Robert Manchel

Explain The New Jersey Chapter 7 Bankruptcy Case Hearing

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Attorney Explains The New Jersey Chapter 7 Bankruptcy Case Hearing.

There is one required hearing for a chapter 7 bankruptcy case that is filed in New Jersey. The hearing is called the “Meeting of Creditors” or a “341(a)” hearing, which is the bankruptcy code section that requires the hearing.  The entire State of New Jersey has three bankruptcy court locations, Camden, Trenton and Newark. The court in which a person’s bankruptcy case is filed, typically depends on the location of their residence. Debtors who file their case in the Camden and Newark locations, attend their “341(a)” hearings in an office building. Debtors who file their cases in Trenton, attend their hearing in the Trenton bankruptcy court, but not in a courtroom.
The court randomly assigns each case to a trustee. A trustee is the person who is responsible for administering each chapter 7 case. The trustee reviews the bankruptcy petition and the various documents that are require to be submitted, such as: pay stubs; bank statements; income tax returns; real estate valuations; mortgage statements, etc. The trustee has the responsibility of researching the debtor’s financial circumstances to determine if the debtor meets the chapter 7 discharge criteria. The trustee provides her recommendation to the presiding judge as to whether the debtor is entitled to a discharge.Typically, if the trustee recommends a discharge, the judge will sign the order of discharge.
Additionally, the trustee is responsible to ensure that the debtor either has no “unexempt” assets to sell. Or, in the alternative, the trustee is required to sell and administer the sale of any assets. Please note that it is very unusual for a debtor to file a case, where an asset is sold. Also, prior to the New Jersey bankruptcy filing, the debtor should know whether the trustee has the right to sell an asset, based on the bankruptcy laws and each person’s financial and asset position.
The Meeting of Creditors Hearing is scheduled about thirty days after the bankruptcy filing. Most likely the only people in attendance, at the hearing, is the debtor and his attorney. It is very unlikely that a creditor appears at the hearing. From my experience, the only creditors that typically appear are individual creditors who had a relationship with the debtor, such as an ex-spouse or individual who made a loan to the debtor. Typically, the trustee and his staff review the debtor’s bankruptcy petition and documents in preparation for the hearing. The hearing is very short and lasts about seven minutes. The hearing is recorded and the trustee “swears in” the debtors prior to questioning.
The trustee will confirm that the debtor read and understood the completed petition prior to signing. The trustee will ask various questions for different reasons. However, In general, the trustee’s main objective is to elicit questions that, (1) determine if the debtor owns valuable assets; (2) determine whether the debtor could sue for valuable assets (money); (3) confirm that the debtor’s household income is less than their reasonable and necessary monthly household expenses, that are required to live. Also, the trustee will ask questions to determine whether the debtor’s financial difficulties and bankruptcy filing was unintentional
Contact Manchel New Jersey Bankruptcy Law at 866 503 5644 to discuss your NJ. bankruptcy law questions.

Consequences of Filing For Bankruptcy In New Jersey

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New Jersey Attorney Explains The Consequences Of Filing For Bankruptcy Protection In New Jersey
The consequences of filing for bankruptcy protection and obtaining a discharge varies based on each person’s: intentions; assets; income; expenses; and financial position.
Chapter 7 Bankruptcy
After the chapter 7 has been completed, in approximately four months, the debtor is free to move forward with their life, without the debt that is discharged. A New Jersey chapter 7 discharge will result in the elimination of unsecured debt, such as credit card debt, personal loans, utility bills, medical bills, etc. A person who does not wish to save or keep their house will eliminate mortgage debt and liens on their house. A person who does not wish to keep their car will eliminate their auto finance and/or lease debt. Additionally, it is possible that none, all, or a portion of tax debt may be eliminated, as well. Any and all wage garnishments and bank levies are permanently eliminated. Also, pending lawsuits in connection with unsecured debt are permanently stopped and/or eliminated.
A person that wishes to keep their house, may possibly eliminate all or a portion of their non-mortgage house liens, depending on various factors. The debtor is liable for any portion of taxes that are not eliminated by the bankruptcy filing. Utility debt is discharged and the utility company must allow the debtor to restore service and/or continue service. Automobile fines will not be eliminated and must be resolved after the discharge.
Chapter 13 Bankruptcy
A New Jersey Chapter 13 debtor will receive a discharge after making trustee payments for 36 to 60 months. A chapter 13 discharge will has similar consequences as a chapter 7, with the following possible exceptions. If a debtor filed a chapter 13 to cure their mortgage arrears and save their house, their house payments should be current at the completion of the case. The debtor may do the same for automobile finance arrears. At the completion of the case, all tax debt will be paid or eliminated. There will be no tax debt that must be paid after the discharge. Also, any child support or alimony debt will have been paid during the life of the bankruptcy case. Therefore, there will be no such debt that must be paid after the discharge. A chapter 13 may allow for additional benefits such as paying one’s automobile fines. Another benefit of a chapter 13 is to allow debtors to eliminate second mortgages in certain situations. Also, any liens that are eliminated and discharged in a New Jersey chapter 7 and chapter 13, do not attach to property purchased after the bankruptcy discharge.
11 U.S.C, section 524, of the bankruptcy code is called the, “Effect of Discharge”. This code section prohibits certain acts by creditors after a bankruptcy discharge, for all chapters. Therefore, after a discharge, certain creditors’ acts may still be a violation of the bankruptcy code. If a creditor violates this code section, the debtor may bring them back into bankruptcy court for the reinforcement and sanctioning of such actions. In general, this section prohibits a creditor’s act to collect a debt that was discharged, or collect on a lien that was eliminated and discharged. This section also prohibits telephone calls, letters, lawsuits, etc., regarding debt that was incurred prior to the filing. There are other non-bankruptcy laws that may be breached by the same acts.
The other portions of this website explain, in detail, other effects of bankruptcy, including, but not limited to: rebuilding credit; obtaining debt after bankruptcy; how to recover; and what to expect.

Saving An Auto Through A New Jersey Bankruptcy Case

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Saving your car from a finance and lease company in a chapter 13 case.
A New Jersey chapter 13 bankruptcy case may save an auto from repossession and/or obtain possession, of a repossessed auto, if the auto has not been sold at auction. Initially, the debtor must provide proof of adequate auto insurance that covers the finance company in the event of auto damage. Also, the debtor must create a feasible chapter 13 plan, that properly pays the finance / lease company, pursuant to the bankruptcy code. The information below applies if all people on the loan are debtors in the bankruptcy case. The information below may not apply if all people on the loan are not included in the bankruptcy filing.
OPTION ONE FOR FINANCING
A person can file a New Jersey chapter 13 bankruptcy case and pay the total amount of the finance arrears, at the time of the filing, through a chapter 13 bankruptcy plan. The bankruptcy plan requires monthly payments for a period of 36 to 60 months. In addition to making the monthly trustee payments, the debtor must also pay the regular monthly finance payments, directly to the finance company, on a monthly basis. The debtor must keep current with the bankruptcy plan and their direct monthly finance payments.
OPTION TWO FOR FINANCING
A debtor may save their auto by paying the entire amount that is due on the loan through the bankruptcy plan. This requires the debtor to pay the entire balance of the loan, plus interest, through a monthly bankruptcy payment. This option does not require that the debtor to make monthly finance payments directly to the finance company, in addition to making the payments through the New Jersey bankruptcy plan.
OPTION THREE FOR FINANCING
If a debtor bought the auto with the financing, at the time of the purchase, uses the auto for personal use, and bought the auto 910 days or more, prior to the bankruptcy filing, the debtor may “cram down” the financing debt. A “cram down” permits the debtor to pay, through the bankruptcy plan, only the value of the auto, plus a fair interest rate. For example, if the auto has a value of $15,000.00 and a finance payoff of $20,000.00, the debtor only needs to pay the $15,000.00, plus a fair interest rate. The $15,000.00, plus the fair interest rate, is paid completely through the bankruptcy plan payments. The $5,000.00 balance may be eliminated, in most circumstances.  The debtor need not make any payments directly to the finance company. The finance company and the debtor may dispute the actual value of the vehicle.
DEALING WITH A LEASE
A debtor may cure the lease arrears through a bankruptcy plan, in addition to making the regular monthly lease payments to the leasing company. However, the bankruptcy code requires that the lease payments, that are paid through the plan, be paid “promptly”. This means that the lease arrears must be paid, through the plan, within a certain time period, that is deemed “promptly” by each particular judge. The amount of months that is considered “prompt” under the bankruptcy code, has not been established in the New Jersey District Bankruptcy Court. Therefore, each judge may deem a different time period as “prompt”.
In a New Jersey bankruptcy case, the debtor may be required to pay other creditors, through the plan, even though the reason for the filing based on saving an automobile. Certain type of debt, such as taxes and other secured debt may be required to be paid through the plan. Also, a portion of unsecured debt, such as credit card debt may be required to be paid, through the plan, based on various factors.
Robert Manchel may be contacted at 866 503 5644 to discuss your New Jersey bankruptcy questions.

How To Save a House In a New Jersey Chapter 13 Case?

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SAVING A HOUSE IN A CHAPTER 13 CASE

CURING MORTGAGE ARREARS
A person may save their house from a foreclosure action in a chapter 13 bankruptcy case. The first option is to save a house by curing the mortgage arrears.  This requires the debtor to pay the total amount of the mortgage arrears, at the time of the filing, through monthly bankruptcy trustee payments. The amount that must be paid to the mortgage company, through the plan, each month, is the total mortgage arrears divided by the number of months in their bankruptcy plan. In addition to making trustee payments, the debtor must make their regular monthly mortgage payments, directly to the mortgage company, on a timely basis. A person may save their house, if he is able to make such monthly trustee and mortgage payments.

Please note that there may be additional funds that must be paid to other creditors, as well.

LOAN MODIFICATION PROCESS
The second option to saving a house in a chapter 13 case is to pursue a mortgage loan modification, within the bankruptcy case. Typically, the bankruptcy court allows a debtor approximately six months to pursue a loan modification, through the application process and the court’s Loss Mitigation Program. During this time, the foreclosure action and sheriff’s sale are stayed. Pending the loan modification process, the debtor must make monthly mortgage payments, directly to the mortgage company. Additionally, the debtor must make monthly trustee payments. The amount of the trustee payment varies based on numerous factors,  that are explained, in detail, in other portions of this website.

In most circumstances, the monthly trustee payment need not be sufficient to pay the total amount of the mortgage arrears through the life of the bankruptcy plan. However, if the mortgage arrears are enormous, the mortgage company may require the debtor to make a monthly trustee payment that is sufficient to cure all arrears over the life of the bankruptcy plan, in addition to paying regular monthly mortgage payments. Generally, in this scenario, it is unlikely that the debtor will be able to make such trustee payments. However, there may be circumstances that allow the debtor to pursue a loan modification, in such a situation, with affordable monthly trustee payments.

The loan modification process is typically facilitated through a website portal, which is used by the mortgage company and the debtor.  This process eliminates much of the communication issues that are usually related to the loan modification application process. The submitted loan modification documents are uploaded and held on the website’s server. Also, all communication between the mortgage company and debtor is saved on the website server for access.

If the loan modification is approved, typically, the monthly mortgage payment is changed and the arrears are incorporated into their future payments. This means that there are no longer any mortgage arrears. In this scenario, the debtor must file a modified chapter 13 plan and update certain schedules to reflect updated disposable income. The modified plan will remove payment of the mortgage arrears. Such modifications must also be filed, in the event that the debtor is denied a loan modification.

LOAN MODIFICATION AND CURE MORTGAGE ARREARS
A debtor may wish to pursue a loan modification and cure the arrears at the same time. This consists of combining the above referenced options concurrently. As a result, if the loan modification is denied, the person may save his house by continuing to make the monthly trustee payments that will cure the arrears. If a debtor pursues both options, the monthly plan and updated income and expenses must still be filed with the court upon the denial or approval of the loan modification.

GENERAL CHAPTER 13 INFORMATION THAT APPLIES TO ALL CHAPTER 13 CASES
The bankruptcy code requires every chapter 13 debtor to make monthly payments to a trustee for a period of 36 to 60 months. The amount of the payments depends on the debtors’ household income, expenses, type of debt and property values. A person cannot pick and chose which debt they wish to pay in a chapter 13. But rather, the bankruptcy code, coupled with the debtors’ intentions, dictate which creditors must be paid, through the bankruptcy plan. Certain types of debt, such as priority debt, must be paid through the bankruptcy plan. There are situations in which certain types of secured and/or unsecured debt may or may not be paid, through trustee payments.

This means that even though someone is filing a chapter 13 for the sole purpose of saving their house, he may be required to pay other debt, through the trustee payments, in addition to their mortgage arrears. If the debtor is unable to pay the necessary mortgage arrears through the bankruptcy plan, because he is also required to pay other types of debt, the debtor may not continue with the bankruptcy case. Such a plan is called unfeasible. Under this scenario, if the attorney is unable to resolve the feasibility issue, the case will be dismissed.

Contact Manchel New Jersey Bankruptcy Law at 866 503 5644 to discuss your bankruptcy questions.

What Are Some Benefits of a New Jersey Bankruptcy Case?

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Immediately upon a NJ. bankruptcy filing of any chapter, the Automatic Stay Provision of the bankruptcy code applies, thereby protecting the debtor (person filing) from the creditors’ collection efforts. This means that no matter what type of bankruptcy case is filed, no creditor may proceed or commence a lawsuit against the debtor for money or property.

The Automatic Stay Provision stops the following actions: creditors’ correspondence, such as telephone calls and collection letters; bank and property levies; wage garnishments; lawsuits; utility shutoff; auto repossessions; foreclosure actions; prevent drivers’ license suspension and/or reinstate drivers’ license, under certain circumstances; prevents sale of property; filing of liens; possible limited protection from support arrears; and, delay collection from student loan creditors.

The Automatic Stay works as follows. If the bankruptcy petition is filed prior to the creditor commencing a lawsuit against the debtor, the creditor may not file the lawsuit. Immediately upon the bankruptcy filing, the lawsuit process stops. If the debtor files a bankruptcy case, after the lawsuit is filed and before the answer is due, the debtor need not file an answer. If the debtor files the bankruptcy petition after the creditor obtains a judgment from the lawsuit, the creditor may not attempt to collect money on the judgment.

A finance company may not repossess an auto if a bankruptcy case is filed, after the debtor is behind with payments, but before the auto is repossessed. If the auto is repossessed and not yet sold, the bankruptcy filing, may allow the debtor to obtain possession of the vehicle, under certain circumstances.

CHAPTER 7

The chapter 7 process is about four months long. After four months from the filing, the debtor is completely out of the bankruptcy case, with an order of discharge. Discharge means that the debt is eliminated. The discharge order completely eliminates certain debt, including all unsecured debt. Unsecured debt is debt that is not connected to collateral or property, such as credit card debt and personal loans. A chapter 7 does not require any court or trustee payments.

The bankruptcy code has a list of specific types of debt that are not discharged, including, but not limited to, child support, alimony, some types of tax debt and student loan debt.

A debtor may eliminate a mortgage if he does not wish to keep his house. Additionally, auto debt may be eliminated, if you are surrendering your auto. A chapter 7 will not permit someone to save an auto or house if he is behind with payments.

A debtor may possibly eliminate liens, as well.

CHAPTER 13

A chapter 13 requires monthly payments to a trustee for 36 to 60 months. The number of trustee payments vary based on numerous factors.

A person that does not meet the chapter 7 criteria, due to excessive income, may file a chapter 13 to pay back and/or eliminate a portion of their unsecured debt.

Also, a chapter 13 may permit someone to save a house from foreclosure and a car from repossession. Chapter 13 offers various options to save a house from foreclosure. However, the most likely options are to cure the mortgage arrears through the bankruptcy plan or obtain a loan modification. An automobile may be saved from repossession by way of various options. The most used options are to pay the finance arrears through the bankruptcy plan or pay off the total financing balance through the bankruptcy plan.

Under certain circumstances, a debtor may be permitted to eliminate a second or third mortgage. A debtor may be able to eliminate a lien too.

Bankruptcy lawyer, Robert Manchel, Esq., is available for a free consultation.

What Happens to Welfare And Social Security Debt Benefits In A New Jersey Bankruptcy Case?

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Lawyer explains how welfare and social security debt and benefits are treated in a New Jersey bankruptcy case.

In many instances, New Jersey debtors have debts owed to state or federal governmental agencies, that arise out of various public benefit programs. Such benefits include welfare and social security. These debts may arise out of a an obligation to reimburse a specific entity as a result of an over payment which the debtor is required to repay.

Generally, the over payment of welfare and social security debts are “dischargeable” in bankruptcy, which means that the debt may be eliminated. However, the debt will not be “dischargeable” (eliminated), if the bankruptcy court determines that the debt was obtained through fraud. If such fraud was not specifically determined by a court prior to the bankruptcy filing, the bankruptcy court may determine the existence of fraud. The allegation of fraud must be found by way of a lawsuit that is filed in the bankruptcy court. The complaint is called a Complaint for the “Nondischargeability” of Debt.
What happens if the creditor, such as the social security administration, owes the debtor benefits after the bankruptcy discharge? The social security administration cannot hold back $6,000.00 of your future benefits because $6,000.00 was previously discharged in a bankruptcy case.

You may contact Robert Manchel at 866 503 5644 to discuss your NJ. bankruptcy law questions.

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