New Jersey Bankruptcy Law Blog

I have yet to meet the individual that has wanted to file for bankruptcy.  In laying out one's plans for the future, few, if any, ever contemplate having to utilize bankruptcy protections.  However, the reality is that many quality individuals are forced to face unforseen complications that necessitate a bankruptcy filing.  

One of the most common refrains I have heard is, "I'm not like the rest of your clients."  It is far too easy to generalize and group together those that are forced to seek Federal Bankruptcy protections.  There is no "like" to anything with our various clients.  The truth of the matter is that the only common link amongst our clients is financial hardship.  The need for bankruptcy protections does not descriminate along any common denominator.  

Since the inception of this firm, we have had the honor to represent some of the finest individuals imaginable.  While it is easy to imagine and label those seeking bankruptcy protections as out of control spenders with little contemplation of consequences, reality paints a vastly different picture.  Those that were previously in a position of financial strength are suddenly vulnerable due to any number of variables.  Loss of income/employment, illness and divorce are just a few of the circumstances that can suddenly arise and shake the very foundation of one's personal finances. 

It is my firm belief that everyone knows an individual that has had to seek the relief of bankruptcy protections.  Be it a friend, neighbor or family member, all of us have known someone who has faced financial obstacles that seem insurmountable.  It is imperative to understand that these obstacles are rarely self created.  There should never be a 'Scarlet Letter' labeled to those in need of assistance nor should there be any generalizations as to how they got there. 

A daily review of current events displays famous actors, singers and athletes in need of bankruptcy relief.  What isn't laid out in print are the millions of others trying to save their homes, address past due obligations and obtain fresh starts.  These individuals share little in common other than a need to restore their personal finances.  The Federal Bankruptcy Code offers a key to unlock the many doors closed with financial hardship.  Those in need of the key do not fit into any convenient categories or stereotypes and they come from each and every walk of life.

According to the Mortgage Bankers Association, a record 16.7 percent of home mortgages in the state of New Jersey are late on their monthly payments, or in foreclosure. That is above the 12.5 nationwide percentage. In addition, after the foreclosure slow down last year in the wake of reports of mortgage service abuse and investigations, the process is coming back online. In fact, foreclosure activity numbers in New Jersey last month rose nearly 72 percent compared to March of 2011.

Foreclosure filings and sheriff auctions are up drastically compared to this time last year, but significantly below the numbers we saw in 2010. New Jersey was part of a $25 billion settlement between five large mortgage lenders and state and federal officials that were accused of "robo-signing" foreclosure paperwork and cutting corners to get people evicted quicker.

There are few activities that have proven more frustrating than trying to obtain a loan modification.  Countless numbers of our clients have previously attempted to obtain a loan modification with little to no success.  It has come to a point where a completed loan modification appears as rare as a winning lottery ticket. 

During the loan modification process, our clients have informed of numerous shared experiences:  excessive time spent submitting the same documentation over and over again, deadlines for definitive answers that never come about, scam agencies that make outrageous promises and subsequently take no action.  The only certainty appears to be that nothing is certain with a proposed loan modification.

In New Jersey, the United States Federal Bankruptcy Court has taken provisions to attempt some assistance with this process.  In August of 2011, The Federal Bankruptcy Court approved a process whereby clients can request a loan modification as part of their bankruptcy proceedings.  At the inception of the request, the mortgagee assigns a representative to work directly with debtor's counsel in efforts to effectuate a loan modification.  Thereafter, the mortgagee can obtain the requisite documentation needed to determine whether or not a loan modification is feasible and warranted. 

While this process does not guarantee a loan modification will be granted by the lender, it does help avoid many of the complications associated with the process.  To date, many of our clients have been able to retain homes that may have otherwise been lost if not for this new process.  

I highly encourage individuals facing foreclosure to contact our office about this program.  Upon so doing, we shall be able to determine whether or not the individual qualifies for this program and what steps should be taken to assure retention of the residence.   

Last month we discussed the Fair Debt Collection Practices Act and the code of conduct that debt collectors and creditors must follow when they are trying to collect money from you. Those rules change, depending on who is doing the calling. So how can you tell? The main difference between a debt collect and a creditor is that the creditor is who actually offered you the line of credit, whereas the debt collector is just the hired thug. The creditor gives you money; the debt collector tries to get it back.

The only reason you would pay a debt collector is if your debt has been reassigned or purchased. If your student loan, car loan or credit card debt has been purchased by another party, the ownership of that debt is transferred to the collector and they have a right to 100 percent of the payment. If the debt has merely been assigned to a debt collector, their job as the hired gun is to try and get you to pay back your debt. The collector gets a portion or percentage of whatever monies they collect on behalf of the creditor.