Readers in New Jersey may be interested to learn about the bankruptcy of a local man. The man is the owner of an oil company, Norton Oil Company, which recently had some difficulty making the oil deliveries that it contracted to make to people in our state. The Chapter 7 bankruptcy filing came in part due to the personal guarantees made by the owner of the oil company for his business. This filing may help him to avoid a business bankruptcy for his personally owned oil company.
There are several different types of bankruptcy options for people in New Jersey who find that they are unable to repay the debts that they owe. Most often, people choose a personal bankruptcy under Chapter 7 or 13. Each of these has requirements for the process, possibly including the need to be a wage earner or to have an income under a Chapter 13.
Credit card debt can become overwhelming. Often in a desperate effort to avoid bankruptcy, individuals will borrow against or withdraw their pension or retirement savings to pay down at least some of the debt. In certain circumstances, that can help. But often, the pension loan is just a short term remedy and a bankruptcy has to be filed anyway. Except now, the individuals have reduced their retirement savings. Initially it should be noted that retirement savings are typically protected in a personal bankruptcy meaning that asset will not be lost or liquidated during the bankruptcy. If the unsecured debt is not significant and the pension loan can payoff the debt, and the loan payment is less than was being paid, the pension loan could work. However, if credit cards remain and now the individuals are paying credit card debt and a pension loan, then it may be that bankruptcy from the start may have been a better solution. Certainly before borrowing further, it would make sense to schedule a free consultation with an experienced attorney to consider the advantages and disadvantages of each option.
Many people in New Jersey and elsewhere took on home mortgage loans over the past few years that were unfavorable. Some of these same people found that they had difficulty making the required payments on their mortgage because of the high rates or the lowered value of their homes. This has led to many facing foreclosure or making the decision to seek the help offered by a personal bankruptcy filing.
A current trend in Case Law has increased the circumstances where personal bankruptcy can be used to eliminate student loans. Typically to eliminate a student loan a debtor must show that they have attempted to make payments in the past, though they cannot make payments currently and they will not be able to make payments in the future. The last requirement is often difficult to prove unless somebody has been determined to be permanently disabled. However, recently there have been a number of cases where elderly debtors have been allowed to discharge the student loans. In doing so the courts look at the totality of circumstances to determine whether it is indeed unlikely that a debtor will be able to pay off the loan in the future. The debtor's age, income circumstances and the amount of the debt are all factors that the court can consider.
There is good news for people in New Jersey in a recent report about credit card debt. The amount that the average person in our country owes for these types of financial obligations has fallen again. This has occurred throughout the past year. However, for the many who still find it difficult to pay the debts that they owe, the decision to file a personal bankruptcy may be a good choice.
When a Chapter 7 Bankruptcy is filed and you have a car loan, you are required to file a Notice of Intention to indicate what your intention is relating to that car loan. Generally, there are three options. You can reaffirm the debt, which is basically entering into an agreement to treat the loan no differently than prior to filing the bankruptcy. You can surrender the vehicle. Typically in a Chapter 7 Bankruptcy any deficiency resulting after the vehicle being sold by the lien holder would be eliminated as a part of the Chapter 7 Bankruptcy. Or you can redeem the vehicle. For example, if you owe $10,000.00 on a vehicle, but the vehicle is only worth $6,000.00, you can satisfy the entire debt by paying $6,000.00 in full satisfaction of the loan. In effect you are paying the secured creditor what they would have received had the vehicle been returned to them and sold. Of course most people filing bankruptcy do not have $6,000.00 sitting in their bank account. However, redemption can still be accomplished. In addition to receiving help from a friend or relative, there are banks that lend to people in bankruptcy specifically for the purpose of redeeming a vehicle. Typically the interest rate is going to be high. However, often paying a higher interest rate on $6,000.00 is still going to result in a reduced payment and reduced total amount paid than the original loan of $10,000.00. Some companies will even provide the analysis as to what the payments would be before the bankruptcy is even filed. Certainly, when a debtor has a vehicle where the debt is greater than the value of the vehicle, but they wish to retain the vehicle, redemption is something that should be seriously considered.
Generally any mortgages secured by a home must be paid if the intent is to keep the property. However, when the amount owed on the first mortgage exceeds the value of the home, a chapter 13 bankruptcy can be used to "cram down" the second mortgage and treat the debt as an unsecured debt. Even if there is no equity in the debtor's assets, a chapter 7 cannot be used to accomplish the "cram down". Also, a recent 4th Circuit Court decision, Alvarez v. HSBC Bank USA N.A., holds that both spouses must file bankruptcy to accomplish this if both are on the mortgage.