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I filed bankruptcy in NJ; why aren't I getting monthly statements on my mortgage, car loan or car lease?

It is not unusual for people to stop receiving monthly statements from their mortgage company or car loan bank after filing a bankruptcy (either chapter 7 or 13). This is because of something called the Automatic Stay in Bankruptcy, which protects you from attempts by creditors to collect a debt from you.

Although this is certainly what you want, and one of the big reasons you filed bankruptcy in the first place, it can present a small bump in the road when it comes to these particular creditors.

In an effort to avoid the appearance of demanding payment from you, mortgage companies and car loan banks will stop sending you these monthly statements. You are not in trouble, and nothing has gone wrong; it is just that certain things have to happen before you can start receiving them.

In a Chapter 13

In New Jersey, chapter 13 plans of repayment contain language that allows these creditors to send monthly statements. Thus once the plan is confirmed, the statements should resume.

I say "should" because some creditors are skittish on this, and not all bankruptcy courts like New Jersey's have this language in their plans. You may end up just having to set a reminder for yourself every month to make the payment and not rely on something in the mail.

In a Chapter 7

With a chapter 7 it depends on the loan. If it is a car loan or lease, statements should resume once you sign and send back the reaffirmation agreement. If it is a mortgage, they may want to wait until your bankruptcy is over, and the discharge has been issued.

Even then, they may not because in most chapter 7s your personal obligation to pay the mortgage has been discharged (although the lien is still in place and can be foreclosed upon if you do not pay), and monthly statements could be seen as an attempt to collect a discharged debt.

So What Should You Do?

The bottom line here is that, although a cessation in the sending of these statements is not an indication that you are in trouble on the loan, it may mean that the responsibility for reminders to pay may be all on you until the loan is paid off.

If you live in southern New Jersey and are considering filing bankruptcy, please feel free to call me at 856-432-4113 or contact me through this site for a free consultation in my Woodbury office to discuss your case.

If you are looking for more information about bankruptcy, then download my free book,Top Questions People Ask About Filing Bankruptcy in New Jersey.

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