Revolving Credit Card Debt and Personal Loans
As we emerge from the first two years of the pandemic, New Jersey residents are carrying record amounts of revolving credit card debt and personal loans. Pandemic era relief programs offered short-term debt relief options such as a forbearance on credit card payments and reduced minimum payments. However, at the end of these programs, it was required that regular credit card and personal loan payments resume. New Jersey residents find themselves unable to meet or resume their regular monthly revolving debt payments. With rising interest rates, these minimum payments have gone up and will continue to rise.
In most cases, these debt loads are unsustainable. Take it from an expert and top bankruptcy attorney in New Jersey. Bankruptcy remains the best option to get a handle on your debts, improve your credit quickly, provide a better financial future for you and your family, and allow you to stop stressing about debts and sleep at night. I offer this advice to you as I would to a relative or one of my closest friends.
Right now, I see people realizing that they cannot afford their minimum monthly credit card payments and personal loan payments. They have borrowed from their 401(k) accounts or drained their retirement accounts to make minimum revolving debt payments. They still have the debt, and nothing in their retirement accounts. Or, they have waited until judgements have been entered against them and they wake up one morning without access to their bank accounts due to a creditor levying the funds due to an unpaid debt, or to a wage garnishment for unpaid debt.
- Have you drawn down your retirement accounts and savings making credit card payments since March of 2020?
- Are you current on your credit card payments and personal loan payments but see no end in sight to pay off the revolving balances?
- Are you being sued by a creditor?
- Are you in a debt management program?
- Are you currently being sued by a creditor?
- Do you have wage garnishments or pending wage garnishments?
- Are judgements pending against you or have been entered against you?
It’s time that we talk.
Federal Debt Relief Programs
Recent surveys show that some individuals and families considering bankruptcy in New Jersey are mistakenly waiting for new federal debt relief programs post-covid to help them out of their financial difficulties. Congress has existing laws for debt relief in New Jersey achieved in a guaranteed, proscribed fashion through the Local Rules of the United States Bankruptcy Court for the District of New Jersey and the United States Bankruptcy Code. In short, bankruptcy is the Federal Debt Relief Program which is designed to successfully get you out of debt while providing the protections offered by federal law. It is misinformation to think that Post-COVID, Debt Relief will take a form other than utilizing the bankruptcy laws to your benefit. While COVID has unquestionably affected everyone, the law on Debt Relief remains the same, tried and true bankruptcy law. As your zealous advocate, my job as your bankruptcy attorney is to use these laws and all local practice nuances in New Jersey to expertly guide you through a New Jersey bankruptcy case.
The State of Mortgages and Foreclosures:
In March of 2020, all foreclosures in New Jersey were halted under the CARES Act. The CARES Act mortgage programs ended as of September 2021. Sheriff Sales resumed as of September of 2021. New foreclosure filings resumed as of January of 2022.
There was a lot of understandable confusion for New Jersey residents who took forbearance or deferments during COVID which allowed them to stop making mortgage payments for a period of time. If you have not resumed making your regular mortgage payment, cannot afford the post-COVID mortgage payment, or have mortgage delinquencies, please reach out. Time is of the essence.
Previously, during the mortgage crisis of 2008, it took years for a property to get to the point of a Sheriff Sale in New Jersey. Unlike other states, New Jersey is a judicial foreclosure state. Foreclosure proceedings must follow specific timelines proscribed by law and make their way through the court system. Unlike 2008, however, there is little to no backlog in foreclosure filings and Sheriff Sales. The courts and mortgage lenders are full-steam ahead filing new foreclosure actions and scheduling Sheriff Sales.
If you are facing a Sheriff Sale in New Jersey, you now have two (2) 28 day Sheriff Sale adjournments. Then, unless a Chapter 13 Bankruptcy case is filed, you will lose your home to a Sheriff Sale. A Chapter 13 Bankruptcy is the only guaranteed way to stop a foreclosure action and a Sheriff Sale. The Superior Court Chancery judges are not granting further time beyond the two (2) 28 day adjournments. Regardless of the story you present to the judge, the courts are moving forward with Sheriff Sales.
If you are not currently making mortgage payments, we need to talk about your plans and how to save your property. Or, if you are facing a Sheriff Sale, we need to come up with a plan of action. The plan of action, through a Chapter 13 Bankruptcy can be to resume making your regular mortgage payment and catch up on your back mortgage payments over a maximum 60 month period, sell the home while stopping foreclosure through Chapter 13 Bankruptcy, or applying for a loan modification either under the protection of a Chapter 13 Bankruptcy or outside of bankruptcy.
Chapter 7 Bankruptcy Eligibility
In 2022, if you own a home, a Chapter 7 Bankruptcy is not recommended. Property values are at record highs. Most homeowners have some or substantial equity in their home. In a Chapter 7 Bankruptcy, the Bankruptcy Trustee, generally a senior bankruptcy attorney appointed by the United States Bankruptcy Trustee’s Office to administer your case, has the right to obtain their own independent valuation of your home and dictate that the home be sold to pay your creditors. You are then put on the defensive to argue against the sale of your home and about its valuation.
Chapter 13 Bankruptcy Eligibility
Given that property values are at record highs, Chapter 13 Bankruptcy is the best option for homeowners in 2022. In a Chapter 13 Bankruptcy, you are guaranteed to keep your home, provided that you can afford it. In exchange, you make minimum payments to your creditors on a pro-rata basis of as little as $150.00 per month for 36 months. In this example, let’s say you have $45,000.00 of credit card debt, personal loans, and judgements. In exchange for keeping your home, your creditors share a portion of the $150.00 per month payment. At the end of the 36 month period, you receive a Discharge of Bankruptcy. The Discharge is your official forgiveness of debt.
Are you a business owner or individual who has received a notice that an ex-business partner, business entity, spouse or ex-spouse, or someone who owes you money or property has filed a Chapter 7, Chapter 11, or Chapter 13 Bankruptcy? If so, we need to talk to protect your rights. As civil lawsuits have resumed full-speed in New Jersey as of 2022, individuals and businesses are using bankruptcy filings strategically in New Jersey to seriously delay or prevent monetary recovery and recovery of property.
Many people, when served with a notice of bankruptcy filing, deadline for filing a Proof of Claim, hearing dates, and so forth, put these notices to the side . Deadlines to protect your rights as a creditor are critical to follow. It is more important than ever that if you are a creditor in a bankruptcy case to get in touch as soon as possible. Unlike the “Before Times” (pre-March 2020) the overwhelming majority of hearings are held virtually. Do not assume any delays due to the pandemic. If anything, the virtual format allows the courts to move faster. Please do not sleep on your rights. I look forward to representing your interests as a creditor.