General Bankruptcy Information

What happens if someone is unable to attend the bankruptcy hearing?
The bankruptcy code requires every debtor (person filing) to attend a Meeting of Creditors Hearing, which is also called a 341(a) hearing. The hearing is held in a room, other than a court room, before the trustee, who oversees the case.
In the event that a debtor is unable to attend the hearing due to circumstances, such as a physical disability or incarceration, the court may permit the debtor to proceed with the hearing without their physical appearance. Depending on the reason for the inability to attend the hearing, the trustee may require the debtor to file a specific request with the court, asking for a court order allowing the debtor to proceed with the hearing by other means. Alternative means of proceeding with the hearing, without a physical appearance, could include a telephone conference, written interrogatories, or by way of another person’s testimony on behalf of the debtor, pursuant to a power of attorney.
Assuming that the debtor has a legitimate reason for his inability to personally attend the hearing, the debtor is generally permitted to conduct the hearing by a separately scheduled conference call, with the trustee and the debtor’s attorney. Although unusual, the debtor may be permitted to proceed with the hearing through certified written answers to the trustee’s questions, called interrogatories. If the debtor is unable to communicate, it may be possible for another person to answer the questions, on behalf of the debtor, by way of a power of attorney. Inability to speak English does not excuse the personal attendance of the debtor.
At the hearing, the trustee is required to validate the debtor’s identity, by way of two valid pieces of ID. The trustee requires a photo identification card, such as a drivers’ license, and proof of the debtor’s social security number. In the event that the debtor completes the hearing by conference call, the debtor’s identity may be confirmed by the debtor’s attorney’s certified statement, reflecting that the attorney personally viewed the two forms of id. The attorney’s signed statement and a copy of the two forms of ID., must be forwarded to the trustee.
Robert Manchel is a New Jersey lawyer who limits his practice to bankruptcy and foreclosure resolution. He may be contacted at (866) 503-5655 to discuss your filing options for bankruptcy protection.

Recently, payday loans are becoming very popular.
Typically, a payday loan (creditor) requires the borrower to approve the creditor’s right to withdraw funds directly from the borrower’s bank account.
At some point, after borrowing additional funds, the cost of the loan, including interest and fees, may spiral out of control. Thereafter, the creditor may continue to withdraw more and more funds out of the debtor’s bank account, which is unmanageable. In the event that payments are not timely paid, the creditor’s representatives’ communications may be harassing and unrelenting. At this point, the borrower may look for bankruptcy relief.
Typically, a payday loan is an unsecured loan that may be discharged like any other unsecured (ie. credit card) debt, assuming the borrower meets the necessary bankruptcy criteria. Also, immediately upon the bankruptcy filing, the Payday loan creditor is prohibited from collecting the debt, which means that the creditor may not withdraw any funds from the debtor’s bank account.
Robert Manchel, a NJ bankruptcy attorney, will answer your bankruptcy questions at 1(866) 503-5655. Schedule a free consultation to learn how bankruptcy protection may be applied to your personal situation.
Disclaimer: The above information is based on my experience in communicating with a number of people. Obviously, the manner in which creditors handle their collections varies. I am not suggesting that any creditor is acting in a manner that is illegal and/or unethical.

Many people are concerned that they must confront their creditors, who will ask them questions.
It is extremely unusual that any creditor will ask a debtor questions. The first hearing of a chapter 13, which is the only mandatory hearing of a chapter 7, is called a Meeting of Creditors, or a 341(a) hearing. Even though the name connotes a personal confrontation with your creditors, it is extremely unusual that any creditor appears at the hearing. In virtually every case, the only people who appear at the hearing is the debtor(s), their attorney and the trustee.
Typically, the only time a creditor will appear at the 341(a) hearing, is a creditor who is personally involved with the debtor, such as an ex spouse, ex business partner,  individual landlord, or individual who lent the debtor money. In the unusual circumstance that a creditor appears at the hearing, the creditor is limited with the time he has to question the debtor. The court schedules the 341(a) hearings and allows very limited time for each hearing, as the trustee must call many other cases within a certain time period.
Although very unusual, every creditor has an opportunity to schedule a separate hearing, named a 2004 hearing, which is a deposition. The deposition in a bankruptcy case is generally held at an attorney’s office before a court reporter. Typically, a trustee is not present at this hearing.
Robert Manchel, an expert NJ bankruptcy lawyer, can be reached at (866) 503-5655 to discuss your options when filing for bankruptcy protection.

A chapter 7 process is about 4 months. After the 4 months, the debtor is completely out of the bankruptcy case and process. The debt that is dischargeable will be eliminated and the property that is exempt in the bankruptcy case may be kept by the debtor. Typically, people file for the purpose of eliminating certain unsecured debt, such as: credit card; personal loans; medical bills; etc. People can also eliminate secured debt that is connected to property that they are surrendering. This means that a person can eliminate a mortgage debt or an auto finance debt, in the event they wish to surrender their house or auto. Typically, a person may keep all of their property unless they own any type of real estate or property having substantial equity or value.
A person may not meet the criteria of a chapter 7 due to excessive disposable income. A person may not wish to file a chapter 7 if he owns valuable property that the trustee will take. Under either or both of these scenarios, a person could obtain financial relief by filing a chapter 13, which requires a monthly trustee payment for a period of 36 to 60 months. In this situation, the debtor will likely be required to pay back at least a portion of the unsecured debt.
A person may also file a chapter 13, as opposed to a 7, for other reasons, such as saving a house from foreclosure while in bankruptcy or an auto from repossession. A debtor may save his house from foreclosure by paying back the total arrears through a monthly bankruptcy plan, in addition to making his regular monthly mortgage payments. A person may save their auto in the same fashion as saving their house, in a chapter 13. In the alternative, a debtor may also keep their auto by paying the total balance on the loan through the trustee payments.
There are also additional benefits of a chapter 13, regarding the elimination of certain type of debt that will not be eliminated in a chapter 7, such as equitable distribution and homeowner’s association debt, in certain situations. A chapter 13 also permits a person to cure child support arrears, Homeoners’ Association arrears, etc.
Robert Manchel, the leading bankruptcy lawyer in NJ, may be contacted at (866) 503-5655 to discuss your options for seeking bankruptcy protection.

Immediately upon the filing of a bankruptcy petition, the Automatic Stay provision of the bankruptcy code is effective immediately. This means that no creditor may commence or pursue any action against the debtor (person filing) for any action, regarding a monetary debt.
All lawsuits must stop immediately, no matter where the case is pending in the litigation process. If a bankruptcy petition is filed before the creditor commences a wage garnishment, the creditor may not start garnishing the wages. If the petition is filed after the wage garnishment has commenced, the garnishment must cease, immediately. Any funds deducted from the wages after the bankruptcy filing must be refunded to the debtor.
The following creditors’ actions must cease, immediately, upon the bankruptcy filing:
termination of utility service;
application of a lien;
application of a bank levy;
mortgage foreclosure action;
tax foreclosure action;
repossession of auto or other property;
telephone calls and any communication of any kind;
eviction action, unless a warrant of removal is entered.
Upon the filing of a bankruptcy petition, the creditor may not communicate or correspond with the debtor by any means, including, but not limited to, the following: letters, telephone calls to debtor, or any other parties. In certain situations, the creditor must return a repossessed auto and restore utility service.
Robert Manchel, bankruptcy lawyer in NJ, may be contacted at 1(866) 503-5655 to discuss your options for seeking bankruptcy protection.

If a homeowner or mortgage company does not pay the real estate taxes to the municipality, the municipality may obtain the payment for the balance due by selling a tax certificate. The municipality sells a tax certificate to an entity that pays the homeowners’ taxes. In return, the entity receives a certificate, reflecting the amount paid, plus the interest that is due on the funds paid. If the homeowner or mortgage company does not payoff the certificate, including interest, within two years from the date of the purchase, the certificate owner may commence a foreclosure action against the homeowners’ property.
The state and municipalities establish the amount of the interest rate on the funds paid for the certificate, which may be as high as 18%, depending on the specific certificate.
A homeowner may file a chapter 13 to avoid the tax foreclosure and loss of their property. The bankruptcy code requires that the homeowner payoff the amount due on the certificate, including the interest, through a bankruptcy plan, over a period of 36 to 60 months.
Before 2010, a bankruptcy debtor was required to pay back, the certificate, plus the interest rate, established by the state and municipality for each certificate. However, in 2010, a New Jersey bankruptcy judge wrote an opinion indicating that the interest rate, for the certificate, may be modified to the prime interest rate, plus an additional 1% to 3%, which substantially reduced the interest.
Thereafter, a second bankruptcy court judge wrote an opinion agreeing with this opinion. However, subsequently, two other New Jersey bankruptcy judge’s wrote opinions disagreeing with their decisions and determined that the interest rate should be the amount that is required by the state / municipality.
The various judge’s decisions result in a substantial difference of the interest rate, as the municipality’s rate may be as high as 18% and the rate based on the bankruptcy code is presently about 4.25%, based on the present prime rate and risk.
At the time this blog is drafted, the issue regarding the appropriate interest to be paid through the bankruptcy plan is scheduled to be decided by the New Jersey Supreme Court. However, at present, the amount of interest that must be paid on a tax sale certificate, in bankruptcy, depends on the debtor’s bankruptcy judge’s interpretation of the law.
Robert Manchel, a New Jersey bankruptcy lawyer, may be contacted at (866) 503-5655 to discuss your options for seeking bankruptcy protection.