Archives for February 2017

Using Chapter 13 to Address Mortgage and Property Tax Arrearages

Often, when you have financial challenges, it’s your mortgage and/or the property tax payments that you can’t make in a timely manner. If you are behind on your mortgage, haven’t paid your property taxes, and are facing either foreclosure proceedings or a tax lien / tax sale, you can use Chapter 13 of the bankruptcy laws to reorganize your debt and negotiate new payment arrangements. That can apply to both mortgage obligations and tax debt.

Under Chapter 13, you’ll have three to five years to satisfy your creditors. While that’s likely not a long enough period to pay your mortgage in full, you may be able to enter into an agreement whereby you pay off all penalties and arrearages by the end of the bankruptcy. While you are doing that, you’ll enjoy the benefits of the automatic stay, a provision of the bankruptcy law that prohibits your creditors from calling, writing or taking any legal action outside of the bankruptcy process to try to collect the debt. As long as you honor your commitment, you won’t have to worry about the harassing phone calls and letters, or of any impending legal action.

In addition, if you avoid incurring new debt, you should have significant disposable income when you emerge from bankruptcy, so it should be easier for you to make your mortgage payments.

A Chapter 7 filing can invoke the automatic stay, and you can exempt your home from the bankruptcy sale. However, you can’t get relief from property tax payments in a Chapter 7 bankruptcy.

Contact Neuner & Ventura, LLP

At Neuner & Ventura, LLP, we provide a free initial consultation to every client. To set up a meeting, call Neuner & Ventura at 856-596-2828 or send us an e-mail. We do, however, reserve the right to charge a fee to review any work done by another attorney. Evening and weekend appointments are available upon request.

Representing Clients across South Jersey

Keeping debt collectors honest and how best to respond to them

We see a lot of people who are dealing with sometimes abusive debt collectors. A recent New York Times article, Jan 13, 2017: How to Keep Debt Collectors Honest and at Bay provides some excellent advice. Among the tips provided (and our tips) are:

  1.  If you are at all unsure that the debt is valid or the amounts are correct, demand documentation to validate the debt. (Debt collectors often do not have this information but be insistent).
  2. Put all requests in writing. In fact, demand the name of the collector, a mailing address and contact information, the name of the original creditor, and the name of the current owner of the debt.
  3. Don’t assume that the collector or the party they claim to represent really own the debt. A lot of bad debts get sold off. Some collectors have attempted to collect “stolen” debt accounts that they do not own.
  4. Do not let collectors call you at work or call neighbors. Demand that they stop, orally and in writing. Keep all those papers.
  5. If the debt is older than 6 years since you first defaulted (unless you entered into a payment plan after that) any suit may be barred in New Jersey by the statute of limitations. (if it is a store credit card, the limitation is 4 years). Demand the date when the debt first became past due.
  6. Do not put up with abuse. If this happens, tell the collector you are recording the call and if possible record it. (Recording a call without notice is a criminal violation in many states and if your collector is calling from one of those states you could get in trouble)
  7. Finally and most importantly, you need to assess your finances and get professional advice. Start with doing a budget for just your basic living expenses (ie food, shelter, transportation, medical care etc). Often there is no money left over to pay debts being collected, or not enough. There are budget forms for you to use on the Forms page of our website.
  8. Finally, do not be reluctant to use bankruptcy as a tool to pay, settle or obtain relief from your debts. As we have noted in another blog post, at least one study has shown that those who used bankruptcy to overcome financial distress later had better credit and better access to credit than those who did not.

Meeting the Chapter 7 Means Test Requirements

It’s been the law of the land for more than a decade, but there’s still a significant amount of confusion surrounding the application of the “means test” when you file for a Chapter 7 bankruptcy. Under the 2005 amendments to the bankruptcy laws, Congress made it a bit more difficult for a personal debtor to qualify to permanently discharge certain debts. Anyone filing a Chapter 7 petition must now satisfy the “means test,” showing that he or she lacks the means to pay off the debt in a three-to-five-year period. If that cannot be shown, the only recourse is a Chapter 13 filing.

So how do you know if you meet the means test? There’s a simple way to determine your eligibity.

The Median Income Test

Pursuant to the bankruptcy code, if your “current monthly income” is less than the median family income level in your state, you qualify to file for protection under Chapter 7. If you meet that test, you don’t have to look at any other criteria. The U.S. Census annually determines and publishes the median family income on a state by state basis.

Identifying your “current monthly income,” though, can be far more complex that you think. You’ll need to put together a summary of all your income for the last six months, from any source, including employment, unemployment, child support, alimony, investments and insurance payments. You must then divide that number by six to get your current monthly income.

Contact Neuner & Ventura, LLP

At Neuner & Ventura, LLP, we know that the bankruptcy process can be intimidating and confusing. We offer a free initial consultation to every client. For an appointment, call our office at 856-596-2828 or send us an e-mail. We do, however, reserve the right to charge a fee to review any work done by another attorney. Evening and weekend appointments are available upon request.

Representing Clients across South Jersey

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