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June 2013 Archives

What Can the Bankruptcy Stay Stop?

When you file a Chapter 7 or Chapter 13 bankruptcy, the automatic stay is immediately effective. The stay prohibits creditors from continuing any collection activity during the bankruptcy case. Thus, because the stay is effective as soon as your petition is filed, the timing of your filing can be crucial, especially in emergency situations such as:

Your Credit Score & Bankruptcy

One of the most common myths about bankruptcy is that it forever destroys your credit. While it takes time to improve your credit score after a bankruptcy filing, with patience and hard-work, a debtor can rebuild his or her credit. It is important to understand what the credit reporting agencies (the three major credit reporting companies are Experian, Equifax, and TransUnion) consider in calculating your credit score:

Will Student Loans in New Jersey Increase?

  According to the American Federation of Teachers in New Jersey (AFTNJ) student loan rates for more than 7.4 million students with federal "Stafford loans" are scheduled to double July 1, 2013. If nothing is done, the current rate of 3.4% will increase to 6.8%. The AFTNJ article states that students in the United States currently owe nearly $1.1 trillion in student loan debt, and this amount is increasing at approximately $2,800 per second! You have probably heard that student loans are rarely discharged in a bankruptcy filing.  Section 523(a)(8) of the Bankruptcy Code says that student loans cannot be discharged unless repaying them would be an "undue hardship" on the debtor or the debtor's dependents.  The good news is that there are no time limitations for pursuing the discharge of student loans in bankruptcy. The burden of meeting the standard for undue hardship is strictly applied by the bankruptcy court. While many individuals will not qualify to discharge their student loan debt in bankruptcy, it doesn't mean that filing a case won't help you. A Chapter 13 bankruptcy filing allows an individual to consolidate debt, including student loans, into one affordable monthly payment for a term of 3 to 5 years.  This is helpful if you are being harassed by several creditors. Your Chapter 13 plan of repayment will set forth how you intend to pay your creditors.  An important factor, however, is that you are only required to use your "disposable income" to pay your creditors under the plan. Disposable income is the amount left after you have paid your necessary bills. Student loans are not considered a necessary bill.  This means that your student loans will be paid at a reduced amount while you are in the Chapter 13 bankruptcy.   As a result, your monthly payment may be significantly lower than what is required by the lender of the student loan. By filing a Chapter 13 case, therefore, you can set up reasonable payments for your student loan debt for the term of your plan. The bankruptcy will discharge or eliminate a large portion of your debt, so when you complete your case, you will hopefully be in a much better position to pay the remaining balance of your student loan. A Chapter 13 filing can be a powerful tool for paying your student loans.  If you are considering this option, it is important that you seek the advice and guidance of the attorneys at Levitt & Slafkes, PC. We are bankruptcy lawyers who know how to make a difference in your financial situation. We have experience you can rely on and we care about your results. Contact our New Jersey law firm online by filling out the form or by calling 973-323-2953 to schedule a free initial consultation.

Medical Issues Can Lead to Bankruptcy

A recent study performed by researchers from the Fred Hutchinson Cancer Research Center in Seattle revealed that cancer patients were twice as likely to file for bankruptcy as individuals without cancer. The report linked bankruptcy court records and information from the regional cancer registry on about 200,000 cancer patients, and compared them with a similar group of people from the same area who did not have cancer. Young people with cancer experienced the highest bankruptcy rates, the study found, up to 10 times the rate of bankruptcy filings among older age groups. All major medical problems lead to costly bills, even if you have insurance. According to a report released by the Center for Studying Health System Change in December 2011, one in five American families was having trouble paying off their medical debt in 2010.  As a result, many of these families were considering filing for bankruptcy protection. In a Chapter 7, the majority, and usually all of your debt (including medical bills) is discharged or eliminated.  For somebody who has stayed in the hospital for any length of time or otherwise incurred a massive amount of medical debt, discharging thousands of dollars can be a huge relief. For information on qualifying to file a Chapter 7, please read our blog titled "What is the Chapter 7 Means Test?" In a Chapter 13 filing, medical bills are treated the same as other unsecured debts.  This means that the debtor pays a percentage of what is owed, which is usually a very small amount, if anything. Again, this can save you a significant amount of  money. If you are drowning in medical debt, contact Levitt & Slafkes, PC to learn what options are available to you. If you are interested in learning how filing a bankruptcy case can benefit you, contact Levitt & Slafkes, PC, at 973-323-2953. You can also reach us by filling out our online form. We represent debtors in Chapter 7, Chapter 13 and Chapter 11 filings. Let us help you get the fresh financial start you need today.

Bankruptcy Fraud - Yes, it still happens

Most of us assume that with the strict regulations governing bankruptcy, it is unlikely that bankruptcy fraud crimes still occur. However, a Bethesda woman who pleaded guilty to using a bankruptcy scheme to defraud creditors was recently sentenced in federal court to more than two years in prison. She must also serve three years supervised release after she leaves prison, and she has been ordered to pay more than $150,000 in restitution. According to reports, she used the Chapter 7 bankruptcy process to defraud people to whom she owed money. She misappropriated money, hid property and assets and failed to use insurance money to make repairs or report the proceeds in her bankruptcy filing. In an unrelated matter, a Dallas, Texas woman who filed multiple bankruptcy filings was also recently charged with fraud.  The woman reportedly filed for bankruptcy at least six times in four years.  After multiple attempts at filing, her activity was noticed by federal officials who brought bankruptcy fraud charges against her. Bankruptcy fraud is a serious federal offense that may include a 5 year prison term and a $250,000 fine if convicted.  Hiding or purposely leaving out information when filing is one of the most common ways bankruptcy fraud is committed. Thus, if you are considering filing a Chapter 7 or Chapter 13 case, contact Levitt & Slafkes, P.C.  to ensure that your filing is correct. If you are interested in learning more about Chapter 7 or Chapter 13 bankruptcy, contact Levitt & Slafkes, P.C. We are experienced in handling a variety of bankruptcy issues. Our offices are conveniently located in South Orange, New Jersey. Please call us at 973-323-2953 or online to schedule your free initial consultation today.

Is the National Mortgage Settlement Agreement Working?

I recently came across a CNBC article discussing how millions of Americans have their home stuck in limbo despite government programs meant to help them. Bank regulators ordered a national review of troubled loans, only for the government to cancel the review and settle mortgage processing violations with 14 major lenders. The lenders agreed to make $3.6 billion in payments to borrowers who were harmed, averaging about $1,000 each in addition to actively working out loan modifications. Many homeowners are still waiting to receive their payment and learn how their mortgage is going to be handled. What are the problems? The CNBC article reports there are widespread reports of three main areas of lender's failure:

How Social Media Can Impact Your Bankruptcy Case

Facebook, Twitter, Instagram and other social media sites have become one of the primary ways people communicate with each other. Many individuals love sharing their lives, including pictures and daily posts on what we're doing. However, if you are a debtor in a Chapter 7 or Chapter 13, you need to think carefully before you post anything. Below are a few ways your social media accounts can cause problems in your bankruptcy case:

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