Are Positive Bankruptcy Law Changes Coming for New Jersey Residents?
May 19, 2021
Get ready - there might be some very positive changes coming to help people that are in debt and trying to decide whether filing for bankruptcy would be a good or a bad decision. Several members of Congress have been actively lobbying to make important changes to the existing bankruptcy laws in this country. Basically, they feel that the bankruptcy laws need to be updated, and that Congress should make it easier and cheaper for the average person to file for bankruptcy and get a fresh financial start. Here are some examples of positive changes that could be coming soon:
WIPE OUT STUDENT LOAN DEBT a) The general rule under the present law is that it's very very tough to wipe out student loans. b) If the law is changed, it would create a huge benefit for student loan debtors. The proposal is generally that a person who owes student loans will be able to file for bankruptcy and easily wipe out his student loans - it is virtually a complete turnaround from the present state of the law. If this law changes, it will be a tremendous blessing for millions of people. Imagine filing for bankruptcy, and in four months having all of your student loan debt totally wiped out, just like magic. Stand by, and we will keep you updated as to any positive changes.
WIPE OUT COURT FINES OWED a) Back in the 1990's I defended a lot of people who owed traffic court fines, and I filed bankruptcy cases for them in an effort to convince the Bankruptcy Court to permit those fines to be wiped out. I thought I was going to win those cases, but to my surprise, the judges did not permit those fines to be wiped out. The theory was that these court fines were punitive in nature, (they were supposed to serve as punishment for the debtor), and therefore these types of debts were distinguished from debts where people simply owed money for credit card bills, personal loans, or medical bills. b) Well, that law may soon be changed. If this favorable change is enacted, imagine millions of people filing for bankruptcy and possibly wiping out billions of dollars in court fines.
REDUCE THE BALANCE YOU OWE TO PAY OFF YOUR HOME MORTGAGE a) Right now if you are a homeowner and you owe the mortgage company more than your home is worth, well that's just your bad luck. In other words, by way of example, if you file for bankruptcy and you have a house that is worth $200,000, and you owe the mortgage company $250,000 to pay off the mortgage loan, you aren't going to get any kind of a break. You will still have to pay off the mortgage company $250,000, unless you are approved for a short sale. b) On the other hand, if this law is changed and liberalized, homeowners will be able to reduce the mortgage balance on their homes if they owe more on their mortgage balance than the house is worth. Using the above example, if the law was changed, then the homeowner would only owe $200,000 to the mortgage company instead of $250,000. If you consider that the homeowner would be paying this mortgage off for maybe another 20 years or so, a change in the law like this might help to save his home from foreclosure and possibly save him $100,000 or more on his mortgage balance.
THERE ARE MANY MORE PROPOSED CHANGES. Right now, nobody really knows if any of these proposed changes will become law, so I don't want to give anyone any false hope. So stay tuned because there is a good chance that the pendulum will be swinging to the side of honest consumers who have gotten into financial difficulty through no fault of their own. And we will be happy to keep you updated.