Anyone familiar with N.J. BK laws?

[fpsk13]

Good morning, I am very new here so please bear with me
we live in NJ..I own a home with my sister which carries a mortgage - my husband owns a townhouse in florida with our daughter which also carries a mortgage (our daughter pays the mortgage)
We own 2 cars, one is a 2002 which is paid off and the other is a 2007 van which still carries a loan (for about 10 more months).
I am on SS/Dis and recieve $859 each month. My husband brings home (after all deductions and pension loan dedusctions)approx. $3900 per month. His income wil be changing very soon due to health benefit deductions beginning July 2012.
We are approx. $88K strictly in credit card debt. We are current on our payments, never EVER late but it has come ot the point of no return! We are considering bankruptcy but before contacting an attorney I thought I'd post here..
Anyone familiar?
Thanks!

[keepsmiling]

Hi from a fellow NJ-an. Welcome to your new home
When it comes to BK, NJ has about the crappiest rules in the country... BUT Luckily we can use Federal Exemptions. Not the best but better than some. And they are usually stackable here, according to an atty we consulted.
Someone will post a link or you can google them.
Meanwhile call TODAY and make a few appointments. What county are you in?

Give us more info as to values and we can help you more.

[trader19]

i am from NJ and fairly new here.... but i am pretty sure some of the veterans from this board will ask you for more info. what are the houses worth. how much do you owe on them? what other assets do you have? and have you paid any family/friends back any money for loans in the last 12 months. these are called preferential payments and if done in the last 12 months can cause a problem. it is what is causing me a headache. i have $100k in CC debt but i made payments to my mom about a month ago to pay off some loans to her. now i have to wait 11 months before filing with CCs calling me every day. under the right circumstance, that 88k can be wiped clean and you will have a fresh start. the best advise is become familiar with NJ law and speak to a good BK lawyer. the consultations are free. i have spoken to 4. i really liked one in neptune if you are near that area.

[fpsk13]

Hi and thanks - the house I own with my sister is worth about 350K(current market valuse), we owe approx 213K..... the townhouse my husband owns with my daughter (she lives there) is worth about 120K, the balance owed is 167K..as far as assets go, we have hardly none...2 carss (as I mentioned) 2002 & 2007..balance on the one van is 3,900. No loans paid to anyone. I am about 40 min from Neptune.

[fpsk13]

Hello and thanks! I live in MIddlesex County...stressed to the absolute max!!!

[TheBajan]

Good morning and welcome! You have a bit of a difficult situation regarding the two houses. Particularly the one you own with your sister as it actually has equity. I'm not a lawyer and I'm sure there are some here who will be far more helpful. I believe that since you own these homes, when you file, it will affect the credit of your daughter and sister. Would someone more knowledgeable please chime on regarding if that is true or not? Since you are still current on your cc payments, you have a bit of time to plan. My best wishes to you. Definitely go to several atty's before retaining one and really press them on how this will affect your sister, and your daughter.

[trader19]

i am gonna add some comments on here.... but i am fairly new, so i hope that a veteran will correct me if i am wrong. first, the house you own with your sister does have a bit of equity in it. you would lose your house in chapter 7. remember it is total liquidation with exemptions. but that is alot of equity. so they would take it to settle your debt with the creditors. your best bet might be a chapter 13 BK. i believe you keep your house and will basically settle your CC debt in either a 36 or 60 month timeframe. when that timeframe is done, you will be free. you might want to investigate that. also, you could stop making payments on your CCs for about 5 months with the intention of filing a chapter 13. your credit cards will probably start to panic and offer you some good deals to settle for less. maybe 15%-25% of the total amount owed. i am kinda leaving that as an option on my debt but will file chapter 7 if not. if you have the means, you can pay that 88k off for maybe 14k. the upside is that this could all be over in 5 months, you save a couple grand on a BK lawyer, and your credit will not show a BK on it. the downside is that you need to have 14k to pay them, you need to take the time to negotiate and play hard ball (don't jump at their first offer, really make them think you are filing chapter 7 and they will get nada), and the amount you save (74k) will be reported as income and you will owe taxes on it. hey it is worth a shot. if not, be prepared to file. i am holding out for nothing more than 15% or i will file. i have some business losses on my taxes for this year that will offset the income if they 1099 for the debt forgiveness.

hopefully someone can chime in an let me know if my plan is sound or if i missed something.

[TheBajan]

i am gonna add some comments on here.... but i am fairly new, so i hope that a veteran will correct me if i am wrong. first, the house you own with your sister does have a bit of equity in it. you would lose your house in chapter 7. remember it is total liquidation with exemptions. but that is alot of equity. so they would take it to settle your debt with the creditors. your best bet might be a chapter 13 BK. i believe you keep your house and will basically settle your CC debt in either a 36 or 60 month timeframe. when that timeframe is done, you will be free. you might want to investigate that. also, you could stop making payments on your CCs for about 5 months with the intention of filing a chapter 13. your credit cards will probably start to panic and offer you some good deals to settle for less. maybe 15%-25% of the total amount owed. i am kinda leaving that as an option on my debt but will file chapter 7 if not. if you have the means, you can pay that 88k off for maybe 14k. the upside is that this could all be over in 5 months, you save a couple grand on a BK lawyer, and your credit will not show a BK on it. the downside is that you need to have 14k to pay them, you need to take the time to negotiate and play hard ball (don't jump at their first offer, really make them think you are filing chapter 7 and they will get nada), and the amount you save (74k) will be reported as income and you will owe taxes on it. hey it is worth a shot. if not, be prepared to file. i am holding out for nothing more than 15% or i will file. i have some business losses on my taxes for this year that will offset the income if they 1099 for the debt forgiveness.

hopefully someone can chime in an let me know if my plan is sound or if i missed something.

Trader has made some good points here. If you can settle the debt for 15 to 20%, it wouldn't affect your sister's credit or your daughters and you would have a ding on your credit but not as bad as a BK. I haven't used it myself but many people here have used Google Voice as a means of not being hassled with the phone calls once you stop paying. If your credit is still good enough, you could use the equity available in the house you co-own with your sister to settle the cc debt and then just make the payments on that smaller loan. Is that something feasible for you?

As a side note, we were only 3 months late on our cards when we filed and we had already started receiving offers to settle so it shouldn't take terribly long.

[trader19]

thebajan definitely brought up a point i totally missed. why not try to apply for a home equity line of credit now while your credit is still good. then, stop making payments and if these cards come in with an offer that appeals to you... you can take the money off the line of credit to settle the debt. at least that would probably be paid back over 15 years at a good interest rate and is tax deductible.

[fpsk13]

Thank you all for your input! Regarding an equity loan, the equity in the house is notall mine thus paying off my cc debt in full is not going to happen...I was under the impression that the BK courts would allow you to keep one home - the other home is -50 or 60K ..ugh, the stress is unbelievable!

[SMinGA2]

The home in FL I see as a non-issue - it has no equity. And if necessary you can document that your daughter makes the payment, so its not a drain on your budget.

For the home you own with your sister, depending on how its titled then 1/2 or all of the equity could be in danger. Do you live in this house? If not - I'm not sure you'd be able to exempt any equity except for a little if you have wild card exemptions. (Homestead exemption is generally only good for your primary residence.)

One theory... Have your sister buy out your equity, at fair market value. Heavily document this transaction so you can show you did not sell it to her cheaply. Consult a financial planner, and see about investing the majority of the $ in IRA's or similar investments (which would be protected bankruptcy), so that you can live off of it in the future as needed. Make sure you're in reliable yet affordable transportation. Then stop paying the credit cards. Eventually file.

OR use the $ from selling your share of the home to pay off or settle your cards. (Settling when they're current may be near impossible. And waiting til they're 6-12 months past due means they accrue fees and interest so its hard to say if 'settling' them then saves you anything.)

[TheBajan]

Thank you all for your input! Regarding an equity loan, the equity in the house is notall mine thus paying off my cc debt in full is not going to happen...I was under the impression that the BK courts would allow you to keep one home - the other home is -50 or 60K ..ugh, the stress is unbelievable!

No, not in full. But what about maybe settling for $18K? That's over 20% of the debt and I know I've heard of people settling for even less than that. It would mean waiting a little bit for the debts to get old but It still seems like your best way to avoid affecting your sister's credit and your daughters credit and not risk losing the house to the trustee for the equity that's in it.

[SMinGA2]

Each state has an exemption allotment for a homestead. If you don't live in the home (I don't know if you do or not) then it probably does not apply. Most states have a $ amount for the exemption. In GA, its $10k though married couples can double and claim $20k.

You're right that the equity is not all yours, depending on how the home is titled. If only 1/2 the equity is yours, then only your portion would be in jeopardy for a bankruptcy filing. If you can't exempt it, the trustee could force the sale and take your 1/2 for creditors. Or you could work out a ch. 13 to pay an amount equal to your equity to unsecured creditors.

Thank you all for your input! Regarding an equity loan, the equity in the house is notall mine thus paying off my cc debt in full is not going to happen...I was under the impression that the BK courts would allow you to keep one home - the other home is -50 or 60K ..ugh, the stress is unbelievable!

[tobee43]

Anyone familiar with N.J. BK laws?

yes, that's why we moved before we filed. nj is a KNOWN creditor friendly state. the only salus is that one can file using the federal exemptions, which many do as opposed to filing using nj's codes. however, it depends entirely on what type of situation you are in and what you need to do to protect yourself the best way you can.

we left, and went literally underground for 2 years in our new state so that we could use our new states wildcard exemption. now that was fun

we also had lived in our home in nj over 30 years so this was no easy task, but one in the end was much better for our personal situation.

best of luck and welcome to the forum!

[keepsmiling]

Current values for your cars are needed too. An old Chevy or Ford probably has little or none but an '02 BMW and the van may be an issue. We get somewhere around 3450 exemption for a car- haven't checked to update lately.

I wish we had more NJ reports here- I tried to start a group- but sadly very little commentary on what's going on here. Could be good news in that we don't (yet) have the carve out craziness of Washington or the FL middle asset craze. I think they save the big guns for the celebs we occasionally hear about and the estates in Alpine.

You need to call some lawyers today and explore your options. I liked a guy in Summit and can pm you his name. Make a few appointments and get a few opinions. Feel free to pm me (I'm not far) if you need to talk.
AND..
Be aware that the settlement may not happen in the way that you would like. Sometimes it works out but more often it doesn't. I just cautioned a friend a month ago about a settlement her son made and she just said to me yesterday- "you are going to say 'I told you so' "--- it was resold after payment and has resurrected itself ("zombie debt")-- so approach carefully and smartly.