Dubiln Packard

Bankruptcy as an Option

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Will Bankruptcy Stop a Sheriff Sale?

Will Bankruptcy Stop A Sheriff SaleBankruptcy will stop a Sheriff sale provided a bankruptcy case filing number is provided to the Sheriff prior to the sale. So, Will Bankruptcy Stop A Sheriff Sale?  Yes.

Sheriff’s sales are the final event in the foreclosure process but sometimes, if an adjournment of the Sheriff sale cannot be obtained, the only way to stop the sale is with a bankruptcy filing.

If the property is placed in bankruptcy through a bankruptcy filing, the Sheriff is not permitted to proceed with the sale until the Sheriff receives further orders from the plaintiff’s attorney. The file is held in abeyance of the Court until the bankruptcy is dismissed or if there is a default on the defendant’s part.

If you have been attempting to get a loan modification and save your home from foreclosure, a chapter 13 bankruptcy may prove to be helpful by stopping the Sheriff’s sale  and obtaining a loan modification. In a Chapter 13 Bankruptcy filing, you will be permitted to catch-up on all of the arrears (missed payments as of the time of filing) over a 60-month period through a Chapter 13 plan and immediately start making your mortgage payments. Provided you have enough income to make those payments, there is no approval required from the bank, rather, your chapter 13 plan is confirmed by the bankruptcy court.  This is often extremely helpful in the case of a self-employed person who has been unable to convince a lender of the ability to pay.

Will Bankruptcy Stop A Sheriff Sale?  Yes.  Contact us to learn more.

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Are Condo Association Dues Dischargeable in Bankruptcy?

Condo fees dischargeable in bankruptcyIn a word Yes.  But read on.

Yes, is not the end of the question.  Past-Due Condo Association Dues Are Dischargeable in Bankruptcy. BUT, you will continue to owe dues and fees that are incurred after the bankruptcy for as long as you remain in title to the house.

Many people are confused by the question: Are Condo Association Dues Dischargeable In Bankruptcy? Condominium association fees pose a special difficulty in Chapter 7 or Chapter 13 bankruptcy, given the deflated values of many condos in this real estate market, the intent of many condo owners to surrender and safely walk away from terribly underwater condominium properties through the tax-free and collection-free bankruptcy process, and the slowness new of mortgage-holding banks in foreclosing on surrender condominium properties in New Jersey.

The “special difficulty” is with regard to the condominium association fees and dues that come along with the ownership of such properties. First: a bankruptcy surrender of real estate does not “quitclaim” the property back to the mortgage-holding banks immediately.  A New Jersey law-based foreclosure is required for the title to transfer from the individual filing the bankruptcy back to the bank after the bankruptcy.  Second: while the bankruptcy discharges the filler’s obligation to pay all past-due fees and dues, it does not have any effect on all post-filing dues and fees that become due and owing and continue to become due and owing each and every month until the filer no longer holds title to the property.

Past-due association dues and fees are discharged by a bankruptcy just like any other unsecured debt. However, condominium associations (and homeowners’ associations in planned subdivision situations) have litigated the issue of continuing association fees aggressively in the bankruptcy courts, and they have largely come out ahead on this question.

What does all of this mean?
Even If Surrendering the Condo, Dues Must Be Paid from Date-of-Filing of the Bankruptcy Petition until the property is transferred to another owner or back to the bank.

A homeowner must continue to pay the association fees so long as they remain the titled owner of the property—even after a surrender of the property in bankruptcy.

It is worth repeating for clarity: Bankruptcy will discharge all association fees incurred prior to the date of the filing of the bankruptcy petition BUT the homeowner will be liable for association fees from the date of filing forward, on through the completion of a full foreclosure process by the note-holding bank. In New Jersey, this can mean several months to a year or more of continuing responsibility for these fees, even after a bankruptcy. This is because, until a full foreclosure process as required under New Jersey state law is completed, the surrendering homeowner remains the titled owner of the property.

A full foreclosure process includes a “redemption period” following the foreclosure Sheriff’s sale of the property, generally. If you are not in foreclosure at the time you file your Chapter 7 or Chapter 13 bankruptcy in New Jersey, you can expect to remain the titled owner of the property and to be required to pay ongoing association dues for at least 12 months from the date of filing of your bankruptcy petition. During that period of time after a bankruptcy, you are not required to make any mortgage payment or pay any property taxes, BUT you MUST make your ongoing association dues payments (and keep the property insured, if that insurance payment is not drawn from the association dues, for your own liability protection).

If you are a New Jersey resident and would like to explore your options for a Chapter 7 or Chapter 13 bankruptcy with an experienced New Jersey bankruptcy attorney, please contact us at or click the button to schedule a free, initial consultation.

 

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What Are Median Income and Means Tests?

What are median income and means tests?  These are two different tests used to figure out if you can file for bankruptcy.  Let’s review them one at a time:

The Median Income Test:  This test  is used when your debt is NOT business debt, and is mostly consumer debt.  To find your median income, you add your total monthly income for the past 6 months and divide it by 6.  Then, you compare it to the current median income figures for the same state and family size as yours, published on the U.S. Trustee website (insert link).  If your income is below this number, you can file for bankruptcy.  An attorney can advise you if filing for Chapter 7 or Chapter 13 is best for you.  If your income is more than the published median income for a family size similar to yours in your state, then you must do the Means Test.

The Means Test:  This test is used when your average monthly income is more than the median income for your state published on the U.S. Trustee website.   A lawyer can help you calculate this test.  The Means Test determines if you have money leftover at the end of the month, which affects whether or not you can file for bankruptcy.  With this test you calculate how much money you are bringing in, then subtract your expenses. The problem with this test is that you must use the published IRS numbers for your expenses, like food and transportation.  Sometimes those numbers aren’t the same as what you are actually spending.  Also, you can’t include student loans or retirement account loans when calculating a means test.The means test can show that you have money left over at the end of the month to pay your bills when in reality you don’t.

Speaking with an experienced bankruptcy lawyer can help you figure out where you stand on both types of tests, and help you figure out if you qualify for bankruptcy and if that is the best option for you.

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About Car Loans

Financial stress can result in difficulty making car payments. There are several options for the car owner confronting financial difficulty, including loan extension or modification, sale of the vehicle, repossession of the vehicle, surrendering the vehicle, a “cramdown” of the car loan in Chapter 13 bankruptcy, or reaffirmation or redemption of the loan in Chapter 7 bankruptcy.

Auto loans are secured debt, with the car itself used as collateral for the loan. Lenders can repossess vehicles as loan collateral without a court order, soon after default on a loan. The loan is in default the next day after a missed payment, and the car can show up in the collection queue as soon as ten days after default.

Time is of the essence, for both lender and borrower. For the lender, it’s the rapid decline in the value of the car, and for the borrower, it’s the lender’s haste that forces timely action to avoid or address a possible default.

Failure to maintain insurance on a vehicle can also cause the loan to go into default, even if the payments are current.

If you’re going to be late on a payment, call the lender ahead of the due date and try to arrange an extension, change the payment date, or get the loan rewritten for lower payments over a longer term (resulting in more interest paid). If you’ve missed the deadline, try to catch up on payments as soon as possible. Hiding the vehicle or otherwise thwarting repossession will only add more to your liability when the car is repossessed, or a judgment is obtained. Buyers are responsible for collection, towing, storage and auction fees if a car is repossessed.

When a repossessed car is sold, the proceeds may not cover the outstanding loan balance and fees. In this case, a deficiency will exist for which the holder of the loan will be held responsible. (A deficiency is the difference between the outstanding loan balance and the proceeds collected by sale or liquidation of the asset.) This deficiency is unsecured debt, and can be discharged in a bankruptcy.

Another option is a “cramdown” of the loan in Chapter 13 bankruptcy. The loan balance can be marked down to the market value of the vehicle, and pooled with other debt in the debtor’s Chapter 13 repayment plan. The total paid may be less than the balance on the loan, and on completion of the payment plan under Chapter 13, the buyer will own the car free and clear.

In the event of a Chapter 7 bankruptcy, the option to reaffirm the loan exists, if the car payment is judged to be affordable by the court. In the event of a default after reaffirmation, the buyer is responsible for the debt, including a deficiency in the event of repossession and sale. If a vehicle is surrendered (that is, returned to the dealer) a deficiency will be wiped by the Chapter 7 filing.

722 Redemption

Another option in Chapter 7 for the car owner is a “722 Redemption,” in which the car loan is marked down to the market value of the vehicle and the dealer paid the reduced amount arbitrated by the bankruptcy court. The lien is released with no deficiency. It can be difficult for an owner to come up with a lump sum, but there are lenders who specialize in making loans in these circumstances. The loan is not discharged in the bankruptcy, and can enable the owner to keep the car.

Todd Murphy Law is experienced in dealing with issues related to auto loans in financial difficulty. Get help choosing your best course of action. Call Todd Murphy Law today for a free evaluation.

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Myth One: Its Hard To File Bankruptcy

It Is Not Hard To File Bankruptcy

Myth One in a series of 10 Myths about Bankruptcy:

Not everything you’ve heard about bankruptcy is true. In fact, there are a number of myths about bankruptcy floating around. And if you buy into these myths, you may never take action to get yourself out of a difficult situation – one that seems to be escalating.

Your financial situation is likely taking a toll on you:

You may feel trapped and need to talk to someone you can trust.

You may feel anxious and need to find answers from someone who knows the facts about what you can and can’t do.

You may feel tired and need some hope to keep you going.

Or maybe you just want to ask someone what you should do next?

To help you get clear about your options, let’s take a look at the first MYTH about bankruptcy:

Myth 1: It’s hard to file bankruptcy because of new laws that have been passed.

Truth: Bankruptcy is easy to file when you meet the legal criteria to do so. In fact, more bankruptcies are being filed in America now that at any other time in history.
If bankruptcy is something you’re considering and you’d like to know whether or not you are eligible to file, please pick up the phone and give me a call. The initial client consultation is absolutely free. There is no charge…no obligation…and I can help you make the best decision for you and your family.

You’ll be amazed at the relief you will feel when just this one simple question is answered:

“Am I eligible to file bankruptcy?”

Call to find out.