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Frequently Asked Questions
How long will it take to file my Chapter 13 petition?
What documents should I bring to my consultation with your law firm?
What will it cost to file for a Chapter 13 bankruptcy?
How long will take before my plan is confirmed?
How many months will have I have to make payments under the plan?
Where is the U.S. Bankruptcy court located?
I filed bankruptcy before. When can I file another bankruptcy case?
How can I make my Chapter 13 case successful?
Avoiding Foreclosure: When a Lender Won't Work with You
Guide to Avoiding Foreclosure
No Income documentation Loans
Q. How long will it take to file my Chapter 13 plan?
A. Usually when you come for your first appointment, if you bring all of your documents with you we can complete all of the required filings before you leave our office. Your bankruptcy can be filed within 48 hours, almost immediately if necessary.
For an emergency filing, we can file just the Voluntary
Petition, but we also need a list of all of your creditors, collection agencies,
sheriffs, attorneys and others who are seeking to collect debts from you. If we
do an an emergency filing, the additional documents must be filed within a 15
day period or your bankruptcy will be dismissed.
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Q. What documents should I bring to my first consultation with your law firm?
A. Documents to bring: Last two years tax returns; pay stubs; mortgage,
installment loan, and automobile payment books or stubs; utility, telephone,
insurance, and other receipts; evidence of child support payments and alimony,
and other documentation that will support your income and expenses. Also bring a
list of all of your creditors, both secured and unsecured, and the amount owing
to each.
For an emergency filing, we can file just the Voluntary Petition, but we
also need a list of all of your creditors, collection agencies, sheriffs,
attorneys and others who are seeking to collect debts from you. If we do an an
emergency filing, the additional documents must be filed within a 15 day period
or your bankruptcy will be dismissed.
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Q. What will it cost to file for a Chapter 13 bankruptcy?
A. For a Chapter 13 Bankruptcy our retainer fee to file the
bankruptcy petition with the court, which will stop the foreclosure and the sale
of your house, is $1500.00 plus the court filing fee of $274.00. This is not the total legal fee but will get our firm
started on your case in an emergency. For a Chapter
7 Bankruptcy our rates are very competitive. Call for a quote.
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Q. How long will it take until the hearing and until my plan is confirmed?
A. The first meeting with the Trustee takes place six weeks
after your documents are filed. Chapter 13 plans are usually confirmed within 90 days of filing, depending on the court's backlog.
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Q. How many months will I have to make payments under the plan?
A. The minimum time period for a pay plan is 36 months but most
of our clients prefer a 60 month pay plan.
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Q. Where is the U.S. Bankruptcy court located?
Camden, Trenton, and Newark.
A. Click here for directions.
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Q. I filed bankruptcy before. When can I file another bankruptcy case??
The answer all depends on when you last filed a bankruptcy.The Bankruptcy Code was amended in 2005 to change the time period between Chapter 7 filings from six years to eight years.However, a person can file a Chapter 13 within four years of filing a Chapter 7.
Another recent scenario is a person who filed a Chapter 7 bankruptcy less than eight years ago and then filed a Chapter 13 but couldn’t keep up with the Chapter 13 payments.Can that person convert the Chapter 13 to a Chapter 7 since eight years have not elapsed?The answer is no.
Another common question is when do you begin counting the time period.It is the date of filing the previous case - not the date you received your discharge.
Short sales?
A short sale is where you agree with a buyer to sell your home subject to your being able to get your mortgage lender to agree to take less money than you owe on your house. The lender will require that you prove to it that you are unable to come up with enough money to pay off the mortgage at the time you transfer the house to the buyer. The lender will take a look at the property, the contract and at the information about your finances that you provide. The lender does not have to agree to a short sale.
The lender may want you to pay the real estate broker’s commission, the closing costs including New Jersey’s real estate transfer tax. This can be many thousands of dollars.
If you receive forgiveness for the balance due on your mortgage or your home equity loan or home equity line of credit after the short sale or a foreclosure sale, then you may have taxable income that the lender can and will report to the Internal Revenue Service or the State of New Jersey Division of Taxation. Check with your accountant, the IRS and NJ Division of Taxation to see if you can be considered exempt from paying taxes on this strange form of ‘income’.
The impact on your credit score is the same for a short sale, a deed in lieu, or a foreclosure. How the problem is ultimately resolved does not impact the credit score one way or another.
The desire to protect their credit score seems to motivate who want to complete a short sale. They think that even if they get not a dollar from the transaction that they are banking some benefit to their future credit worthiness. Check with the Fair Isaacs Company website www.myfico.com. You will see that a short sale does not really help your credit score.
A home owner who can not pay the mortgage can live, payment free, in their over encumbered home until the foreclosure is complete. If your mortgage payments and property taxes are $3000/month, and it takes 10 months from last payment to foreclosure, that’s $21,000 you’ve saved toward new housing, health insurance or repairs to your cars.
If you contract for a short sale, you have to surrender possession at closing and find a new place to live immediately. Speak carefully with your attorney about how to protect yourself from any further liability on your mortgage, home equity loans or other debts that may come out of a short sale. Some times a short sale may make sense for you. But in many circumstances it may not.
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Q. How can I make my Chapter 13 case successful??
Here are some guidelines we give our Chapter 13 clients so they can avoid many of the common mistakes and problems we see in Chapter 13 cases.
HOW TO HELP MAKE YOUR CHAPTER 13 CASE SUCCESSFULL
Please be sure you read and understand the information below. It is very important. It will help keep you protected from your creditors. It can help save you money on future legal fees and costs. Be sure you ask any questions you have. You must follow these instructions to help avoid creating new problems in your case.We recommend that you save a copy of these instructions and refer to them often.
PAYMENTS TO CHAPTER 13 TRUSTEES
- The Bankruptcy Court requires that you begin making your Chapter 13 plan payments to the Chapter 13 trustee in the month after your Chapter 13 case is filed. For example, if your case was filed on January 1, then your first payment MUST be made in February. You must make payments every month after that until the Court, the Chapter 13 trustee or your attorney tells you differently
- The Chapter 13 trustee is not allowed to accept personal checks or cash.
- You MUST send the trustee payments in the form of a money order, certified check or a check issued by a bank such as a cashier’s check, treasurer’s check or bank draft. The Trustees do not accept electronic payments or electronic funds transfers.
- You MUST write your Chapter 13 case number on the check you send to the trustee. If you do not do so, the trustee’s staff will not know how to give you credit for your payment. The money will be placed in a suspense account. It will be hard for us to get you credit for the payment.
- You MUST make the payment to the trustee assigned to your case. PLEASE NOTE THAT THE ADDRESSES BELOW ARE WHERE PAYMENTS ONLY ARE TO BE SENT.The payment should be made payable to and sent to the trustee whose name and address for payments only are checked :
TRENTON BANKRUPTCY COURT CASES
( xx )Albert Russo, Esq. Standing Chapter 13 trustee
PO Box 933 Memphis, Tennessee 38101-0933
NEWARK BANKRUPTCY COURT CASES
( )Marie Ann Greenberg, Esq. Standing Chapter 13 trustee
PO Box 520 Memphis, Tennessee 38101-0520
CAMDEN BANKRUPTCY COURT CASES
( ) Isabel C. Balboa, Standing Chapter 13 Trustee
P.O. Box 1978 Memphis, TN 38101-1978
- PLEASE KEEP A COPY OF EVERY PAYMENT YOU SEND TO YOUR CHAPTER 13 TRUSTEE. We recommend you staple the copy of each cashiers check or money order, etc. into a notebook. If there is any question, you will have written proof the payment was made. We may ask you to provide us with this evidence of your having made the payments.
PAYMENTS TO YOUR MORTGAGE, AUTO AND OTHER SECURED LENDERS
- Your Chapter 13 plan payments only pay the payments you missed from before your bankruptcy case was filed. The payments described below are to be kept current by you. These payments are required if you want to keep your home, car or other property. These payments are in addition to the payment you will make each month to the Chapter 13 trustee.
- You MUST make your mortgage and auto loan payments as they come due each month beginning with the month after you file your Chapter 13 case. These are called ‘post petition’ mortgage or loan payments. You should make this payment directly to your mortgage lender or auto lender. You should make this payment even if the mortgage or auto lender does not send you a bill or payment coupon.
- We can help you estimate what the payment should be. It is the principal and interest plus 1/12 of your annual property taxes and annual home owners’ insurance premium.
- Please keep a copy of every payment you send the mortgage lender, auto lender or leasing company. We recommend you staple the copy of each cashiers check or money order, etc. into a notebook. If there is any question, you will have written proof the payment was made. We may ask you to provide us with this evidence of your having made the payments. We may use this evidence in Court to protect you by showing it to a Bankruptcy Judge and to the lawyers for the trustee or lawyers for your creditors.
SOME OF THE CONSEQUENCES OF NOT MAKING PAYMENTS TO YOUR SECURED CREDITORS AFTER YOUR BANKRUTPCY CASE HAS BEEN FILED.
- A secured lender is a lender who has the right to take away certain property from you if you do not pay them. This is called a security interest. The property is the lender’s collateral.
- Once any bankruptcy case is filed the secured lender must obtain the Bankruptcy Court’s written permission to take your property away from you. The lender can do this by filing a motion for relief from the automatic stay. The automatic stay is an injunction (a form of Court order) that became effective when you filed your bankruptcy case. You will get a copy of this order with the first piece of mail the Bankruptcy Court sends you. It is called a “Notice of Commencement of Case” Please read it carefully. IT IS VERY IMPORTANT.
- If you do not make the mortgage or auto loan or lease payments or fail to make them on time you will be sent a motion to vacate the automatic stay or motion to dismiss your Chapter 13 case. You can incur additional legal fees owed to your attorney. You can be assessed the lender’s legal fees as well. Even worse, the Bankruptcy Judge may agree to order that the lender is entitled to have to automatic stay lifted or modified to allow them to foreclose on your home or other real property or to take your car, truck or other property away from you.
GOING TO COURT AND OTHER MEETINGS
- You must attend the First Meeting of Creditors. If you filed a joint bankruptcy case with your spouse, then both of you MUST attend this meeting. This meeting can not be rescheduled unless there is a true medical emergency or a death in the immediate family. You will get at least a month’s notice so you can make proper arrangements.
- The Notice of Commencement of Case is a Court Order that tells you when and where you MUST appear. If you do not attend this meeting, the case can and will be dismissed. The automatic stay will end. You will no longer be protected from your creditors.
- If you MUST change the date of the First Meeting of creditors, you must tell our office in writing. We MUST notify all creditors of the new date after we are told by the Trustee of the new date. You MUST prepay us $100.00 to cover the cost of notifying your creditors of the new date.
- You do NOT have to attend the hearing on confirmation of your Chapter 13 plan or hearings on motions unless your attorney tells you to do so. You are welcome to attend any Court hearing you want to go to.
KEEPING IN TOUCH WITH OUR OFFICE
- You MUST promptly notify our office in writing if your address, telephone number or emailaddresses changes. Because we mail letters and court papers to you, you must give us an address where your mail will be received by you.
- You must provide us with an emergency number in case we need to reach you after regular business hours.
- You must respond to our requests for information quickly and return telephone calls promptly.
- Please call our office whenever you have questions or concerns. We want you to avoid unnecessary worry in a difficult time. You should always call us if you get court papers, get phone calls or letters from any one claims you owe money to them from a bill or other debt you had from before your bankruptcy case was filed or any one who says they want to take away property you own such as repossess a car or freeze money in your bank account.
- Please do not come to our office even to drop off papers or other items, without calling us first. This helps us avoid unplanned interruptions in our work day and assures that someone who is familiar with your case can be available to speak to you. We want to take time to speak with you. We also want to protect your privacy and make some time to be available. We do not want to answer your questions or discuss your case while some one else may be able to hear your very private concerns. Please give our other clients the same courtesy and respect we want to give you. This helps us protect you.
TAXES, CHILD SUPPORT, FINANCIAL LITERACY COURSES
- You MUST file all of your state and federal income tax returns before the Bankruptcy Judge can confirm your Chapter 13 plan. This is the law. It is required by Bankruptcy Code section 1308.We are required to have you sign a sworn statement that you have filed all your tax returns or will do so promptly.
- You MUST give us all tax returns so we can provide them to the Chapter 13 trustee.
- You MUST provide us with your tax returns and file them even if you owe the state or federal government tax money. We can arrange for you to pay past due taxes in your Chapter 13 plan.
- You must pay your child support. Wage garnishments for Child support are not stopped by your Chapter 13 filing.
- You MUST sign a sworn statement under oath that you are current with your child support obligations. You must provide the Chapter 13 trustee with the name and address of the person who is entitled to receive child support payments from you.
- You MUST successfully complete a financial literacy course by phone or over the internet. You MUST pay for the course. It is not included in your legal fees. You MUST sign a certification that you have taken the course. This is a separate course in addition to the pre bankruptcy consumer briefing you participated in before your case was filed. It should be completed within 45 days from the date of the first meeting of creditors although the law says that it can be completed within 45 days of your last trustee payment. We do not want you to forget to complete the course. We think the information in the course can be very useful to you. The Bankruptcy Code requires that you take and complete this course.
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Avoiding Foreclosure: When a Lender Won't Work with
You |
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You've done all your homework, talked to a housing counselor and tried to
talk to your lender. But, the lender won't work with you. What do you do
now?
For an FHA-insured loan
Your lender has to follow FHA
servicing guidelines and regulations for FHA-insured loans. If your lender is
not cooperative, contact FHA's National Servicing Center at toll free (888)
297-8685 or via email.
For a VA-insured loan
First, visit the VA
Foreclosure Alternatives page. If you need assistance or have additional
questions, talk to a Loan
Service Representative.
For conventional loans
If you have a conventional loan,
first talk to a HUD approved Housing
Counselor (or call (800) 569-4287). They may be able to help you with your
lender. You can also contact Hope Now
(1-888-995-HOPE) to ask for assistance in working with your lender. |
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Guide to Avoiding Foreclosure
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Whether you're in foreclosure now or worried
about it in the future, we have information that can help.
Get Help Now!
Keep Your Home
Refinance Options
If You Can't Keep Your Home
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No Income documentation Loans
A recent article in The Wall Street Journal, Are Borrowers Free to Lie? talks about a recent Bankruptcy Court decision in the Northern District of California. In re Hill dealt with an attempt by National City Bank to hold the Hills’ mortgage loan non-dischargeable, meaning that, despite the loss of their home due to foreclosure and their subsequent bankruptcy, they would have to pay it back. How did the Hills get in this situation? They did what many borrowers were urged to do over the past several years: take out a “stated income” loan.
Stated Income loans, also called “liar loans” or NINJA (No Income, No Job, No Assets) loans, were mortgage loans in which no proof of income, employment or assets was required. Rather, the borrower simply “states” on the loan application what his or her income is, and the bank does no checking. No pay stubs, no tax returns, nothing. Ask for a mortgage, in virtually any amount, and get it without any investigation of ability to pay, examination, or common sense. Common sense would have disclosed that something was very wrong in the Hills’ case.
The Hills were 54 years old, and worked as delivery drivers and employee for an auto-parts distributor. They signed a loan application falsely stating they earned about a combined $191,000 a year. They claimed that their independent broker and the bank put the income figures into the applications without their knowledge and that they didn’t read them before signing.
Based on the obviously false figures in the application, following the foreclosure on their home and the Hills filing for bankruptcy, National City Bank, the lender on the loan, asked the Bankruptcy Court to find that their debt to the bank should not be discharged because they lied on their mortgage application. While agreeing that the income statement was false, the Bankruptcy Court disagreed that the Hills should lose their discharge.
The Court stated:
While the Court finds and concludes that the debtors made a material false representation concerning their financial condition to the Bank in October 2006, with knowledge of its falsity and the intent to deceive the Bank, the Court finds and concludes that the Bank’s nondischargeability claim under § 523(a)(2)(B) must fail. The Bank failed to prove that it reasonably relied on the Debtors’ false representation concerning their income, as set forth in the October Loan Application. As a result, the Bank’s claim has been discharged. Judgment will be ordered accordingly.
In other words, because National City knew or should have known that the Hills misrepresented their income and didn’t check it out, it didn’t meet one of the criteria for nondischargeability: it didn’t rely on the Hills’ false statements in making the loan. The Hills’ loan was found to be dischargeable.
The Hill decision is an important one. It makes clear that banks cannot place sole responsibility for their poor lending practices and decisions on the shoulders of the borrowers. Mr. and Mrs. Hill aren’t without fault, but the fault was on both sides. The Hills lost their home of 20 years and had to file for bankruptcy. The bank lost its money.
Sounds to me as if the Court restored a bit of balance to the equation.
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![[Photo: Avoid Foreclosure]](images/foreclosure.jpg)
