Robert Manchel

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.

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.

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.

When Can A Mortgage Be Modified Or Eliminated in a New Jersey Bankruptcy Case.

July 12, 2015 by Robert Manchel

Lawyer In New Jersey Explains When Mortgages Can Be Modified In Bankruptcy Case

The bankruptcy code section permitting a mortgage modification in a chapter 13 is as follows:
11 U.S.C. Section 1322 (b)(2)
“…modify the rights of holders of secured claims, other than a claim secured only by a security interest in real property that is the debtor’s principal residence, or of holders of unsecured claims, or leave unaffected the rights of holders of any class of claims;”
The bankruptcy laws permit a mortgage modification in a 13, under certain circumstance. The interpretation of section 1322 (b)(2) is different when dealing with real estate that is not the debtor’s principal residence. A mortgage in connection with a non principal residence may be modified and reduced to the value of the real property. The following example explains this application. A debtor has a rental home and resides in a separate property. The value of the rental home is $100,000. The payoff of the first and second mortgage is $80,000.00 and $60,000.00, respectively. The first mortgage may not be modified under any scenario because the house’s value is more than the first mortgage’s payoff amount. However, the bankruptcy code permits the reduction of the second mortgage to $40,000.00, which is the amount available after the first and second mortgage payoff is subtracted from the house’s value. In this scenario, the $40,000.00 must be paid through the bankruptcy plan. If the previous example related to the debtor’s principal residence, and not a rental property, the bankruptcy law would not permit any modification of the second mortgage.
The bankruptcy law permitting a mortgage modification in a chapter 13, specifically excludes the modification of any mortgage that is deemed a secured claim, in which the mortgage is limited to a security interest only in the debtor’s principal residence. The judicial case law interpreting this bankruptcy law, determined that any mortgage that attaches to any equity in the debtor’s principal residence may not be modified. This means that if any value of any principal residence is less than the payoff of the first mortgage payoff, than all junior mortgages may be completely stripped and removed from the real estate. However, if the value of the debtor’s principal residence is more than the first mortgage payoff amount, even by $1.00, than no junior mortgage may be modified, to any extent.
An example of the law’s application to a principal residence is as follows. A house with a value of $100,000.00 and a first mortgage payoff of $101,00.00, permits the debtor to strip away, completely, any junior mortgage from the house, no matter the amount of the junior mortgage payoff. However, if their is any equity available in the principal residence after subtracting the payoff of the prior mortgage, than the second mortgage may not be reduced, to any extent. For example, if the value of a principal residence is $100,000.00 and first mortgage’s payoff is $99,990.00, than the second mortgage may not be modified, to any extend. However, if the debtor’s principal residence has a $100,000.00 value and the first mortgage has a payoff of $101,000.00, than the second mortgage may be completely stripped from the house. In other words, when dealing with a mortgage modification in connection with a principal residence, it is all or nothing.
Typically, the main issue regarding such cases is the house’s value. If the mortgage company contests the value, than the debtor and mortgage company must provide an expert real estate appraisal. Please note that there are exceptions to the above law that is not explained above. Also, in certain circumstances, the debtor may be required to pay a portion or all of the part of the mortgage balance that may be “eliminated” as explained above.

Bankruptcy Lawyer Discusses How A New Jersey Bankruptcy Trustee Avoids a Transfer as a Preference

July 2, 2015 by Robert Manchel

New Jersey Attorney Explains How Bankruptcy Trustee Avoids A Transfer As A Preference

As I explained in a separate blog, a New Jersey Bankruptcy Trustee has seven Avoidance Powers that provide the right to avoid (cancel) specific types of transfers made by the debtor. The bankruptcy code, 11 U.S.C. § 547, permits the trustee to avoid (cancel) any transfer of interest in the debtor’s property that was made: to or for the benefit of a creditor; for or on account of an antecedent debt owed by the debtor before such transfer was made; while the debtor was insolvent; and within the ninety (90) days prior to the bankruptcy filing; and the transfer enables the creditor to received more than such creditor would have received if the transfer had not been made.
A transfer may not necessarily mean that the debtor transferred property to a creditor. A transfer may also mean that a creditor obtains a better interest in the debtor’s property, such as converting an unsecured interest into a secured interest. An example of a transfer is a creditor gaining a benefit by filing a lien against the debtor’s property, in connection with a prior debt owed to the creditor.
The following is an explanation of the criteria. “for or on account of an antecedent debt owed by the debtor before such transfer was made” means that the debtor previously owed a debt to the creditor prior to the time of the transfer. If the debtor sold property and received money for the property, the transfer is not avoidable, as no previous debt was owed to the creditor. The following example meets the criteria of a transfer that relates to an antecedent (prior) debt. A bank account levy and removal of funds, in connection with a debt that was previously due to the creditor, prior to the filing of the levy. In this scenario, the transfer is the filing of the levy.
All of the above listed criteria must occur simultaneously. Therefore, at the time of the transfer, the debtor must have been insolvent. Insolvent means that the debtor’s aggregate debts are greater than the total value of all of the debtor’s assets. With regard to the last criteria, if the transfer does not entitle the creditor to receive more money or an improved interest in property, than the transfer is not avoidable as a preference.
Most chapter 7 bankruptcy cases do not involve the sale of assets or the distribution of funds. In a chapter 7, the trustee will not pursue the avoidance of a transfer, if there is no asset to liquidate or money to disburse to creditors. Typically, a chapter 7 trustee will not permit a debtor to use his power, strictly for his own benefit. Therefore, even if all of the criteria is met, but there is no distribution to creditors in the chapter 7, the trustee will not pursue the avoidance action.
In a chapter 13, the avoidance of a transfer may benefit the debtor, by reducing the amount that the debtor must pay to such creditor, if the transfer was avoided. However, this power is strictly limited to the trustee and not the debtor. Typically, the chapter 13 standing trustee will avoid a transfer if the avoidance results in a substantial benefit to creditors other than the creditor who participated in the transfer. For example, if the result of the transfer results in a substantially higher payout to numerous other creditors, the trustee will likely pursue the action. Each trustee may not permit the avoidance of a transfer that solely benefits the debtor and no other creditors by reducing his payments to the trustee.
As always, there are a number of exceptions to the ability to avoid a transfer as a preference, assuming all of the criteria are met. There are a number of exceptions to consider. One exception is the business exception. The business exception does not permit an avoidance of a transfer made in the ordinary course of business or financial affairs of the debtor, which was made according to ordinary business terms. In addition to the business exception there are many more. I would be happy to discuss how they can individually apply to your personal circumstances.
Robert Manchel, an expert NJ Bankruptcy Lawyer, may be contacted at 866 503 5655 to discuss your bankruptcy protection questions.

Bankruptcy Attorney Discusses the Facts About Bankruptcy in NJ

July 1, 2015 by Robert Manchel

Below Is A List of Facts About New Jersey Bankruptcy

Bankruptcy stops debt collection and protects property.

All assets and debts must listed on the petition.

Husband and wife may file together or separately.

Even though the husband may file without wife, or vise versa, both of their income must be included on the petition. This assumes that they are not separated.

The bankruptcy code does not set forth a minimum amount of debt that is required for filing.

Typically, a chapter 7 case requires one hearing and a chapter 13 case requires two hearings.

The Trustee’s “Notice of Abandonment” means that the trustee is abandoning his right to property and does not mean that the debtor must abandon the property. In other words, “Notice of Abandonment” is a good thing, not bad.

A chapter 7 will stop a foreclosure action, but not permit someone to permanently save a house with mortgage arrears.

A chapter 13 will stop a foreclosure action, and may permit someone to permanently save a house with mortgage arrears.

Typically, the chapter 7 process is about four months and the chapter 13 process is about thirty six to sixty months.

Chapter 7 does not require any payments to be made.

Chapter 13 bankruptcy requires monthly trustee payments.

Although the filing of a chapter 7 bankruptcy petition stops an auto repossession, a chapter 7 does not allow a person to permanently save their auto, if there are payment arrears.

Typically, a chapter 7 allows someone to eliminate unsecured debt, such as credit card debt.

There are three bankruptcy courthouses in New Jersey, which are Newark, Trenton and Camden.

The bankruptcy code lists certain debt that cannot be discharged or eliminated.

Certain types of debt must be paid in a chapter 13.

Even though a bankruptcy filing is included on one’s credit report, does not mean that the person cannot restore their credit and credit report.

There are three New Jersey chapter 13 standing trustees, with one trustee handling all cases that are filed in each particular courthouse, as explained above

There are numerous chapter 7 trustees that handle cases in each courthouse.

Robert Manchel is an experienced New Jersey Bankruptcy Lawyer. His telephone number is (866) 503-5655. Please call to discuss your bankruptcy protection options.

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