modification program for which she applied was no longer available. Although the homeowner was precluded from raising certain defenses, Judge Doyne ruled that a debtor is permitted to raise a claim of bad faith against the lender where a valid basis for such a claim exists. If you are seeking loan modification in an effort to fend off foreclosure, you should consult with an experienced consumer debt attorney immediately in order to protect your rights. For more information regarding your decision to defend against a foreclosure action, file for bankruptcy or other consumer debt matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for information purposes only and in no way is intended to replace the advice of an attorney regarding your specific matter. Our law firm is a debt relief agency and helps people file for bankruptcy relief.

Are You Contemplating Bankruptcy Due To Foreclosure?

During this troubled financial time many New Jersey homeowners find themselves facing foreclosure. Mortgage companies, in spite of the massive number of foreclosures pending, tend to remain unwilling to discuss the issues or consider modification, partial payments or other means of resolving the matter. Often the homeowners will not speak to anyone and simply try to straighten out their finances by seeking additional employment or borrowing from others. Months go by and they receive a Complaint for Foreclosure which is ignored simply because they are frozen with fear by the prospect of losing their home. Eventually, if the homeowner does not respond to the complaint, even if they do try to negotiate directly with the mortgage company, they will receive Notices regarding Default as a result of not filing an Answer to the Foreclosure Complaint. Finally, the homeowner will find themselves facing an actual Judgment of Foreclosure. In a recent case, the Court denied a litigant's request to vacate a default judgment of foreclosure against his investment property. The debtor's claim was that under New Jersey Court Rule 4:50-1 (d) the Assignee Mortgagee did not have the original Promissory Note or Mortgage so that the Judgment was invalid and that the judgment should be set aside under Rule 4:50-1(f) due to exceptional situations to prevent a grave injustice. There was no denial that the mortgage was not paid or that there was a justification for failing to make the mortgage payments or any other justification for relief from the judgment under Rule 4:50-1 such as mistake, newly discovered evidence, fraud, misrepresentation, misconduct by the Assignee Mortgagee, that the judgment was satisfied, or released. The Court found there was no demonstration of prejudice which would warrant the litigant's last ditch effort at a reprieve from the judgment of foreclosure and the decision was upheld by Appellate Division. In another matter, the Appellate Court dismissed a complaint for foreclosure because the bank failed to provide proof of its status as the lender pursuant to the requirements of New Jersey Statute 12A:3-301 or the Uniform Commercial Code (UCC) and filed to comply with the notice requirement of the Fair Foreclosure Act (FFA) and N.J.S.A. 2A:50-56. In this matter, the debtor filed an objection with the court to the Bank's Complaint for Foreclosure prior to a Judgment being granted. There are no guarantees that if a homeowner attempts to address the issue of foreclosure prior to a Judgment that a foreclosure will not result, however, there are standards that a Bank must meet including proof of service, appropriate notice and the fact that is in the actual holder of the mortgage and entitled to bring the foreclosure action. If you are facing foreclosure, you should consult with an experienced foreclosure attorney immediately in order to protect your rights. For more information regarding foreclosure, bankruptcy or other consumer debt related matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for informational purposes only and is in no way intended to replace the advice of an attorney regarding your specific matter. Our law firm is a debt relief agency and helps people file for bankruptcy relief.

Homestead Exemption in Chapter 7 Bankruptcy

A debtor sought to claim a homestead exemption for property formerly owned by his father which passed to him upon his father's death in the matter of In re Stoner. The bankruptcy Trustee objected to the exemption, filed under 11 U.S.C. Section 522(d)(1), claiming that, as the executor of his father's estate, the debtor held an interest in the property on the date of the bankruptcy filing. The Court found that qualification of a residence includes permanence. Although the debtor's father passed away prior to the filing of the bankruptcy petition, the debtor used a different address when filing and, in a later amendment to the petition 2 years after the original filing, chose to amend his address to the property for which the exemption is now being claimed. Prior to amending the petition to reflect his address as being that of the property claimed for exemption, the debtor sold the property and divided the proceeds. Further, the Court held that 11 U.S.C. Section 522(d)(1) was intended specifically for the protection of home-mortgage lenders. The Bankruptcy Court, in the case of in re Stoner, held that the mere possession of a future interest as a beneficiary to a will does not qualify a debtor to claim a property under the homestead exemption. If you are considering filing for bankruptcy you will be addressing many issues such as exemptions and whether you qualify for same. You should consult with an experienced bankruptcy attorney immediately in order to protect your rights. For more information regarding bankruptcy, exemptions, foreclosure and other consumer debt matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for information purposes only and in no way is intended to replace the advice of an attorney regarding your specific matter. Our law firm is a debt relief agency and helps people file for bankruptcy relief.

Can Credit Cards Be Used To Pay Bankruptcy Attorney's Fees?

Bankruptcy attorneys fees depend on the type of bankruptcy being filed, whether it be Chapter 7, 13 or 11 for businesses, plus there are filing fees charged by the Bankruptcy Court. Many of our potential clients, known as "debtors" ask if they can put the fees on their credit card. The fees cannot be put on the debtors' credit card and it is best if all credit card use is stopped because non-essential transactions which appear on credit cards within two years of filing for bankruptcy are highly scrutinized. In some cases the filing fees may be waived for hardship or allowed to be paid in installments. It is critical that you do not violate the bankruptcy code when filing your petition. If you are considering bankruptcy you should consult with an experienced bankruptcy attorney immediately in order to protect your rights. For more information regarding foreclosure, bankruptcy or other consumer debt matters in New Jersey visit www.TheNJBankruptcyAttorney.com. This blog is for information purposes only and in no way is intended to replace the advice of an attorney regarding your specific matter. Our law firm is a debt relief agency and helps people file for bankruptcy relief. Contributed by Tracy Luciano

Can Gambling Debt Be Discharged Through Bankruptcy?

Those who find themselves in financial trouble are often unaware that debts associated with gambling can be eliminated in a bankruptcy. While New Jerseyians have received certain benefits such as generating revenue for the Schools, from offering widespread gambling opportunities such as lotteries, racetracks, and casinos, it also has created some pitfalls. New Jerseyians often find themselves with unpaid gambling debts especially when they are provided with cash advances and extended unsecured lines of credit, which they cannot afford to pay back. The Bankruptcy Code does allow for the discharge of certain legal gambling debts. This is dependent on other factors in the debtors case, such as levels of income, monthly living expenses, other debts, and the bankruptcy chapter you qualify for. We can help you discover if you are eligible to discharge any gambling debt as well as your other debts that you are struggling to repay. To determine whether your gambling debts are dischargeable, as well as any other debts you are facing, you should consult with an experienced bankruptcy attorney immediately in order to protect your rights. For more information regarding foreclosure, bankruptcy or other consumer debt matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for information purposes only and in no way is intended to replace the advice of an attorney regarding your specific matter. Our law firm is a debt relief agency and helps people file for bankruptcy relief. Contributed by Tracy Luciano

Blocking a Chapter 7 Discharge

A woman claiming misrepresentation by a construction company filed a complaint seeking to block entry of a Chapter 7 discharge. The appeal was dismissed for failure to comply with Federal Rule of Bankruptcy Procedure 8006 and the woman sought reconsideration of the dismissal. The woman attempting to block the discharge, Filomena Boccella commenced an adversary proceeding pro se against the debtor based on claims grounded in consumer fraud and theft by deception. At the last minute, the Boccella sought to amend her complaint in order to avoid dismissal. Boccella’s opposition to the discharge was based on the fraud portions of 11 U.S.C. § 727(c), (d),(e) but her allegations were more aligned with 11 U.S.C. § 523(a)(2). Due to Boccella’s ineffective pursuit of the matter her case was dismissed, as was her appeal for failure to comply with Federal Rule of Bankruptcy Procedure 8006. In reviewing the motion for reconsideration of the dismissal the court, in In re Purington, looked to the matter of Poulis v. State Farm Fire & Cas. Co.,747 F.2d 863, 868 (3d Cir. 1984) where the court set forth 6 factors which must be considered in deciding whether a case may be dismissed without a hearing on the merits. The Poulis factors included (1) the extent of the party's personal responsibility; (2) the prejudice to the adversary caused by the failure to meet scheduling orders and respond to discovery; (3) a history of intentional delay by the party; (4) whether the conduct of the party or the attorney was willful or in bad faith; (5) whether other sanctions, short of dismissal, are more appropriate and curative; and (6) the meritoriousness of the claim or defense. Upon consideration, the court found dismissal of Bocella’s motion for reconsideration was inappropriate and reinstated her appeal. If you have been carrying the burden of IRS or other substantial debt, you can also obtain relief through bankruptcy. If you are considering bankruptcy you should consult with an experienced bankruptcy attorney immediately in order to protect your rights. For more information regarding foreclosure, bankruptcy or other consumer debt matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for information purposes only and in no way is intended to replace the advice of an attorney regarding your specific matter. Our law firm is a debt relief agency and helps people file for bankruptcy relief.

IRS Fraud is Likely Reason to Vacate Bankruptcy Order

IRS debt is a reason for many bankruptcy filings. Although bankruptcy can permit debtors to escape massive tax debt, if the IRS discovers the debtor willfully failed to pay the debt, misrepresented income or expenses or otherwise attempted to defraud the Internal Revenue Service, it is highly likely that the debt will not be avoided. Additionally, if IRS debt is expunged, reduced or modified and the IRS learns of fraud relating to the debt there will likely be a dispute as to the dischargeability of the debt and any reduction or modification. In the recent matter of In re Clemente, the United States filed a motion for reconsideration of the order permitting the Chapter 7 trustee to expunge, reduce and modify 2 proofs of claims. The court found that the debtor did willfully refuse to pay taxes due and also levied penalties and interest. The order to expunge and reduce the claim of the IRS was vacated as the priority claim was nondischargeable. If you have been carrying the burden of IRS or other substantial debt, you can also obtain relief through bankruptcy. If you are considering bankruptcy you should consult with an experienced bankruptcy attorney immediately in order to protect your rights. For more information regarding foreclosure, bankruptcy or other consumer debt matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for information purposes only and in no way is intended to replace the advice of an attorney regarding your specific matter. Our law firm is a debt relief agency and helps people file for bankruptcy relief.

Dionne Warwick Seeks IRS Relief Through Chapter 7 Filing

Singer Dionne Warwick's affiliation with the Psychic Friends Network provided her with no known warning of her future bankruptcy or the need to cut back on her spending. Dionne Warwick filed a Chapter 7 bankruptcy petition in March 2013 stating her income and expenses to be equal at $21,000 per month and leaving her with nothing to pay outstanding debts. Dionne Warwick's stated expenses may have been substantial but, based on her outstanding unpaid tax burden of approximately $10,000,000 they were not substantially deductible. Dionne Warwick owes $7,000,000 to the Internal Revenue Service which accumulated from 1991 to 1999. There is a potential dispute as to the portion of this debt attributable to penalties and interest. IRS debts are dischargeable in the event the debtor meets all of the following criteria: 1) the taxes are only income taxes; 2) the debtor properly filed all returns; 3) the debtor did not attempt to evade payment of the taxes; 4) the debt is at least 3 years old; and 5) the debt was assessed at least 240 days before the debtor files the bankruptcy petition or was not yet assessed. Representatives for Dionne Warwick say she filed all returns and paid the debt leaving only interest and penalties to make up the $10,000,000 outstanding debt. If this is true, because of the age of the delinquent taxes, Dionne Warwick will likely find herself free of this substantial debt she has carried since 1999. If you have been carrying the burden of IRS or other substantial debt, you can also obtain relief through bankruptcy. If you are considering bankruptcy you should consult with an experienced bankruptcy attorney immediately in order to protect your rights. For more information regarding foreclosure, bankruptcy or other consumer debt matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for information purposes only and in no way is intended to replace the advice of an attorney regarding your specific matter. Our law firm is a debt relief agency and helps people file for bankruptcy relief.

FDCPA Offers Protection From Harassing Creditors

The Federal Trade Commission released a study on January 30, 2013, discussing the shady actions harassing creditors take to unfairly collect debts. Many of these debts are usually from credit cards and can be discharged if the debtor files a Chapter 7 bankruptcy. The FTC found that debt buyers, usually collection agencies or law firms who have bought the debt from the original creditor, often lack basic information about the debt they are trying to collect. Many times they do not even know if the debt is valid, whether the consumer has disputed the debt or even when the statute of limitations has run on the debt. The FTC requires that creditors have a reasonable basis for believing a debtor lawfully owes the debt they are trying to collect on, yet some creditors cannot even establish that much when they file judgments against debtors! The FTC concluded that the Fair Debt Collections Practices Act (FDCPA) should be updated to better protect debtors from unscrupulous debt collectors. In the meantime, if you are considering filing for bankruptcy and are receiving harassing communications from creditors who may not even have a legitimate claim against you, remember filing for bankruptcy will stop the harassment and allow you time to scrutinize your debts. If you are considering filing for bankruptcy you will be addressing many issues concerning protection from creditors and should consult with an experienced bankruptcy attorney immediately in order to protect your rights. For more information on how to protect yourself from creditors, foreclosure, other consumer debt or bankruptcy law matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for information purposes only and in no way is intended to replace the advice of an attorney regarding your specific matter. We are a Debt Relief Agency. We help people file for bankruptcy relief.

FDCPA Provides For 30-Day Dispute Period

In a recent consumer debt matter Stokes v. Transworld Systems Inc., an individual, Pamela Stokes, brought a class action suit against Defendant Transworld Systems, Inc. (TSI) for claimed violations of the Fair Debt Collection Practices Act (FDCPA) following her receipt of collection letters she received. Stokes claimed that reference to the 30 day FDCPA dispute period in a second collection letter and reference to a legitimate debt in a third collection letter were misleading and deceptive and would confuse the "lease sophisticated consumer" about how to dispute the validity of the alleged debt. The first letter from TSI set forth an amount due and informed Stokes of a 30 day notice to dispute the debt and how to do so. The second letter explained that, if the debt was not disputed within the 30 day dispute period set forth by the FDCPA, it would be assumed valid and collection efforts would continue. After the 30 day FDCPA dispute period expired, Stokes attorney sent a letter via facsimile, certified and regular mail pursuant to 15 U.S.C. 1592c(c) demanding TSI cease and desist all collection efforts immediately, cease direct communications with Stokes, disputing the debt, demanding verification of the debt and the name and address of the original creditor. The following day, TSI sent a letter directly to Stokes seeking payment in order to avoid transfer of the matter to telephone collectors. The purpose of the FDCPA is to protect consumers by eliminating abusive practices by debt collectors, protect debt collectors using legal collection methods. The courts, in effecting the acts intent, have reviewed the creditors' actions under the "least sophisticated debtor" perspective. Communication is deceptive within the FDCPA if it can reasonably be read with 2 or more different meanings and one would be considered inaccurate. The primary question in determining FDCPA violations is whether the "notice fails to convey the required information clearly and effectively and thereby makes the least sophisticated consumer uncertain as to the meaning of the message" Weiss v. Zwicker, 664 F. Supp. 2d 214, 216 (E.D.N.Y. 2009) Not every letter sent from a debt collector within the 30 day dispute period violates the Act. A follow-up letter need not restate the rights set forth in the initial validation notice, nor must it set forth the expiration date of the 30 day dispute period. Simply put, follow-up letters must not confuse the least sophisticated debtor as to their rights under the FDCPA. Therefore, the actions of TSI were held to be valid and Stokes matter was dismissed. If you are facing mounting debt or believe a debt collector is pursuing you inappropriately, you should consult with an experienced bankruptcy attorney immediately in order to protect your rights. For more information regarding how the FDCPA can protect you from harassment and unfair collection practices or for information regarding bankruptcy, foreclosure or other consumer debt matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for information purposes only and in no way is intended to replace the advice of an attorney regarding your specific matter. We are a Debt Relief Agency. We help people file for bankruptcy relief.

Chapter 13 Plan Disturbed for Want of Service

In a Chapter 13 bankruptcy, the bankruptcy court granted a debtor's unopposed motion ordering the IRS to release a levy and return the debtor's funds. The IRS was also ordered to pay the debtor's attorney fees, costs and actual damages. The United States sought to vacate the order and allow the IRS to retain the levy and debtor's funds based on the court's lack of jurisdiction over the United States and its agencies. The United States argument was grounded in the debtor's failure to provide proper notice of the debtor's motion to the clerk for the U.S. attorney for the district of New Jersey or the attorney general in Washington, D.C. Under Federal Rule of Bankruptcy Procedure 7004. Bankr. R. 7004(4) includes, in pertinent part, that service "upon the United States is effected by mailing a copy of the summons and complaint to the civil process clerk at the office of the United States attorney for the district in which the action is brought and by mailing a copy of the summons and complaint to the Attorney General of the United States at Washington, District of Columbia…" Although the premise behind bankruptcy discharges and confirmation of plans is the provision of a clean slate and a fresh start for the debtor without the need to worry about prior creditors returning, debts may not discharged if the debtor was not properly noticed of the bankruptcy. Under Federal Rule of Bankruptcy Procedure 9024, Federal Rule of Civil Procedure 60(b)(4) operates to allow relief from a judgment or order for failure to properly notice the creditor in a Chapter 13 bankruptcy. If you are considering bankruptcy you should consult with an experienced bankruptcy attorney immediately in order to protect your rights. For more information regarding foreclosure, bankruptcy or other consumer debt matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for information purposes only and in no way is intended to replace the advice of an attorney regarding your specific matter. Our law firm is a debt relief agency and helps people file for bankruptcy relief.

Abandonment Not Automatically Revoked by Reopening Case

In the event an asset is abandoned by a Chapter 7 trustee, the abandonment is not automatically revoked by the Trustee's reopening of the bankruptcy action. In the case of In re Reilly, the bankruptcy trustee appealed the abandonment of a Tevis claim by the trustee during a prior bankruptcy proceeding. The bankruptcy court ruled that a technical abandonment is irrevocable, in the same manner as if a notice of abandonment was filed. The practice of reopening bankruptcy when closed would have the opposite effect of the intent of bankruptcy which is to close all matters and give the debtor a fresh start following the most equitable distribution possible to the creditors. On appeal, the Appellate Court ruled that there is no automatic revocation of abandonment in the event a bankruptcy is reopened. The Appellate Court decided that Federal Rule of Civil Procedure 60(b) must be applied to determine whether to revoke a technical abandonment and remanded the case for consideration of the rule. Under F.R.C.P.60(b), grounds for relief from a judgment, order or proceeding may stem from: (1) mistake, inadvertence, surprise or excusable neglect; (2) newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud, misrepresentation, or misconduct by an opposing party; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable; or (6) any other reason that justifies relief. It is critical that the bankruptcy trustee consider all matters in order to ensure that the debtor receives a final discharge and obtains the true value of the fresh start they seek. If you are considering bankruptcy you should consult with an experienced bankruptcy attorney immediately in order to protect your rights. For more information regarding foreclosure, bankruptcy or other consumer debt matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for information purposes only and in no way is intended to replace the advice of an attorney regarding your specific matter. Our law firm is a debt relief agency and helps people file for bankruptcy relief.

Avoiding A Foreclosure Sale With Bankruptcy

Bankruptcy offers an automatic stay which can assist a home owner in advance of a foreclosure and sheriff's sale. The Chapter 13 filer and the Chapter 7 filer can both obtain foreclosure relief in this manner. The debtor must be aware of when a filing will help and should not wait until the sheriff's sale to take advantage of this protection. When the debtor in US Bank National Association v. Rodriguez attempted to utilize bankruptcy after the fact to avoid a sheriff's sale the judge ruled that the time for Defendant to act had long expired and debtor's lack of action until the 11th hour would not be permitted to work and injustice against the bank. The debtor failed to enter the foreclosure action, in spite of proper notice from the bank, and a default judgment in foreclosure was entered in 2009. Only upon learning the sheriff's sale was looming did the debtor act but the only action taken was to utilize all adjournments of the sheriff's sale available by law and attempt to induce the bank to modify the loan. Finally, after the sheriff's sale took place, the debtor filed bankruptcy in an effort to vacate the sheriff's sale. An automatic stay will not permit you to stay in your home forever or strip the mortgage from a primary residence but it will give you the breathing room you need to review the different options available to you as a bankruptcy filer. If you are facing foreclosure you should consult with an experienced consumer debt protection attorney immediately in order to protect your rights. For more information regarding foreclosure, bankruptcy or other consumer debt matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for information purposes only and in no way is intended to replace the advice of an attorney regarding your specific matter. Our law firm is a debt relief agency and helps people file for bankruptcy relief.

You Occupation Can Be Used Against You in Foreclosure

In the matter of Salierno v. Kosky, the debtor was penalized in a foreclosure action as a result of knowledge he was assumed to have from an external source. In the above foreclosure matter, a loan was made to the debtors which was secured by mortgages properties in Mahwah, NJ. One on a property which Barbara Kosky owned and resided in and another on a property on which Daniel Kosky owned and resided in. When the debtors defaulted, plaintiff filed a complaint in foreclosure. The debtors filed a motion to dismiss the complaint because the properties secured by the mortgages are residential and, therefore, protected under the Fair Foreclosure Act (FFA). The FFA requires strict notice requirements for mortgages on properties used as the debtor's primary residence. The court held that, although the required notice of intent to foreclose was not sent to the debtors prior to the filing of the foreclosure action, the foreclosure action need not be dismissed because Daniel Kosky was formerly employed as a bank executive and should have known the rights of lenders and borrowers in a foreclosure action. If you are facing foreclosure, considering bankruptcy or trying to deal with overwhelming debt, you should seek experienced legal counsel immediately in order to protect your rights. For more information on foreclosure, bankruptcy or other consumer debt related matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for informational purposes only and in no way intended to replace the advice of an attorney regarding your specific matter.

NJ Offers Choice of State or Federal Exemptions

Under the bankruptcy laws of New Jersey, a debtor may elect using either New Jersey or Federal bankruptcy exemptions. When you file Chapter 7 bankruptcies, non-exempt property you own will usually be used by Trustee to pay off your creditors. Under Chapter 13 bankruptcy, a Trustee will usually require you to pay any amount owed to creditors on the value of your property that is not exempt. Properties qualifying for exemption vary between State and Federal law, which has its own set of exemptions. Although New Jersey allows you to choose between Federal and New Jersey State exemptions,you cannot mix and match between the two. Deciding whether State or Federal exemptions are more beneficial to you largely depends on your situation. For instance, if you want to try and save your home, federal exemptions may be better for you as you are allowed to exempt over $20,000 of equity in your home (over $40,000 for a married couple filing jointly). Both State and Federal exemptions include specific values you may exclude in your automobiles, clothing, pensions and insurance, to name a few If you are considering filing for bankruptcy you will be addressing many issues concerning which set of exemptions to choose from and should consult with an experienced bankruptcy attorney immediately in order to protect your rights. For more information regarding which set of bankruptcy exemptions to choose from, foreclosure, consumer debt or other bankruptcy law matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for information purposes only and in no way is intended to replace the advice of an attorney regarding your specific matter. We are a Debt Relief Agency. We help people file for bankruptcy relief.

Protecting Your Home in Bankruptcy

If you are a homeowner and thinking about filing for bankruptcy, there are many factors which you must take into consideration in order to protect your home. When you file for bankruptcy, you must inform the bankruptcy Trustee of all the assets you own, including your home. Assets which are not exempt will be used by the Trustee to pay off your creditors. Under New Jersey law, there is no homestead exemption; only a non-debtor spouse’s survivorship interest in the home is spared. However, under Federal law an individual is allowed to exempt $21,625, of equity in their home, $43,250 for a married couple filing jointly. If you have more equity in your home than what is allowed to be exempt, a Trustee could force the sale of your home to pay your creditors. If that is the case, you should look to remove second and third mortgages on your home or even look into trying to file a Chapter 13 bankruptcy. If you are considering filing for bankruptcy you will be addressing many issues concerning your home, and should consult with an experienced bankruptcy attorney immediately in order to protect your rights. For more information regarding how to protect your home during a bankruptcy, foreclosure, consumer debt or other bankruptcy law matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for information purposes only and in no way is intended to replace the advice of an attorney regarding your specific matter. We are a Debt Relief Agency. We help people file for bankruptcy relief.

Effect of Bankruptcy On Your Credit Score

Filing for bankruptcy will be reported on a person’s credit report and will have an impact on their credit rating. However, it may not be nearly as bad as they think and could even improve their score. Once someone’s bankruptcy is processed and reported on their credit score, it will unfortunately be listed for 7 years if it was a Chapter 13 bankruptcy and up to 10 years if it was a Chapter 7 or 11. This will negatively impact their score if prior to the bankruptcy they had a stellar credit score to begin with. However, the fact is many people who file bankruptcy do so because they are unable to make on time payments to their creditors in the first place and already have taken many negative hits on their credit report. As such, their credit score has already been negatively affected and filing for bankruptcy will not actually lower it significantly . In fact, depending on the amount of bad debt the person has, filing for bankruptcy could even make their credit score better as bankruptcy wipes clean all of the person’s dischargeable debts, leaving a better credit score despite having a bankruptcy listed on their credit report. If you are considering filing for bankruptcy you will be addressing many issues concerning your credit score and should consult with an experienced bankruptcy attorney immediately in order to protect your rights. For more information regarding your credit score, bankruptcy, foreclosure or consumer debt matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for information purposes only and in no way is intended to replace the advice of an attorney regarding your specific matter. We are a Debt Relief Agency. We help people file for bankruptcy relief.

Discharge All Your Debt to Protect Your Future Credit by Disclosing All Debts in Bankruptcy Filing

One of the most obvious benefits of filing for bankruptcy is having your debts discharged and one of the most common concerns is the effect of bankruptcy on your credit score. When your debts are discharged, you no longer have to repay the debt and your creditors lose the right to seek repayment. In order to successfully discharge your debts, however, you must be extremely cautious when preparing your petition as you will need to satisfy the scrutiny of both the court appointed trustee and judge who are assigned to your case. It is required that you provide information about each creditor and details regarding each debt. Failure to disclose essential information could lead to painful consequences such as the debt not being discharged. For example, a U.S. Bankruptcy judge in Newark recently refused to discharge a person’s $40 million debt when he failed to keep records required by the Bankruptcy code and grossly impaired the ability of the assigned trustee to perform his duties. Filing for bankruptcy certainly hurts your credit score in the short term, but at least it will allow you to start fresh by eliminating your debts. Not filing properly could lead to a bankruptcy filing which leaves you with serious debts a damaged credit report, so it is imperative to disclose accurate information when filing. If you are considering filing for bankruptcy you will be addressing many issues concerning discharging your debts and should consult with an experienced bankruptcy attorney immediately in order to protect your rights. For more information regarding discharging your debts, Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, foreclosure, consumer debt, credit card debt or debt related matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for information purposes only and in no way is intended to replace the advice of an attorney regarding your specific matter. We are a Debt Relief Agency. We help people file for bankruptcy relief.

Chapter 13 vs. Chapter 11 Bankruptcy

The differences between filing a Chapter 13 or Chapter 11 bankruptcy are very important to understand as the law has specific requirements for each. Although the underlying purpose of both Chapters is to reorganize and eliminate debts, one is usually better suited than the other for each case. For instance, it is important to understand before filing that only individuals and sole proprietorships can file Chapter 13 bankruptcy whereas types of business excluded from Chapter 13, such as corporations and partnerships, and individuals can file Chapter 11. In addition, it is important to note that individuals who file for Chapter 13 must not have more than $360,475 in unsecured debt and $1,081,400 in unsecured debt, whereas Chapter 11 has none of these requirements. Because there is no cap on the amount of debt the debtor has in a Chapter 11 filing, it is usually a more complicated process as debtors filing under Chapter 11 have more debts and creditors that need to be considered by the Bankruptcy Court. If you are considering filing for bankruptcy you will be addressing many issues what type of bankruptcy you should file and should consult with an experienced bankruptcy attorney immediately in order to protect your rights. For more information regarding the type of bankruptcy you should file or other bankruptcy, foreclosure or consumer debt law matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for information purposes only and in no way is intended to replace the advice of an attorney regarding your specific matter. We are a Debt Relief Agency. We help people file for bankruptcy relief.

Bankruptcy and Foreclosure

If your bank has threatened you with foreclosure or has already begun the process of foreclosing on your home, bankruptcy could provide you with an opportunity to save your home. Upon filing your petition for bankruptcy, you will receive what the courts call an “automatic stay”. This means that creditors will not be able to contact you, attempt to collect any debt you owe them and will stop foreclosure efforts against your home. However, banks usually file a motion to lift the automatic stay and seek to proceed with the foreclosure, but it will take some time before a judge grants their motion. If you have multiple mortgages and are seeking to save your home, you should consider filing for Chapter 13 bankruptcy which could allow you to remove your second and third mortgages. This will occur if the value of your home is worth less than what you owe on your first mortgage. You will still be liable to the bank holding your first mortgage, but by stripping off your second and third mortgage, you could substantially reduce your monthly payments, leaving you with the extra cash necessary to save your home. If you are considering filing for bankruptcy you will be addressing many issues concerning foreclosure and should consult with an experienced bankruptcy attorney immediately in order to protect your rights. For more information regarding consumer debt, bankruptcy and foreclosure or other bankruptcy law matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for information purposes only and in no way is intended to replace the advice of an attorney regarding your specific matter. We are a Debt Relief Agency. We help people file for bankruptcy relief.

What Not to Do Before Filing Bankruptcy

What Not to Do Before Filing Bankruptcy Before filing for bankruptcy, you should beware of how you manage your finances as you may make some mistakes which will hold up your case, prevent debts from being discharged or even get yourself fined. Filer Beware You must keep in mind that when you file Chapter 7 or 13 bankruptcy, the court appoints a “trustee” who will scrutinize the petition and documents you submit to make sure you are not abusing the system. If the trustee approves of your filings, he will recommend it to a judge to be finalized. However, if the trustee does not approve it, he will inquire into your finances and you will have some explaining to do. What to Avoid A trustee may not recommend a petition for bankruptcy for a number of reasons; here are a few of them. If you make a big purchase like buying a 60” flat screen television or go on a lengthy vacation to Italy three months prior to filing for bankruptcy, the trustee may view this as your attempt to defraud your creditors of any remaining money you have and will not discharge your debts. Similarly, taking a cash advance on a credit card and then trying to discharge your bill in court will be seen as fraud and will prevent the card from being discharged and could lead to fines. Also, be weary of making “preferential payments” to creditors such as family and friends. Preferential payments are payments that give more money to creditors than they would have otherwise received through bankruptcy. The court will question why you gave them excess money yet are leaving other creditors with less or nothing. Again, the court views this as fraudulent and will lead to problems for your bankruptcy. If you are considering filing for bankruptcy you will be addressing many issues concerning what to avoid doing before filing for bankruptcy and should consult with an experienced bankruptcy attorney immediately in order to protect your rights. For more information regarding what to avoid when filing for bankruptcy or other bankruptcy law matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for information purposes only and in no way is intended to replace the advice of an attorney regarding your specific matter. We are a Debt Relief Agency. We help people file for bankruptcy relief.

Celebrity Bankruptcies

Some would hesitate to file bankruptcy, believing it would be a shameful or immoral thing to do. It is certainly ideal to be independent and able to work ones own way out of financial trouble without the need of having to file bankruptcy. However, life throws many unexpected obstacles in our way. Sometimes the only way to recover from them is to make the decision to go ahead and file for bankruptcy. Even the rich and famous among us have had to declare bankruptcy in order to move forward to stardom or simply to get their life back on track. Walt Disney Walt Disney, prior to making some of the best known movies of all-time, owned an animation company called Laugh-O-Gram Studios. Laugh-O-Gram Studios had to declare bankruptcy due to its financial backer having gone out of business. After moving to California he ultimately created the Walt Disney Company and lead it to be one of the biggest entertainment companies in the world. Elton John Although at one time he was worth over $260 million, superstar musician Elton John declared bankruptcy. John's bankruptcy was necessitated by his having spent an estimated $2 million a month to support his extravagant lifestyle. In fact, BBC reported that his credit card bills alone averaged an estimated $400,000 a month! Larry King Talk-show host Larry King fell into debt over $350,000 after having been arrested for grand larceny and losing his job. Shortly after declaring bankruptcy, King began his late-night talk show which ultimately lead to his televised show on CNN. As the examples show, bankruptcy is not the end of the world. In reality, bankruptcy provides a fresh start and the ability to get ones life back on track and, if you play your cards right, you may just end up with your own famous success story. If you are considering filing for bankruptcy you will be addressing many issues concerning your decision to file bankruptcy and should consult with an experienced bankruptcy attorney immediately in order to protect your rights. For more information regarding your decision to file for bankruptcy or other bankruptcy law matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for information purposes only and in no way is intended to replace the advice of an attorney regarding your specific matter. Our law firm is a debt relief agency and helps people file for bankruptcy relief.

Relief for Real Estate Investors

If you are an investor who fell victim to the real estate market crash, you can reduce your investment property mortgage and interest. If your property is “under water” or “upside down”, you may be able to limit the amount you must repay to the amount the property is appraised at presently, rather than the inflated price you paid when the market was artificially inflated. Not only will investors benefit from the reduced principal but will also benefit from paying a reduced interest rate, typically the prime rate plus 1-3%. Unlike the continued liability for any deficiency in a short-sale, there is no continued liability for the principal reduction when using this cram down method, even if the property is later foreclosed on. This opportunity exists through Chapter 13 bankruptcy. For more information on Chapter 13 Bankruptcy, Chapter 7 Bankruptcy, foreclosure or consumer debt issues visit TheNJBankruptcyAttorney.com. This blog is for informational purposes only and in no way intended to replace the advice of an attorney regarding your specific matter.

Deductions That Spell Trouble For Small Business Owner Seeking Chapter 7 Bankruptcy

In a Chapter 7 Bankruptcy matter, the IRS may challenge the amount of taxes due when a debtor seeks to eliminate IRS debt through the bankruptcy. The IRS is likely to challenge certain deductions taken by the debtor against small business income. The first hurdle in an IRS challenge to small business expenses is proof that the purchases you are seeking to deduct were actually made according to IRC Section 274. Two areas the IRS will question, even though allowable with appropriate documentation are gifts and wages to a spouse, child or other relative they claim to employ. In the case of such wages, the business owner must issue W-2’s or 1099’s for the wages paid or included as business expenses. A business owner is also prohibited from deducting wages paid to herself. Credit card interest is allowable only if the card is limited solely to use for business charges. If it is determined the credit was utilized for household or personal items of the business owner, the interest on the cards will not be deductible. Some deductions you absolutely may not take are dues for social, athletic, vacation and lunch clubs, charitable contributions, donations to political causes, penalties and fines to government agencies, personal expenses for yourself, family or home or repairs that add value to your business property or extend the life of the property. Some deductions are allowable but the IRS may still require proof that the expenses are legitimate in order to eliminate IRS debt through Chapter 7 bankruptcy. Allowable deductions include business travel, use of your car for business, business meals and entertainment, education pertaining to your trade, tools and supplies. If you are considering Chapter 7 Bankruptcy and have substantial IRS debt, you should seek experienced legal counsel immediately in order to fully protect your rights. For more information on foreclosure, bankruptcy or other consumer debt related matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for informational purposes only and in no way intended to replace the advice of an attorney regarding your specific matter.

Eliminating IRS Debt Through Chapter 7 Bankruptcy

Many times a debtor will have a substantial income which results in a tax liability to the IRS, even though their income is still not enough to satisfy the repayment of their debts. When filing a Chapter 7 Bankruptcy it is critical that all the debtor’s debts are discharged or they will be in a very difficult position after bankruptcy. It is possible to eliminate all delinquent taxes in a Chapter 7 Bankruptcy. In order to eliminate the debts you must meet certain criteria including: 1) The tax liability must be at least 3 years old to be eliminated. 2) You must have filed your returns. If you filed for extensions it may make you unable to eliminate the delinquent taxes. 3) The IRS has not filed an assessment against you in the last 240 days. In spite of the above, if you tried to hide from the IRS, you may face a challenge to the discharge. The IRS is very patient, unless you try to avoid them. If this happens, you may still obtain a Chapter 7 Bankruptcy but the substantial IRS debt may remain as a burden you will have to repay. If you are considering Chapter 7 Bankruptcy and have substantial IRS debt, you should seek experienced legal counsel immediately in order to fully protect your rights. For more information on foreclosure, bankruptcy or other consumer debt related matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for informational purposes only and in no way intended to replace the advice of an attorney regarding your specific matter.

Bankruptcy Offers Protection From Harassing Creditors

It is very easy for a person who faces some misfortune to fall behind on their debts whether they have lost their job, have gone through a divorce, became seriously ill or injured, or have fallen on hard times for any number of reasons. Despite a person’s change in circumstances, their debt is fixed and creditors can be merciless in their attempts to have their clients repay them. Receiving constant phone calls, letters in the mail, and court notices from creditors can become oppressive and put a serious strain on person’s life. If an individual does not have enough money to satisfy all his creditors and is stuck beneath crushing debt, bankruptcy is an option which can provide relief from harassing creditors and can offer them a fresh start to regain control of their life. One way filing for bankruptcy can provide much needed relief for a person being harassed by creditors is through what is known as the “automatic stay” provision. This bankruptcy provision prevents creditors from taking any collection actions against a person who has filed for bankruptcy while their bankruptcy matter is pending. This provides someone who has filed for bankruptcy much needed peace of mind and relief while they begin the process of getting back on their feet. If you are considering filing for bankruptcy you will be addressing many issues concerning how to resolve your debt with creditors and should consult with an experienced bankruptcy attorney immediately in order to protect your rights. For more information regarding obtaining relief from harassing creditors or other bankruptcy, consumer debt or foreclosure matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for information purposes only and in no way is intended to replace the advice of an attorney regarding your specific matter.

Bankruptcy Filer and Spouse: Liability of Joint Debts

When filing for bankruptcy, a debtor must resolve any issues relating to marital debts and assets, especially if a divorce is being contemplated or already has been finalized. Even if a debtor receives a discharge of his debts in bankruptcy court, the debtor’s spouse may still be liable for jointly incurred debts. For instance, how a jointly held credit card in both the debtor and his spouse’s name is to be paid off could become a serious issue. If the debtor files for bankruptcy and he receives a discharge for the credit card debt he incurred with his co-debtor spouse, this would likely only relieve him of the obligation he owes to the credit card company. Since the liability a debtor owes to most credit card companies is “joint and severable”, the co-debtor spouse will be left owing all of the debt to the credit card company. This may not be the case if the parties have been divorced prior to the debtor filing for bankruptcy. Generally, when a married couple divorces a property settlement is entered before a court and it outlines how the marital debts are to be paid off by the respective parties. This has the same affect as a judgment being entered against the debtor by any other creditor and could make an otherwise dischargeable debt non-dischargeable. If the property settlement is silent on the matter, resolving how the debt is to be paid off could be very difficult. If you are considering filing for bankruptcy you will be addressing many issues concerning the dischargeablity of your debts and should consult with an experienced bankruptcy attorney immediately in order to protect your rights. If you are considering bankruptcy or divorce you should seek experienced legal counsel immediately in order to fully protect your rights. For more information on foreclosure, bankruptcy or other consumer debt related matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for informational purposes only and in no way intended to replace the advice of an attorney regarding your specific matter.

Charging Debt Purchaser With Consumer Fraud Requires Obvious Fraud By Initial Creditor

A consumer charged American Honda Finance Corp. with violations of the NJ Consumer Fraud Act, NJ Truth in Consumer Contract, Warranty and Notice Act and the Federal Truth in Lending Act when the consumer failed to make payments and Honda attempted to enforce the debt. Honda purchased the debt from and was not the originator of the loan. When the consumer made application for the loan, she was charged a “credit inquiry fee” and, when the suit was filed by Honda, claimed the “credit inquiry fee” was improperly excluded from the finance charge as an “application fee.” The consumer’s claim was that the inclusion of the “credit inquiry fee” incorrectly in the total amount financed instead of the finance charges increased her costs of borrowing money and was fraudulent. The court held that, as the manner in which the fee was charged when the consumer made application was not obvious to subsequent purchasers of the debt. Therefore, Honda, as a subsequent purchaser, could not be charged with violations of the NJ Consumer Fraud Act, NJ Truth in Consumer Contract, Warranty and Notice Act and the Federal Truth in Lending Act on the basis of the fee. If you believe a creditor violated your rights under the Consumer Fraud Act, you should seek experienced legal counsel immediately in order to fully protect your rights. For more information on foreclosure, bankruptcy or other consumer debt related matters in New Jersey visit TheNJBankruptcyAttorney.com. This blog is for informational purposes only and in no way intended to replace the advice of an attorney regarding your specific matter.