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Morristown Bankruptcy Blog

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.

Debt collectors’ bark may be louder than the bite

New Jersey is one of the most expensive states to call home in America. This makes falling into debt an especially terrifying experience. What makes it worse is all the debt collectors calling to reclaim their money by any means available to them. This can make people feel afraid and may cause them to become depressed.

CNBC estimates that debt collectors called one in three consumers in the year preceding July 2016. These collectors harassed people at any hour of the day or night, with no consideration for their rest or peace of mind. They made threats, even including criminal prosecution. Some went as far as to physically threaten consumers or their beloved pets. Not surprisingly, a quarter of the grievances filed with the Consumer Financial Protection Bureau involves debt collection.

Are you worried about your IRA in bankruptcy?

Building up your retirement fund has likely been an important goal for you almost as long as you have had a job. You understand the importance of having those funds tucked away for the years that you will no longer have to work. However, you now face a difficult financial situation that may lead to you file to bankruptcy.

Hopefully, you already know that taking money out of your retirement account to cover outstanding debts is not the best idea because penalty fees could make your financial situation worse in the long run. Still, you may worry that filing for bankruptcy could result in you losing those funds entirely.

What to do when fighting to keep your home

As many people in New Jersey learned during the recession, if the market crashes or someone loses their job even financially responsible homeowners may find themselves facing foreclosure. While the American economy has come a long way since then, there are still many homeowners facing foreclosure due to falling behind on payments. What can people do when this happens?

According to Forbes, the first step is education on the foreclosure process. The more information a person has about foreclosure, how it works and what the process entails, the better position they may be in to rectify the situation. Believe it or not, the best starting point is the foreclosure letters that were mailed.

How to pay your tax bill to the IRS

Many people in New Jersey were concerned about the outcome of filing their 2018 tax returns. According to CNBC, 30 million in America received a tax bill instead of a tax refund. Unfortunately, many people choose to ignore the bill, but there may be serious consequences for doing so. These may range from a ruined credit score to criminal prosecution.

While Americans are still grappling with the changes in the new tax reform, it is important to file early going forward. The balance does not need to be paid until April 15, but if people wait until the very last minute to file taxes and then they owe, that deadline may be impossible to meet. For those who do owe on taxes now or may owe taxes in the future, here are some ways to take care of that bill.

How can I create a bankruptcy budget?

When faced with massive debt, bankruptcy may be the best option to get your finances back on track. With chapter 13 bankruptcy, you must make payments as obligated by the court to ensure you remain in good standing. This entails creating a reasonable budget, which can be difficult for many people. In this case, U.S. News & World Report offers the following tips. 

The first step is to track your expenses. This will give you a good idea of your debt to income ratio. If you commonly use cash to make purchases, try switching over to a debit card for the period you're tracking. That way you can use your bank statement as a guide for how much you typically spend. It's best to get a general idea of your finances, so don't worry about tracking every little expense at this point. 

What can I do about debt collectors?

The actions taken by debt collectors in New Jersey may cause you embarrassment and countless sleepless nights. What is perhaps even more heartbreaking is that Forbes notes for consumers 62 and older, debt collection tops their complaints at the Consumer Financial Protection Bureau. When moving into retirement, the last thing anyone wants to be grappling with is debt collection and the threats that often follow.

Sometimes you already know you owe your creditors when that first call comes in. Other times, the debt may not make sense to you at all. This may result from a clerical error, past identity theft or current fraud. In other words, the people on the phone could be trying to steal your information right then by taking advantage of your desperation to avoid repercussions.

Issues that prompt financial trouble for New Jersey residents

The cost of living in New Jersey is quite high. Any number of extenuating issues may spark a financial crisis in your life. How quickly you can resolve such problems depends on numerous factors, including whether or not you have any savings and how much you know about possible debt relief options that may apply to your situation.

If you're currently struggling financially, you're definitely not the first person in this state to do so nor will you be the last. In fact, most people encounter financial problems at some point in life. You may be able to solve a minor financial crisis by adjusting your spending habits and reorganizing your budget. However, a more serious problem may require additional debt relief support.

What should I know about an automatic stay?

People swamped with debt often face constant harassment from creditors plus the threat that unpaid utility companies will switch off their power or water. That is why many people file for personal bankruptcy. If you find yourself in a debt crisis, the automatic stay provision that bankruptcy offers can be just what you need to stop the harassment and give you greater peace of mind as you seek to rebuild your financial situation in New Jersey.

Per FindLaw, an automatic stay can put a stop to a number of creditor actions. You may be granted an extension on your electricity, telephone, water or gas services. It can also halt foreclosure actions or efforts to evict you from your apartment. Additionally, automatic stays stop your wages from being garnished. During the stay, you will be able to acquire your entire salary when you are paid. Also, if you were overpaid by a government agency, an automatic stay stops the agency from trying to collect on the overpayment.

What do the means test results mean for your bankruptcy filing?

If you are one of the numerous New Jersey residents who is struggling financially, you have probably been doing some research on debt relief options. That search has led you here. While bankruptcy may not have been your first choice, it may be your best option.

Before you start a bankruptcy filing, you have to figure out for which type of bankruptcy protection you qualify. The means test is typically used for this purpose.

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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