Manchel
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New Jersey Bankruptcy Blog

Requirements For A Mortgage Company Loan Modification In Bankruptcy

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If a mortgage company approves a loan modification, the loan modification agreement must be approved by the bankruptcy court. Typically, the court will enter an order approving the loan modification without resistance. However, generally, in a chapter 13, the trustee will require a debtor to amend their income and expense schedules and their bankruptcy plan.
At the time of the bankruptcy filing, the mortgage company will file a proof of claim reflecting the total amount due and the arrears balance. At some point, the debtor will be required to pay the pre-filing mortgage arrears, through the bankruptcy plan, unless the mortgage company approves a loan modification. Typically, a mortgage loan modification removes the arrears and spreads the arrears over the life of the loan, either with or without a balloon payment at the end of the loan.
After the bankruptcy court enters an order approving the loan modification, the debtor will be required to modify their bankruptcy plan to reflect the loan modification approval. Also, the debtor will be required to amend their income and expense schedules to reflect their new disposable income amount,which includes their new mortgage payment and the elimination of any previous payment towards the mortgage arrears. The new chapter 13 monthly trustee payment, must at least reflect their new monthly disposable income amount.
Robert Manchel may be reached at (866) 503-5655, to discuss your bankruptcy and loan modification questions.

Required Filing Of Tax Returns

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This Blog deals with the requirement of filing state and federal income tax returns, not whether any taxes are dischargeable.
Chapter 13 tax return filing requirements
In a chapter 13, the debtor is required to have filed any and all state and federal tax returns that were required to have been filed for the four years prior to the bankruptcy filing. The deadline to file all of these returns is the day before the first scheduled Meeting of Creditors, which is approximately 30 days after the bankruptcy filing.
Under the bankruptcy case, if the debtor fails to file the returns within the required time period, the trustee may extend such period, no more than an additional 120 days past the Meeting of Creditors.This period is about 150 days after the bankruptcy filing.However, the debtor may ask the judge for an additional time period, if the reason for not filing the returns were due to circumstances beyond the debtor’s control.
As a practical matter, without a judges approval to extend the filing period, the case will be dismissed at a Confirmation Hearing that is held later than 120 days after the Meeting of Creditor’ hearing.
Please note that if the Federal or state government does not require a debtor to file a return, for whatever reason, the returns, for that year need not be filed.
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chapter 7 tax return filing requirements
In general, everyone is required to timely file any and all federal and state tax returns. However, the failure to file a tax return is not grounds for the dismissal of a chapter 7 case.
Please call Attorney Robert Manchel at (866) 503-5655, to discuss your bankruptcy protection questions.

New Jersey Bankruptcy Attorney Explains Who May Avoid the Means Test

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Who may Avoid the Bankruptcy Means Test(Current Monthly Income Test)
The result of the Means Test determines if a person may file for chapter 7 protection and the amount that must be paid to unsecured creditors in a chapter 13. Please note that there are other criteria that determine whether a person may file for a chapter 7, and/or the amount that must be paid to unsecured creditors in a chapter 13.
The following bankruptcy debtors may avoid having to complete the Means Test analysis:
Debtors, whose debt is mostly non-consumer debt. Consumer debt is debt that was incurred by an individual primarily for personal, household or family purpose.Therefore, if most of an individual’s debt is business related, including business credit cards, the debtor need not complete the Means Test. Other non-consumer debt include personal injury and other tort claims and taxes. Thus, if any of these non-consumer claims make up most of your debt, you need not complete the means test.
A debtor that is a disabled veteran is exempt from the means test.
Military reservists and National Guard members that are on active duty or performing homeland defense are exempt. This exemption continues for 540 days after active duty is terminated.
Robert Manchel, New Jersey bankruptcy lawyer, may be contacted at (866) 503-5655 to discuss your options about filing for bankruptcy protection.

NJ Bankruptcy Lawyer Discusses Keeping A Motorcycle In A Chapter 7 Filing

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Many people enjoy motorcycles in their free time. Here we will discuss different scenarios for motorcycles in a Chapter 7 Bankruptcy Case.
The following pertains to a single Chapter 7 debtor, who is the sole owner of a motorcycle, that is owned free and clear of liens and financing
Assuming the motorcycle is owned free and clear of liens and financing, the debtor may keep his motorcycle in a chapter 7 if the motorcycle is fully exempt. In other words, if the amount of exemptions available to apply towards the motorcycle are in excess of the vehicle’s fair market value.
As explained in a separate part of my website, a debtor may apply his federal bankruptcy exemptions to personal property and real estate. The amount of exemptions is based on the type of personal property. The Federal exemptions in the bankruptcy code are modified periodically. At this time, a debtor is permitted to apply $3,450 towards a motor vehicle, plus $1,150 towards any property. Additionally, the bankruptcy code permits a person to use up to $10,825.00 of the exemptions that are not applied or needed towards their residence. Therefore if a single debtor, who is the sole owner of a motorcycle, does not need to apply the aforementioned exemptions towards any other property, he may be able to keep a motorcycle with a retail fair market value of approximately $15,425.
The following pertains to an individual chapter 7 debtor with motorcycle financing
In general, a chapter 7 debtor should not be able to afford motorcycle financing payments, which is typically considered a luxury item in bankruptcy. Therefore, the debtor can surrender the motorcycle and eliminate the financing debt.
In order to keep the motorcycle, the debtor must be able to fully exempt the retail fair market value of the vehicle, as explained above. However, the amount of the exemption(s), must only be applied towards the equity of the motorcycle’s retail value. This means that the exemptions explained above only need to cover the difference between the retail value, minus the financing payoff amount. If the retail value is $10,000 and the financing payoff is $7,000, than only $3,000 must be exempted.
In addition to the application of exemptions, the debtor may need to comply with the laws concerning reaffirmation agreements.
Please note that the above explanation is general information, which may not apply in your particular circumstances. Also, it is very unusual to have exemptions of $15,425 available for a motorcycle.
Robert Manchel, NJ Chapter 13 Bankruptcy Attorney, provides expert bankruptcy advice at (866) 503-5655. Call today to discuss your personal situation and bankruptcy protection.

New Jersey Bankruptcy Lawyer Discusses If You Should Stop Paying Credit Cards Before Filing Bankruptcy

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If an individual has decided to file for chapter 7 bankruptcy protection and meets the criteria, in most situations it is advisable to not continue to pay their credit card debt. First and foremost, if a person meets the criteria of a chapter 7, he cannot afford to pay the debt anyway. Furthermore, a chapter 7 discharge eliminates all credit card debt, regardless of the amount due. Therefore, the payment made to the creditor will not benefit the debtor.
Typically, the aforementioned explanation also applies to chapter 13 debtors, as well. However, in the unusual case, where the debtor is required to pay all credit card debt through the chapter 13 bankruptcy plan, it may be advisable to keep current with the credit card debt, prior to the filing.
If a person is current with credit card debt payments, stops making payments, and decides to not file for bankruptcy protection, this will likely result in increased interest and penalties.
Typically, each creditor will review the debt incurred by each debtor for fraudulent conduct. If the creditor believes that a debtor incurred debt with no ability or intent to pay the debt, such creditor may file a complaint with the court, requesting to exclude the debt from the bankruptcy discharge or elimination. A creditor may deem a debt to be fraud, if a substantial debt was incurred prior to the filing, with no payments made to the creditor.
Robert Manchel, a New Jersey bankruptcy attorney, can be reached at (866) 503-5655, to answer your questions.

NJ Bankruptcy Lawyer Explains Chapter 13 Auto Interest Payments

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In a chapter 13, a person has options as to how they may pay their auto payments during bankruptcy. They may make their payments, as follows:
A. Make payments monthly payments directly to the finance company;
A. If they are behind with payments, they may cure their pre-filing arrears through the bankruptcy payments and make their regular future monthly payments directly to the finance company;
C. Pay the entire balance due through the bankruptcy plan; and,
D. Under certain situations, pay to the finance company only the amount equal to the value of the vehicle, at the time of the filing, through the bankruptcy plan.
Please note that the debtor may only apply scenario D under specific situations.
Under scenarios A and B, the monthly payment to the finance company is the same, as if the person is not in bankruptcy. The interest payment is the same, as well. Under scenarios C and D, the interest rate is determined by the prime rate at the time of the filing, plus an additional interest of 1% through 3%, based on the risk that the debtor will not make the payments. The risk is based on the circumstances of each debtor. This means that the interest rate will be a total of 3% at the lowest and 6% at the highest.
Under scenario C, the debtor will pay the balance due, plus the interest rate explained above. Under scenario D, the debtor will pay the retail value of the vehicle, at the time of the filing, plus the interest rate explained above. At the time this blog is written, finance companies are permitting 4.25% to 4.75% as interest rates for first time chapter 13 debtors, under scenarios C and D above.
Robert Manchel, a reputable NJ bankruptcy lawyer, is available to discuss your bankruptcy questions at (866) 503-5655.

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    Manchel
    New Jersey
    Bankruptcy Law

    This web site is designed to provide general information regarding the bankruptcy laws. The bankruptcy laws are complex and may be applied differently, in each case, depending on the particular facts. There may be numerous exceptions and variations for each law and rule. Do not rely on the information provided in this web site. If you are considering filing for bankruptcy protection, you should consult with an experienced NJ bankruptcy lawyer. We are a debt relief agency. We Help people file for bankruptcy relief under the bankruptcy code.

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