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Morristown Bankruptcy Blog

How to save your home by stopping foreclosure

Receiving a foreclosure notice from your lender is sure to turn your life upside down. But before you pack your stuff and prepare to leave, it's important to note that there are ways to save your home from the foreclosure process.

It's not always easy to stop foreclosure, but there are steps you can take to successfully do so. Here's where you should start:

  • Review your foreclosure notice: This will outline everything you need to know about your current situation, including the steps you can take next.
  • Understand what went wrong: You know you're behind on payments, but that doesn't mean anything if you don't know the specifics of your situation. How many payments have you missed? How much money do you owe, including interest, fees and penalties?
  • Talk to your lender: Don't assume that your lender is chomping at the bit to repossess your home. They're willing to hear you out and help you stop foreclosure, but you have to show them a willingness to take action.

You're not alone if these issues have caused you credit card debt

As in most states, the economy in New Jersey fluctuates. The state and national economy might, at times, affect your personal financial situation. Other issues, too, might throw your financial train off its tracks. The good news is that most financial problems are temporary. It's all about knowing what type of support to seek or what type of action plan to implement if a problem arises.

It's no secret that some financial problems are a lot more serious than others. Even when you think there are no viable options to help you obtain debt relief, however, you might be surprised to learn that debt relief, such as bankruptcy, might be able to help you get rid of debt and lay the groundwork for restored financial stability down the line.

There are reasons to consider Chapter 13 bankruptcy

Many people in financial distress shy away from Chapter 13 bankruptcy because they don't want to deal with a repayment plan that typically lasts from three to five years. Instead, they'd rather file for Chapter 7, as it's a faster process that results in the discharge of debt.

If you find that Chapter 13 bankruptcy is your only option, it's well worth your consideration. Here's why you should give it a second look:

  • Less impact on your credit report: A Chapter 13 bankruptcy will remain on your credit report for seven years. While this is a long time, it's three years less than a Chapter 7 filing.
  • Avoid foreclosure: A Chapter 13 bankruptcy will stop foreclosure proceedings, thus allowing you to better assess your situation without fears of losing your home. Best yet, during your filing, you can consider your options for making up missed payments, which may allow you to stay in your home.
  • Lower monthly payments: Through Chapter 13 bankruptcy, you can reschedule some or all of your secured debts. By stretching them over the span of your repayment plan, you may end up with lower monthly payments.

Are there disadvantages of Chapter 7 bankruptcy?

When facing dire financial circumstances, it's critical to consider all your options. For example, there are many benefits of filing for Chapter 7 bankruptcy, including the ability to discharge some — or even all — of your debts.

While the benefits of Chapter 7 bankruptcy typically outweigh the potential disadvantages, you should still be aware of the following:

  • Chapter 7 bankruptcy is a red mark on your credit report: With this remaining on your credit report for 10 years, you'll find it challenging to secure a loan in the immediate future. However, as time goes by, you can boost your score once again if you remain out of debt.
  • You could lose some property: Not all property is exempt from seizure in Chapter 7 bankruptcy, so it's possible you might have to part with some of the items you love. Many luxury possessions will be at risk.
  • It doesn't relieve you of all your debts: For example, if you have student loans or owe child support or alimony, Chapter 7 bankruptcy has no impact on them. You're still required to keep current with these obligations, both during and after your bankruptcy filing.

The Chapter 7 means test explained

Most people in Morristown can sympathize with those struggling with debt. At the same time, however, there may still be a stigma associated with personal bankruptcy. Many might believe that it is simply a way for people to escape from having to pay their debts. The fact that (according to information compiled by the American Bankruptcy Institute) over 63 percent of non-business bankruptcy filings in 2018 were made under Chapter 7 (which allows debts to be discharged) might be seen as affirming this assumption.

Yet federal bankruptcy regulations are structured in such a way as to make it difficult for people to abuse the debt relief privileges afforded by bankruptcy. The Chapter 7 means test is an example of this. It regulates Chapter 7 eligibility by taking a closer look at the income and debts of those seeking bankruptcy protection.

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.

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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