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What Are the Risks of Defaulting on Your Chapter 13 Bankruptcy?


Falling behind on your Chapter 13 payment plan can result in serious consequences, including foreclosure of your home, repossession of your car, or dismissal of your bankruptcy case. In fact, if you don’t keep up with the payments during the approval process, the bankruptcy court might not confirm your case. For this reason, you need to talk with a bankruptcy attorney in Hackensack to make sure Chapter 13 is right for you. Relief from Automatic Stay As soon as you begin filing for bankruptcy, an automatic stay is created in your case. This means your creditors are not allowed to initiate contact or continue any collection activities, including foreclosure or repossession, without court permission. By creating a Chapter 13 repayment plan, you will be able to pay back a significant portion of owed debt over the next three to five years. However, if you fail to follow your payment plan, your creditors can ask the court for permission to resume their collection activities. Dismissal of Case Even if the court already confirms your bankruptcy case, defaulting on Chapter 13 payments may result in dismissal of your case. If you miss a payment, the trustee assigned to your case will ask the court to dismiss the case for failure to comply with the repayment plan. This can terminate your case prior to completion, without you actually being able to discharge your debts. However, if the trustee requests dismissal of your case, you may be able to ask the court for more time. Requesting time to cure the default will be easier if you only missed a few payments due to an emergency, but are now back on track. Most bankruptcy trustees and judges will give you this additional time if you can show an ability to make up your missed payments. The bankruptcy attorneys of Low & Low Bankruptcy Lawyers file more than 800 bankruptcies per year. If you become a client, we will walk you through all of your options in the bankruptcy process, so you can make an informed decision. Call (201) 559-9999 to schedule a consultation.


Understanding the Benefits of Loan Modification


If you are facing unexpected financial challenges that make it difficult to keep up with your mortgage loan payments, filing for bankruptcy isn’t your only option. Through loan modification in Elizabeth, your lawyer will help you negotiate new, more affordable mortgage loan terms. This is a better option than foreclosure, because it allows recovery of more of the principal value of the loan. Extended Payment Terms Extending the terms of your mortgage loan allows you to reduce your monthly payment without changing your interest rate or the principal. For example, if you have a $150,000 mortgage with an interest rate of 6% for 30 years, your monthly payment on the principal and interest would total $899.33. Through loan modification, you can extend the loan from 30 to 40 years, which would reduce the payment to $825.32. This would help you save $74.01 per month. Interest Rate Reduction As a temporary measure, a lender will sometimes agree to reduce the interest rate on your mortgage loan. This temporary reduction can help you get your finances back on track without losing your home to foreclosure. Depending on your situation, your lender may forgive the forgone interest during the rate reduction period. If you are looking for a more permanent interest rate reduction, you should talk to a bankruptcy lawyer about refinancing your loan. Freed Money If you are considering mortgage loan modification, you may also be facing other debt from auto loans, credit cards, or student loans. If you are able to lower your mortgage payment, you will have extra money each month to pay back these other creditors. This can help raise your credit score, as the credit bureaus calculate the ratio between your balance and limit on revolving lines of credit. Low & Low Bankruptcy Lawyers has more than 40 years of New Jersey legal experience. Our bankruptcy attorneys are located in Hackensack, Jersey City, Elizabeth, and West New York. To learn more about how our attorneys can help you through bankruptcy or loan modification, please call (201) 559-9999.


What to Expect When You File Chapter 7 Bankruptcy


For debtors considering filing for bankruptcy, Chapter 7 is the most common type of bankruptcy in the United States. Also known as liquidation bankruptcy, Chapter 7 gives debtors a fresh start through the discharge of owed debts. However, only certain debtors qualify for Chapter 7 bankruptcy, so it’s important to discuss this option with a bankruptcy attorney in Hackensack. In this video, a bankruptcy attorney explains how Chapter 7 bankruptcy treats exempt and non-exempt assets. As she explains, the bankruptcy trustee will liquidate non-exempt assets and distribute the proceeds to creditors. Though exempt assets may vary by state, 401(k) plans and pension plans are generally exempt. To speak with the bankruptcy lawyers at Low & Low, please call (201) 559-9999. We have offices throughout the New Jersey area, including in Hackensack, Elizabeth, Jersey City, and West New York.


A Brief Look at Bankruptcy Proceedings


Filing for bankruptcy is not the right choice for everyone, but it can be beneficial for someone who is facing a very serious financial situation. If you are considering bankruptcy, contacting a bankruptcy lawyer in Elizabeth can help you avoid pitfalls such as lost property or lowered credit score. The sooner you contact a lawyer, the easier it will be for him or her to review your case and begin appropriate bankruptcy proceedings. When considering bankruptcy, you need to review the type of debt you have, your yearly income, and alternative options for resolving debt, like loan modification. Like most debtors, you will probably be considering either Chapter 7 or Chapter 13 bankruptcy. If you file for Chapter 13 bankruptcy, you will propose a three- to five-year repayment plan. Once you petition the court with bankruptcy, the court will assign a trustee to oversee your case and recommend pre-bankruptcy counseling. This process may last several months, during which time you will primarily contact your bankruptcy attorney to learn about any developments in your case. The bankruptcy attorneys of Low & Low Bankruptcy can help you make the best debt relief decisions. To learn more about the bankruptcy process, please call (201) 559-9999.


Who Can Qualify for Loan Modification?


If you apply for loan modification in Hackensack, a lawyer will help you negotiate the terms of your mortgage loan to reinstate more affordable payments. Though loan modification may help you avoid foreclosure or filing for bankruptcy, you are only able to receive loan modification once every two years. You also must meet specific criteria to qualify for the loan modification process. Loan modification can help you recover more of the principle value of your mortgage loan, so it is likely preferable over foreclosure. However, in order to qualify, you must show a verifiable loss of income that prevents you from making complete, on-time payments. The loan modification process is fairly complex, so it’s recommended to seek legal advice regarding your case. Your lawyer can contact your lender on your behalf to negotiate new mortgage loan terms. If you attorney doesn’t feel that loan modification is an option, he or she can also help you understand other avenues for avoiding foreclosure. Call (201) 402-2364 to speak with a bankruptcy attorney at Low & Low Bankruptcy Lawyers. We have offices in Hackensack, Jersey City, Elizabeth and West New York.


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