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Chapter 13 bankruptcy can effectively clear credit card debt

Major credit card debt can build over time. For New Jersey residents who are confronted with this issue and the inevitable problems associated with it, it is important to understand the potential solutions that a Chapter 13 bankruptcy may provide. Before filing, there are common missteps that contribute to the accruing of debt.

There are strategies people think can be effective to clear their credit card debt, but tend to fail. For some, there is a misplaced belief that the intermittent skipping of payments will help. This does little more than damage the credit score, raise the interest owed and accumulate late fees. Some people might make the minimum payment each month. While this satisfies the basic requirement, it does not impact the debt.

Many Americans can't pay medical bills

A survey focused on health care costs in New Jersey and across the country found that only 45% of respondents had the money in savings or other sources to cover medical expenses during the prior year. The survey was conducted by Freedom Debt Relief and also found that 42% of respondents had to charge medical bills to a credit card in order to cover them. Nineteen percent had to borrow money from friends or family to cover medical expenses.

Additionally, only 35% of respondents would have sufficient funds in available cash or savings to cover an emergency medical expense costing $2,000. More than half of Americans have medical debts of $1,000 or more, and 10% of Americans have medical debts of $20,000 or more. Failing to pay medical expenses can hurt a person's credit as much as failing to pay phone or electric bills. Paying medical bills with a credit card is not ideal as the person may incur significant interest charges by paying over time.

Dealing with debt collectors' harassment

People in New Jersey dealing with overwhelming debt may find that the experience is even more stressful due to constant calls from debt collectors. Whether people have medical bills, overdue credit card debt or an unpaid car loan, collection agencies may call frequently demanding payment. People struggling with debt do have rights under the law, and debt collectors are required under the law to follow certain rules. They may not call debtors before 8 a.m. or later than 9 p.m. In addition, if a person makes a written request to stop the phone calls, the collection agency is required to do so.

This may not end all communication about the debt, as a collection agency may send written information that they are filing a lawsuit, but it can stop the phone calls. When people hire a lawyer to deal with their debt, they can also tell debt collectors to send all correspondence to their attorney. Debt collectors can call the debtor themselves, but they may not discuss that person's financial details or disclose the debt to family members, employers or other people who may answer the phone. While collection agencies may call others looking for the person in debt, they cannot say that the debt is the reason that they are doing so.

Three types of creditor claims in Chapter 13 bankruptcy

When a person files for Chapter 13 bankruptcy in New Jersey, part of the process is a requirement that the filer, also called the petitioner, submit a repayment plan to the bankruptcy court. Unless the court grants the petitioner an extension, he or she must submit the repayment plan within 14 days after the petition is filed. The repayment plan may be submitted at the same time as the petition. The submitted plan must provide for payments to be made to the bankruptcy court in fixed amounts on a regular basis.

Typically, the plan will set out payments to be made either monthly or biweekly. After each payment is made, the bankruptcy trustee will distribute the funds to the petitioner's creditors according to the plan's terms. In a Chapter 13 bankruptcy, the creditors might not be entitled to collect the full amounts of their debts. There are three different kinds of claim that a creditor may have: secured, unsecured and priority.

Budget and plan for a successful holiday season

Consumers spend billions of dollars on Black Friday and Cyber Monday every year. Most people in New Jersey participate in these sales that offer great deals in advance of the holiday season. To avoid overspending on these popular shopping days, consumers should consider these tips.

Many retailers offer special pricing on Black Friday and Cyber Monday. It could be tempting to take advantage of all of them. However, to avoid going into debt, consumers should set a budget and stick to it. Spending too much could result in Chapter 7 bankruptcy later. After all, many of the deals offered on those two days will be available again.

Bankruptcy offers relief from unexpected mortgage tax bills

Many individuals in New Jersey and around the country who had some of their mortgage debt cancelled or forgiven after losing their homes due to a foreclosure or short sale now find themselves owing tens of thousands of dollars in taxes. For the last 10 years, up to $2 million in forgiven or cancelled mortgage debt was deductible thanks to provisions introduced in the wake of the 2008 financial crisis, but those tax breaks expired at the end of 2017.

Hopes that Congress would act to extend the tax breaks are dwindling as lawmakers turn their attention to impeachment proceedings and other matters, but relief is available under other parts of the U.S. tax code for individuals who are insolvent or going through a bankruptcy. However, individuals who hope to avoid tens of thousands of dollars in taxes by filing for bankruptcy may be wise to act quickly as the rules for discharging these obligations become far more complex once taxes have been assessed.

Individuals may file for bankruptcy separately, even if married

It is possible for one spouse to file for bankruptcy in New Jersey even if the other does not. In cases where the spouses do not own property together and their assets and debts are generally not commingled, the individual filing of one spouse may not be overly complicated. In other cases, however, one spouse filing for bankruptcy under Chapter 7 or Chapter 13 of the Federal Bankruptcy Code might have ramifications for the other spouse. The facts of the case will determine whether one spouse can file without impacting the other.

One factor that can have a major impact on the decision to file is shared debts. If a married couple has shared debts, it may make more sense to file for joint bankruptcy. If there are shared debts and one spouse secures a discharge, creditors may still go after the other spouse to collect the debts. The other spouse may also see negative marks on his or her credit as the bankruptcy and discharged debts might show up on credit reports.

Detailing bankruptcy exemptions

One of the more common questions that those seeking Chapter 7 bankruptcy protection in Hackettstown have is whether o not filing for bankruptcy will force them to forfeit their personal assets. For those facing seemingly insurmountable debts, the appeal of bankruptcy comes from not having to worry about creditors continuing to seek action against them (thus driving them further and further into debt). Yet when faced with the prospect of potentially losing their homes and/or other valuable assets, many might choose to abandon the idea of bankruptcy altogether. 

Whether one will be forced to part with any of their personal property in a bankruptcy case depends on the bankruptcy exemptions available to them. The law allows debtors to exempt a certain portion of the equity they have in their property from being seized by creditors. For example, if a person has $12,000 of equity in their home, and the law allows them to exempt up to $15,000, then that means that their home cannot be sold to repay creditors as part of a bankruptcy case. However, if the law only allows them to exempt $10,000, then they will be given that $10,000 by their bankruptcy trustee, and then the house will be sold. 

How can I save money during the holidays?

The holiday season will be here before you know it. Overspending during the holidays is a real problem for many people, especially if you're already on a tight budget. Fortunately, it's possible to enjoy the holidays without ruining your finances, as illustrated by these tips from

Before spending season starts, take a moment to think about how much money you'll need to get through the holidays. Along with gifts and presents, also consider costs for hosting dinner, traveling, and decorations for your home. Once you have a reasonable figure, set it as your budget and don't deviate from it. Developing a plan for spending will allow you to make better decisions since you'll have time to think them through. It will also allow you to look for the best deals when buying items, which can save money. 

Bankruptcy and other hardships in life

For some people, the decision to file for bankruptcy (as well as the entire process) may be somewhat straightforward and free of concern. Others may have a very hard time due to bankruptcy, whether they are facing uncertainty over their decision to file a bankruptcy petition or they face various difficulties in the midst of a bankruptcy case. Moreover, some of these challenges can be especially difficult for those who are going through different hardships in life, such as a divorce, the loss of a loved one or serious issues involving children and other family members.

If you are facing major hardships in your life that are interfering with your daily schedule and ability to concentrate, it may be smart to postpone bankruptcy for a short period of time. However, you should not procrastinate or become complacent, especially since debt and other financial issues can spiral out of control when left unaddressed. We know that bankruptcy can be a very complex and challenging process for people who are going through certain challenges in life, but you may be able to make your circumstances easier by carefully concentrating on your options and approaching your bankruptcy.


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