Archive for September 2019

Should I file a bankruptcy if I live in Bergen County and have no creditors other than my 1st mortgage which is in foreclosure?

If you have no unsecured debt and own a home in foreclosure you may be wondering whether you should file a bankruptcy.  Filing bankruptcy is a personal decision.  If your only reoccurring monthly debt is your mortgage (which is in foreclosure) you may decide to file a bankruptcy so that you can zero out the mortgage debt on your credit report.  Filing bankruptcy when you credit score has already taken a hit for something like a foreclosure can often result in an almost immediate increase in your credit score.  In New Jersey, it is extremely unlikely that you will be sued for a monetary judgment by your mortgage company for a 1st mortgage on a primary residence.  The standard practice is for the mortgage company to take back the property in a foreclosure but the mortgage balance remains on your credit report.   FYI – A 2nd mortgage will almost always sue you for a money judgment after the 1st mortgage takes your property back through foreclosure.

Remember bankruptcy is a personal decision.  No two bankruptcy cases are alike.  Foreclosure is not the end of the world (even if it feels like it) and bankruptcy is not necessarily a bad thing (again even if it feels like it).  Speak to an attorney to discuss the specifics of your case and explore your options.

Lease Assumptions Disguised as Reaffirmation Agreements During a Bankruptcy in Bergen County New Jersey

There is a distinction in the bankruptcy code between a Lease Assumption and a Reaffirmation Agreement.  While a Lease Assumption letter is typically required to assume a lease on personal property including automobiles, some creditors may require that you execute a Reaffirmation Agreement in order to continue your lease.   Your attorney should advise you that the firm does not recommend signing a reaffirmation agreement on a lease as there is no such creature in the Bankruptcy Code.  Below is the language in the disclosure I provide to all my clients when they are financing or leasing a vehicle.

 

“REAFFIRMATION DISCLOSURE

I understand that by executing this reaffirmation agreement (hereinafter the “agreement”), I am agreeing to be held liable under the terms of the original financing terms of the contract and/or lease agreement, including but not limited to the obligation to make payment of unpaid principal, interest, fees and other costs associated with the reaffirmed/assumed debt for automobiles.

I understand that by executing this agreement, I may be required to appear before the court to testify as to my ability and desire to continue making payments on the reaffirmed debt. I understand that this agreement may not be approved by the court. I understand that I am not required by law enter into this agreement. I understand that I may rescind (cancel) the agreement at any time before the bankruptcy court enters my discharge.

I understand that if I enter into this agreement and I default on the reaffirmed debt after the bankruptcy case is completed, the creditor may be able to repossess the property and sue me for any deficiency. I understand that if I do not enter into this agreement, my property may be repossessed and my debt may be discharged in bankruptcy.

I understand that some creditors will allow me to retain possession of my property even if I do not enter into the agreement as long as I continue to make payments. I understand that if I do not enter into the agreement and I maintain the collateral and continue to make payments, the lender may not report post-bankruptcy payments to the credit reporting agencies. I understand that if I do not enter into this agreement, I may not receive account statements and I may not be able to make automatic payments on the account.

Lease Assumptions Disguised as Reaffirmation Agreements – I understand that there is a distinction in the bankruptcy code between a Lease Assumption and a Reaffirmation Agreement. I understand that while a Lease Assumption letter is typically required to assume a lease on personal property including automobiles, some creditors may require me to execute a Reaffirmation Agreement in order to continue my lease. My attorney has advised me that the firm does not recommend signing a reaffirmation agreement on a lease.

I am entering into this agreement voluntarily. I am fully informed of my rights and responsibilities in this matter and I have been advised of the legal effect and consequences of defaulting under this agreement.

I have received a copy of this disclosure.”

Attorneys have different opinions on whether you should sign a reaffirmation for a leased vehicles.  Discuss it in depth with your attorney so you are informed.  Even after assuming a lease or reaffirming a car banks and financing companies do not report payment timely or not to the credit bureaus.  So if you are hoping to give your credit score a boost for making timely payments, think again.

FREE Consultation

Your Name (required)

Your Email (required)

Your Tel # (required)

Subject

Your Message

captcha

Member:

 
Member:

Click for the BBB Business Review of this Attorneys & Lawyers - Bankruptcy in Hackensack NJ