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Morristown Bankruptcy Blog

A repayment plan may help get you out of bankruptcy

New Jersey has a high cost of leaving compared to many other American states. It comes as no surprise then that people often find themselves with high-interest and long-term debt that they need to repay. These debts can spiral out of control, causing even financially responsible people to fall behind if they become ill, make a bad investment or have a break in employment.

Credit Karma points out that one way to tackle this is to file Chapter 13 bankruptcy and create a court-approved repayment plan. This may give the debtor three to five years to repay current debts owed. When deciding how much the person can afford to repay, the courts consider the following:

  •          Taxes
  •          Medical bills
  •          Household income
  •          Cost of food and utilities

The FDCPA gives you control over debt collection calls

Perhaps you lost your job, got divorced, or experienced a serious illness or injury. Maybe you got into a financial bind and continued to incur debt in order to keep your head above water, and over time, the situation got out of control. No matter how you ended up with an overwhelming amount of debt, the result is the same -- debt collectors are calling you constantly.

The people on the other end of those phone calls tend to make you feel as though you are powerless, and the only way to stop the calls is to pay what they say you owe. Did you know that isn't quite accurate? You have more control than you think.

NJ homeowners still haunted by the past home foreclosure crisis

Foreclosure left an indelible mark on New Jersey residents. According to NPR, a decade after the housing crisis, “zombie houses” still remain. These are houses in the foreclosure process, or which have since been abandoned. In fact, NPR estimates that no state has as many of these houses remaining per capita as New Jersey. There were roughly 17,000 of these homes in the state.

Neighbor New York is nearly as bad, but around the rest of the country, the numbers are on the decline. One of the reasons these two states get such a hard hit is because both have measures in place to slow down foreclosure and protect homeowners. This can cause the foreclosure process to take about three years on average. These abandoned houses, in turn, affect the value of the other homes around them, making it difficult for homeowners to sell if they wish to move.

What are the basics of Chapter 7 bankruptcy?

Debt is often overwhelming and frightening, especially if you are not sure how to recover. There are several possible paths that may help you overcome debt and return to financial stability, and one of them is filing for Chapter 7 bankruptcy. Understanding the essentials of Chapter 7 and how to file for it in New Jersey may help you determine whether it is the best option for your circumstances.

The United States Bankruptcy Court provides a guide for filing a Chapter 7 case in New Jersey. According to the guide, one of the first requirements is to attend credit counseling with an approved agency. You must include a certificate of completion along with your bankruptcy petition. There are a few possible exemptions to this requirement. For example, you may not have to complete counseling if you are on active duty in a military combat zone.

What are some important things to know about debt collection?

Trying to get out of debt in New Jersey can feel like an uphill battle. If you are also dealing with constant calls from debt collectors, it may seem like you will never be free of debt and harassment. Educating yourself is one of the best steps you can take to protect your assets and peace of mind.

USA Today reminds debtors that you do have rights. The Fair Debt Collection Practices Act sets rules and restrictions deciding how creditors go about collecting debt. That said, it is important to note that creditors sometimes sell the debt to businesses that specialize in collection. So, the company you originally owe may not be the one calling you. Whoever the caller is, if they violate the FDCPA, you may be able to report them.

Owing IRS back taxes could get your passport revoke or denied

When U.S. citizens in New Jersey owe the IRS money, the last thing it wants is for them to fly the coop. CNBC notes that the remedy Uncle Sam may take is to revoke the passport of the debtor. This may not happen for smaller debts. However, debts in excess of $52,000 could cause the agency to take action whether the individual is at home or abroad. If the person attempts to apply for a passport for the first time or renew an old one, that may get denied as well.

The IRS has been enforcing this law since 2018. However, it now refers these cases to the U.S. Department of State. Since the program first began, the agency informed over 400,000 people that they risked losing their passport. Taxpayers who have not resolved the remaining debt may receive a letter from the IRS letting them know that the revocation request may now be forwarded to the State Department. Debtors reportedly have a 30-day window to respond.

It is all too easy to accrue debt after job loss

Finding out that you are losing your job can be a devastating blow. You may have intended to make a career out of your current profession, and now because of layoffs or another reason for your dismissal, you have found yourself back in the pool of trying to find employment. Understandably, you have worries.

Many people face job losses, which can easily cause serious issues, especially when it comes to your finances. You undoubtedly do not want to end up in a situation in which your lack of steady income causes you to accrue considerable debt, but this type of outcome is not uncommon.

How to build your credit after a foreclosure

When homeowners in New Jersey lose their home to a foreclosure, they may have two main concerns. The first is where they will live and the second is how they will rebuild their credit score. Without rebuilding a good score, even finding a place to rent may prove difficult. Once the score is up again, however, the individual may even be able to purchase a new home.

Fox News reports that the higher a person’s credit score was before a foreclosure, the longer it may take them to get their score back to normal. For example, it might take three years to regain a credit score of 680, but seven years to return to a 780 score. The best way to build credit is to keep credit accounts open and make payments on time. People who may forget may consider setting up automatic payments to reduce this possibility.

The pros and cons of filing for Chapter 13 bankruptcy

New Jersey is one of the most expensive states to live in, in America. It comes as no surprise then that many Americans in the Garden State have become overwhelmed by debt. When this happens, some people consider the possibility of filing for bankruptcy. However, the thought of losing their assets and having the ding on their credit report may not sit well with them.

While there may be no avoiding the temporary credit score scar, Forbes points out that people may be able to keep their assets when they file for Chapter 13 bankruptcy. With this type of bankruptcy, rather than sell assets to repay debts, debtors negotiate a repayment plan for some of their debts.

Understanding unsecured claims in bankruptcy

If you are considering filing for Chapter 7 bankruptcy in the state of New Jersey, it is helpful to understand the different terms associated with a bankruptcy case. One of those terms involves the kind of debts creditors claim against you, known as unsecured claims. These kinds of claims involve no collateral and may end up being discharged in bankruptcy, although some unsecured claims will have to be paid in any case.

According to How Stuff Works, an unsecured claim is a debt that is not backed by a claim on property if you do not pay. The good or service is offered by creditors based upon a promise or an assumption that you can pay the money at a future date. If you fail to pay the amount at an agreed upon time, the creditor can try to collect that money from you. But without a collateral agreement, creditors are limited to collecting the money without taking anything from you to compensate for the debt.

Ast & Schmidt, P.C.

Ast & Schmidt, P.C.
222 Ridgedale Avenue 3rd Floor
P.O. Box 1309
Morristown, New Jersey 07962

Phone: 973-984-1300
Fax: 973-984-1478
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