Posted by Kevin on October 30, 2010 under Bankruptcy Blog | 
You bought your house for $300,000 in 1997. By 2003, the value went up to $420,000. You refinanced at $380,000 with an adjustable rate mortgage The value of the house increased to $460,000 by 2005. You wanted to consolidate your credit card debt so you draw down $60,000 on a home equity line (HELOC) in 2006. Things are going all right but then your mortgage adjusts upward and you owe another $600 per month. The HELOC payment goes up too. Then, someone gets sick or loses a job, you miss a couple of mortgage payments. Before you know it, you are in financial trouble. You are thinking about bankruptcy.
If you do file bankruptcy, should it be under Chapter 7 or 13. A Chapter 7 will take care of credit cards and medical bills but can’t do much about the mortgages because they are what is called secured debt. A Chapter 13 can save your house but do you have to make payments on both mortgages? Maybe- Maybe not. Under certain circumstances a Chapter 13 debtor can eliminate that second mortgage.
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Posted by Kevin on October 24, 2010 under Bankruptcy Blog |
Say you bought a car and financed it. The lender will have a lien on the car. You lose your job and file a Chapter 7 bankruptcy. What happens to the car?
Under the new Code, a debtor can elect to do one of three things: surrender the car to the lender; redeem the car for fair market value usually in one payment; or reaffirm the entire debt and continue making payments.
Here is an interesting case involving a surrender of a car. It took place in Maine. That is in a different circuit from New Jersey but the ruling is instructive- that means that the bankruptcy courts in NJ will take heed.
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Posted by Kevin on October 11, 2010 under Bankruptcy Blog |
You are behind on your mortgage 6 months. Your monthly payment, including taxes and insurance, is $3,000 per month. Your lender has filed a foreclosure complaint. What to do? Can filing bankruptcy help? The answer, like most answers involving legal issues, is that it depends. First of all, the filing of any bankruptcy acts as an automatic stay on most efforts to collect a debt including foreclosure. So, if you are facing a sheriff’s sale, the automatic stay will halt that sale. But, for how long?
In a Chapter 7, the stay lasts until the Trustee abandons the property, a creditor obtains relief from the automatic stay from the court, or the earlier of the time that the case is closed or a discharge is granted or denied. A trustee will usually abandon property if he or she determines that there is no equity in the property. That means that the mortgage is greater than the value of the property. This will happen about the time of the first meeting of creditors which occurs about 4-6 weeks after the filing. The trustee sends out a notice of abandonment. If no one objects , then the abandonment is processed by the clerk and notice is sent out to creditors. The whole process takes about 8 weeks and the foreclosure marches on.
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