Robert Manchel

Can A Person Keep A Second House In A New Jersey Chapter 13 Case?

October 18, 2015 by Robert Manchel

NJ. Bankruptcy Lawyer Explains When A Person Can keep A Second House In A New Jersey Chapter 13

In a New Jersey chapter 13, the debtor must pay all of his monthly household disposable income, each month, to the trustee for 36 to 60 months. The disposable income represents the amount left over after all necessary and reasonable expenses are subtracted from the monthly household net income. Necessary expenses are expenses that are needed to live, which include, but are not limited to the following: mortgage; residential rent; utilities; auto finance payments; food; clothing; auto insurance; auto payment, etc. Also, the amount of the expense must be reasonable. For example, $3,000.00 monthly for food, for a household of two, is unacceptable.

The monthly disposable income, as explained above, must be paid to the trustee each month. At the request of the debtor, the monthly disposable income that represents the trustee payment, may be paid to creditors that are needed for a reorganization. This means that the disposable income used to pay the trustee, may include funds to be paid for mortgage arrears on the debtor’s house, or auto finance arrears on an auto that is needed for work. Also, certain creditors must be paid with the trustee payment funds, such as certain taxes and child support arrears. However, any additional remaining disposable income, each month, that is paid to the trustee, must be paid to the general unsecured creditors, such as credit card companies.

In general, the bankruptcy judge will not permit a debtor to use his disposable income to make a mortgage payment on a second beach house, that is used for vacations. Additionally, typically, the trustee will not permit trustee payment funds to cure the mortgage on a second beach house, as the second house is an unnecessary luxury item. However, if the second beach house brings in a monthly positive income cash flow, which brings in more money to the debtor, the judge may permit the debtor to use his income to pay the mortgage and keep the second house. Under this scenario, the additional monthly income benefits the debtor, his creditors and the bankruptcy estate.

Also, if the debtor is paying any and all his creditors, in full, through his chapter 13 bankruptcy plan, the debtor will be permitted to keep the second beach house and any other house or property, as the additional costs does not have an adverse effect on any creditor. Under this scenario, there would be no reason not to allow the debtor to keep the second house, as every creditor will be paid 100% of the total amount due.

Contact Robert Manchel at 866 503 5644 to discuss your NJ. bankruptcy law questions.

New Jersey Bankruptcy and Credit Reports

September 25, 2015 by Robert Manchel

New Jersey Lawyer Explains About Bankruptcy And Credit Reports

A debtor’s credit report will reflect the bankruptcy filing. More specifically, each creditor entry should reflect that the account is in bankruptcy. Also, upon the filing, the public record portion of the credit report should reflect the bankruptcy case number, chapter filed and the date of the filing. If this information is not properly reflected on the credit report, the information may be corrected by sending each credit bureau an appropriate request, together with supporting documents.
At the completion of the bankruptcy process, the debtor will receive a court order indicating a discharge of certain debt. The debtor’s credit report should properly reflect this discharge, next to each creditor that is related to the discharged debt. Also, when the debt is discharged, the public record portion of the credit report should also reflect the status of the discharge. The debtor may pursue the same correction process as explained above, in the event that this portion of the credit report is inaccurate.
Depending on the credit bureau, a chapter 7 bankruptcy case may be on your credit report for seven years, from the filing date. A chapter 13 may be on your credit report for ten years from the filing date. It is a myth that a person is unable to obtain credit if a bankruptcy filing is on a credit report. A person’s credit score may be repaired relatively quickly, by applying the appropriate methods, which will allow for a lower interest rate, even though the bankruptcy notation is on a person’s credit report.
Robert Manchel, the NJ. bankruptcy attorney may be contacted at (866) 503-5655.

The New Jersey Bankruptcy Process When Losing A House

September 16, 2015 by Robert Manchel

New Jersey Attorney Details The Bankruptcy Process When Losing A House

This blog pertains to individuals who are either unable to, or do not wish to, save their house from foreclosure. A person may be unable to save their house, due to a loan modification denial or a substantial reduction in income. Sometimes people understand that their house cannot be saved through any option, including bankruptcy. A person may understand that saving a house is too costly, not worth the monthly payment, or would prefer renting at this time.

Although a chapter 13 may save someone’s house, a person may change their mind and decide to surrender their house, while in a New Jersey chapter 13. A person may modify their chapter 13 plan and surrender their house at any time. If a modified plan surrendering the house is filed with the court, the mortgage company will likely ask the court for permission to proceed with the foreclosure action. The court will likely grant the mortgage company permission to proceed with the foreclosure action. After such permission is granted, both the chapter 13 case and the mortgage foreclosure action will continue simultaneously. At this time, the homeowner, may continue to reside in the property, until the house is sold, at sheriff;s sale. Typically, the house is taken by the mortgage company and not the bankruptcy court or trustee.

A chapter 7 will not allow a person to save a house that is in foreclosure due to mortgage payment arrears. However, the filing of a chapter 7 will initially stop the foreclosure action. In a chapter 7, if the house does not have substantial equity, the trustee and the court will not sell the property. In other words, typically the bankruptcy court will not take the property and the house will be lost by way of the foreclosure action that is not connected to the bankruptcy filing.

If a chapter 7 debtor is in arrears with their mortgage payments, typically, the mortgage company will file a motion with the court asking for permission to proceed or commence a mortgage foreclosure action. Similar to the chapter 13 situation, the mortgage company will likely be granted permission to proceed with the foreclosure action, while the chapter 7 case continues. If the mortgage company does not ask the court for permission to continue the foreclosure action, the mortgage company will be permitted to proceed with the foreclosure action after the chapter 7 case is discharged. A New Jersey chapter 7 case process is about four months to discharge. Ultimately, the house is lost by way of the mortgage foreclosure action and not by way of the bankruptcy case, court, or trustee.

Robert Manchel, the bankruptcy lawyer in NJ. can be contacted at (866) 503-5655.

Losing A House New Jersey Bankruptcy

August 31, 2015 by Robert Manchel

NJ. Lawyer Explains How A Property Is Lost When Surrendered And A Bankruptcy Case Is Filed.

This blog pertains to individuals who are either unable to save their house, or do not wish to save their house from foreclosure. Sometimes people understand that their house cannot be saved through any option, including bankruptcy. A person may understand that saving a house is too costly, not worth the monthly payment, or would prefer renting at this time.
There are various reasons for not saving a house from foreclosure. A person may be unable to save their house, due to a loan modification denial or a substantial reduction in income. Also, a chapter 13 debtor may change their intention, at any time, and decide to surrender their house, during a chapter 13 plan.
Although a chapter 7 will not allow a person to save a house that is in foreclosure, the bankruptcy filing will initially stop the foreclosure action for a short time period. It is unlikely that a bankruptcy trustee will sell a house, in connection with a chapter 7 case. If the house does not have substantial equity, the house will not be sold in the bankruptcy case.
If a chapter 7 debtor is behind with payments, the mortgage company may ask the bankruptcy court for permission to proceed with the foreclosure action. Or, in the alternative, the mortgage company will be permitted to proceed with the foreclosure action after the case is completed and the debt is discharged. Ultimately, the house will be sold at sheriff’s sale and at some time thereafter, the house must be vacated.
If a chapter 13 debtor, at any time, wishes to surrender the house, the mortgage company will be permitted to proceed with the foreclosure action, during the pending bankruptcy case. The chapter 13 bankruptcy case may continue even though the mortgage company proceeds with the foreclosure action and sheriff’s sale. As explained above, typically, the house is lost by way of sheriff’s sale, through the foreclosure process, even though the owner has filed for a chapter 13 or chapter 7 case.
Robert Manchel, the NJ. bankruptcy attorney, may be reached at 866 503 5644.

Is the Over Payment Of Unemployment Benefits Dischargeable In A New Jersey Bankruptcy Case?

August 17, 2015 by Robert Manchel

New Jersey Lawyer Explains When Unemployment Benefits are Dischargeable

Typically, an over payment of New Jersey unemployment benefits is dischargeable in bankruptcy, unless the debt was incurred by fraud. Unemployment debt is not included in any of the bankruptcy code exceptions to discharge. Therefore, in a chapter 13 and chapter 7 unemployment debt is generally dischargeable and classified as general unsecured debt.
However, the New Jersey Department of Labor and Workforce Development, Division of Unemployment and Disability Insurance (dept. of labor), may bring a bankruptcy action to deny the discharge of unemployment debt, under the fraud provision of the code, which states as follows:
“(a) A discharge under section 727, 1141, 1228 (a), 1228 (b), or 1328 (b) of this title does not discharge an individual debtor from any debt—
(2) for money, property, services, or an extension, renewal, or refinancing of credit, to the extent obtained by—
(A) false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor’s or an insider’s financial condition;
(B) use of a statement in writing—
(i) that is materially false;
(ii) respecting the debtor’s or an insider’s financial condition;
(iii) on which the creditor to whom the debtor is liable for such money, property, services, or credit reasonably relied; and
(iv) that the debtor caused to be made or published with intent to deceive; …”
The New Jersey bankruptcy court requires the Department of Labor to prove that the debtor obtained the unemployment debt by actual fraud, which includes the following elements:
“(1) [the debtor] obtained money, property or services through a material misrepresentation; (2) the Debtor, at the time of the transaction, had knowledge of the falsity of the misrepresentation or reckless disregard or gross recklessness as to its truth; (3) the Debtor made the misrepresentation with intent to deceive; (4) the Dept. of Labor reasonably relied on the misrepresentation; and (5) the Plaintiffs suffered loss, which was proximately caused by the Debtor’s conduct.”
The above means that the debtor may discharge the unemployment debt unless the Dept. of Labor can prove, by a preponderance of the evidence, that the debtor is guilty of all five of the above listed elements. A preponderance of evidence means proof of more than 50% that the debtor committed each of the five elements. In other words if the debtor received an over payment without obtaining the funds through fraud, as explained by way of the five elements above, the debt is discharged in a chapter 13 and chapter 7.
Contact the NJ.bankruptcy lawyer, Robert Manchel at 866 503 5644 to discuss your questions.

How Does New Jersey Bankruptcy Effect Credit And The Authorized User?

July 30, 2015 by Robert Manchel

Bankruptcy Lawyer Discusses The Effect of New Jersey Bankruptcy on Credit and the Authorized User

An authorized user is permitted to use a credit card without having any obligation to pay the debt. This means that only the individuals that have signed the credit card documents, as the responsible party, may be sued if the debt is in default. An authorized user may be included at the time the responsible party signs the application or anytime thereafter, without a credit check.Typically, the responsible party and not the authorized user receives the credit card monthly statements and correspondence. Consequently, the authorized user may not be privy to the credit card information,including the status of credit card payments.
The status of the credit card will affect the Authorized users’ credit and credit score, even though he is not responsible for making payments. If the payments are current, the authorized user’s credit will be favorably effected. However, if the payments are in default, the authorized user’s credit will be negatively effected. Also, the filing of a bankruptcy case by the responsible party will negatively affect the credit score of the authorized user. Therefore, it is extremely important for the authorized user to be added to the account of a very responsible person.
The credit card company will continue to report the status of the monthly payments for the authorized user, until the authorized user is removed from the account. If the authorized user is aware, that the payments are not paid on a timely basis, he should remove himself from the account, for the purpose of stopping any future negative reporting. The authorized user should remove himself from the account, prior to the bankruptcy filing of the responsible party. As a result, the filing most likely will not be reported on the authorized users’ account.
One strategy for repairing credit after a New Jersey bankruptcy filing, is to add oneself as an authorized user, to an existing established credit card that is held by a very trusted individual. Also, one can include themselves to a new credit card as the responsible party or authorized user, with a very trusted individual.
The Law Offices of Robert Manchel may be contacted at 866 503 5644 to discuss your New Jersey bankruptcy options.

Manchel
New Jersey
Bankruptcy Law