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New Jersey Bankruptcy Blog

Losing A House New Jersey Bankruptcy

August 31, 2015 by Robert Manchel

NJ. Lawyer Explains How A Property Is Lost When Surrendered And A Bankruptcy Case Is Filed.

This blog pertains to individuals who are either unable to save their house, or do not wish to save their house from foreclosure.  Sometimes people understand that their house cannot be saved through any option, including bankruptcy. A person may understand that saving a house is too costly, not worth the monthly payment, or would prefer renting at this time.
There are various reasons for not saving a house from foreclosure. A person may be unable to save their house, due to a loan modification denial or a substantial reduction in income. Also, a chapter 13 debtor may change their intention, at any time, and decide to surrender their house, during a chapter 13 plan.
Although a chapter 7 will not allow a person to save a house that is in foreclosure, the bankruptcy filing will initially stop the foreclosure action for a short time period. It is unlikely that a bankruptcy trustee will sell a house, in connection with a chapter 7 case. If the house does not have substantial equity, the house will not be sold in the bankruptcy case.
If a chapter 7 debtor is behind with payments, the mortgage company may ask the bankruptcy court for permission to proceed with the foreclosure action. Or, in the alternative, the mortgage company will be permitted to proceed with the foreclosure action after the case is completed and the debt is discharged. Ultimately, the house will be sold at sheriff’s sale and at some time thereafter, the house must be vacated.
If a chapter 13 debtor, at any time, wishes to surrender the house, the mortgage company will be permitted to proceed with the foreclosure action, during the pending bankruptcy case. The chapter 13 bankruptcy case may continue even though the mortgage company proceeds with the foreclosure action and sheriff’s sale. As explained above, typically, the house is lost by way of sheriff’s sale, through the foreclosure process, even though the owner has filed for a chapter 13 or chapter 7 case.
Robert Manchel, the NJ. bankruptcy attorney, may be reached at 866 503 5644.

Filed Under: Mortgage Foreclosure Resolution

Is the Over Payment Of Unemployment Benefits Dischargeable In A New Jersey Bankruptcy Case?

August 17, 2015 by Robert Manchel

New Jersey Lawyer Explains When Unemployment Benefits are Dischargeable

Typically, an over payment of New Jersey unemployment benefits is dischargeable in bankruptcy, unless the debt was incurred by fraud. Unemployment debt is not included in any of the bankruptcy code exceptions to discharge. Therefore, in a chapter 13 and chapter 7 unemployment debt is generally dischargeable and classified as general unsecured debt.
However, the New Jersey Department of Labor and Workforce Development, Division of Unemployment and Disability Insurance (dept. of labor), may bring a bankruptcy action to deny the discharge of unemployment debt, under the fraud provision of the code, which states as follows:
“(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title does not discharge an individual debtor from any debt—
(2) for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by—
(A) false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor’s or an insider’s financial condition;
(B) use of a statement in writing—
(i) that is materially false;
(ii) respecting the debtor’s or an insider’s financial condition;
(iii) on which the creditor to whom the debtor is liable for such money, property, services, or credit reasonably relied; and
(iv) that the debtor caused to be made or published with intent to deceive; …”
The New Jersey bankruptcy court requires the Department of Labor to prove that the debtor obtained the unemployment debt by actual fraud, which includes the following elements:
“(1) [the debtor] obtained money, property or services through a material misrepresentation; (2) the Debtor, at the time of the transaction, had knowledge of the falsity of the misrepresentation or reckless disregard or gross recklessness as to its truth; (3) the Debtor made the misrepresentation with intent to deceive; (4) the Dept. of Labor reasonably relied on the misrepresentation; and (5) the Plaintiffs suffered loss, which was proximately caused by the Debtor’s conduct.”
The above means that the debtor may discharge the unemployment debt unless the Dept. of  Labor can prove, by a preponderance of the evidence, that the debtor is guilty of all five of the above listed elements. A preponderance of evidence means proof of more than 50% that the debtor committed each of the five elements. In other words if the debtor received an over payment without obtaining the funds through fraud, as explained by way of the five elements above, the debt is discharged in a chapter 13 and chapter 7.
Contact the NJ.bankruptcy lawyer, Robert Manchel at 866 503 5644 to discuss your questions.

Filed Under: General Info

How Does New Jersey Bankruptcy Effect Credit And The Authorized User?

July 30, 2015 by Robert Manchel

Bankruptcy Lawyer Discusses The Effect of New Jersey Bankruptcy on Credit and the Authorized User

An authorized user is permitted to use a credit card without having any obligation to pay the debt. This means that only the individuals that have signed the credit card documents, as the responsible party, may be sued if the debt is in default. An authorized user may be included at the time the responsible party signs the application or anytime thereafter, without a credit check.Typically, the responsible party and not the authorized user receives the credit card monthly statements and correspondence. Consequently, the authorized user may not be privy to the credit card information,including the status of credit card payments.
The status of the credit card will affect the Authorized users’ credit and credit score, even though he is not responsible for making payments. If the payments are current, the authorized user’s credit will be favorably effected. However, if the payments are in default, the authorized user’s credit will be negatively effected. Also, the filing of a bankruptcy case by the responsible party will negatively affect the credit score of the authorized user. Therefore, it is extremely important for the authorized user to be added to the account of a very responsible person.
The credit card company will continue to report the status of the monthly payments for the authorized user, until the authorized user is removed from the account. If the authorized user is aware, that the payments are not paid on a timely basis, he should remove himself from the account, for the purpose of stopping any future negative reporting. The authorized user should remove himself from the account, prior to the bankruptcy filing of the responsible party. As a result, the filing most likely will not be reported on the authorized users’ account.
One strategy for repairing credit after a New Jersey bankruptcy filing, is to add oneself as an authorized user, to an existing established credit card that is held by a very trusted individual. Also, one can include themselves to a new credit card as the responsible party or authorized user, with a very trusted individual.
The Law Offices of Robert Manchel may be contacted at 866 503 5644 to discuss your New Jersey bankruptcy options.

Filed Under: Credit And Bankruptcy

Exceptions To Reducing Auto Financing In A New Jersey Bankruptcy Case.

July 24, 2015 by Robert Manchel

Lawyer In New Jersey Explains The Limitations Of Reducing Auto Finance Payments In New Jersey Bankruptcy Case.

A debtor is permitted to reduce the amount that is required to be paid on auto financing in New Jersey, under specific circumstances. The bankruptcy states that a person is permitted to “cramdown” the auto financing, if the vehicle was purchased, with the financing, more than 910 days prior to the bankruptcy filing, for personal use”.  This is called a “cramdown” and is explained, in detail, in my other blogs.
If the auto was purchased, with the financing, for personal use, within 910 days prior to the filing, than a”cramdown” is not permitted. However, if the auto was purchased, with the financing, for personal use more than or later than 910 days prior to the filing, than a “cramdown” is permitted. For example, under this scenario, a “cramdown” is permitted if the vehicle was purchased, with the auto financing, 911 days prior to the filing. Therefore, if a debtor wishes to “cramdown” the auto financing, he must review the auto financing documents to confirm the date of the purchase.
If the vehicle was purchased for business use and not personal use, than the 910 day limitation and the requirement that the auto was purchased with the financing funds, does not apply. For example, if a person purchased a vehicle with the financing, thirteen months prior to the bankruptcy filing, the debtor is permitted to “cramdown” the financing. Of course, the debtor cannot purchase a vehicle with the intention of cramming down the debt in bankruptcy. Consequently, the debtor would not b permitted to “cramdown” the auto financing, if the purchase was made immediately prior to the bankruptcy filing, due to fraud.
A debtor is permitted to cramdown the auto financing if the financing was not used to purchase the vehicle. For example, a person owns a financed free vehicle that is used for collateral of a loan. Under this scenario, the auto financing may be “crammed down”  if the auto was purchased prior to the 910 day limit for personal use.
The Law Offices of Robert Manchel, may be contacted at (866) 503-5655 to discuss your bankruptcy options.

Filed Under: Auto In Bankruptcy

How Can I Keep A Car and Pay Less In A New Jersey bankruptcy?

July 20, 2015 by Robert Manchel

New Jersey Lawyer Explains How Someone Can Reduce Auto Payments In New Jersey Bankruptcy Case.

In a New Jersey chapter 13, a debtor may be able to keep their auto by paying less than the total amount that is due on the auto financing. This process is called a cramdown. Under certain circumstances, a debtor is permitted to reduce the loan amount to the retail value of the vehicle, plus a reasonable interest rate. The value, plus the interest rate, must be paid through the bankruptcy plan. The loan balance that is due in excess of the auto value amount, may be eliminated, under most situations.
The bankruptcy code does not permit such a reduction, if the loan financed the purchase of the vehicle, for personal use, within 910 days prior to the bankruptcy filing. Also, this reduction is not permitted with a leased vehicle. The following is an example of the above explanation. A $10,000.00 auto value has a $15,000.00 finance balance. The debtor may keep the auto by paying $10,000.00, plus a fair interest rate, through the bankruptcy trustee payments.
The court uses the retail value of the auto, as if the exact same auto is sold on a dealership’s lot. In other words, the value is based on the year, make, model, mileage and condition of the debtor’s car. The court will accept as proof of the valuation of the auto, an NADA or Kelley Blue Book internet printout, based on the auto’s detailed specs. However, if the finance company objects to the value, than an expert appraiser would be necessary.
Finding an expert to appraise an auto in New Jersey is difficult. However, in order to prove the value of the auto, it is necessary for an expert to appraise the vehicle, who will testify in court. If both parties cannot agree to a value, the finance company will also obtain an appraisal of the auto. Most likely, the appraisal will facilitate a settlement of the value for a reasonable figure. However, if a settlement cannot be reached, than both appraisers must testify, with the judge making a determination. as to the value.

Filed Under: Auto In Bankruptcy

What is the Real Estate Value Process for Modifying a Mortgage In a New Jersey Bankruptcy Case

July 15, 2015 by Robert Manchel

Bankruptcy Lawyer Explains Valuation Process For Mortgage Modification In A New Jersey Bankruptcy Case

There are other blogs explaining when and how a mortgage may be modified in a New Jersey bankruptcy case. This blog explains the house valuation and associated issues. A mortgage may be modified in a chapter 13 and not in a chapter 7.
If the value of the debtor’s principal residence is less than the first mortgage payoff, than the second mortgage may be stripped completely from the house. Also, if the value of the debtor’s non-principal real estate value is less than the mortgage payoff, than the debtor may reduce the mortgage to the value of the house. However, under this scenario, any mortgage mortgage that is modified, must be paid, in full, through a 60 month bankruptcy plan. As a result of the difficulty to pay the mortgage’s secured portion within 60 months, such a reduction is extremely unlikely.
The main issue dealing with a bankruptcy mortgage modification is the value of the house. A request to modify a mortgage is initiated by the debtor’s Motion to Avoid or Modify a Mortgage. A valuation of the real estate must be filed with the court, to provide proof of the house’s value. The court will accept a house valuation that is prepared by a licensed New Jersey Real Estate Sales Representative or Broker. This type of valuation is named a Comparative Market Analysis or a Brokers’ Price Opinion. In addition to the valuation, the debtor must also provide a first mortgage payoff or recent mortgage statement reflecting the principal balance. If the debtor provides the proper proof of mailing to the creditor and no response is filed, the motion and request to modify the mortgage will be granted.
However, if the mortgage company or creditor files an objection to the motion, than an expert appraisal will be required. An appraisal by a licensed New Jersey appraiser, is necessary although the cost is substantially more than the sale’s rep. or broker’s valuation. Also, the appraiser should be experienced and available to provide expert witness of the house’s valuation in court. Typically, the mortgage company will provide and file their appraisal with the court. The appraisals may facilitate a settlement or a withdraw of the motion or the objection. If the matter cannot be resolved, the appraisers must testify to the valuation, with the judge making the determination of the final value.
The typical manner in which to value a house is to compare the recent sales’ prices of similar houses in the area of the debtor’s house. The appraiser attempts to obtain houses that are most similar to the debtor’s house. The appraiser will adjust the figures downward or upward depending on the differences between the debtor’s house and the comparable properties and condition of the houses. In other words, if the comparable house has more bedrooms, than the appraiser will make adjustments downward, etc. Also, the appraiser will adjust downward for  the costs of repairs.
You may contact the bankruptcy attorney in NJ., Robert Manchel, at 866 503 5655.

Filed Under: Mortgage

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      Manchel
      New Jersey
      Bankruptcy Law

      This web site is designed to provide general information regarding the bankruptcy laws. The bankruptcy laws are complex and may be applied differently, in each case, depending on the particular facts. There may be numerous exceptions and variations for each law and rule. Do not rely on the information provided in this web site. If you are considering filing for bankruptcy protection, you should consult with an experienced NJ bankruptcy lawyer. We are a debt relief agency. We Help people file for bankruptcy relief under the bankruptcy code.

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