Filing for NJ Bankruptcy Because of COVID-19

Throughout the pandemic, many Americans have been piecing their finances together bit by bit to get by. This has sometimes meant deciding which bills and debts will go unpaid in order to stay above water as long as possible. As business closures and restrictions stretch into the second half of the year, many are facing the reality that these “temporary” setbacks aren’t going away anytime soon. If you are one of the many Americans who have accrued a substantial amount of credit card debt, personal loans, or missed payments due to financial hardships caused by COVID-19, you aren’t alone. Filing for NJ bankruptcy may help you get out from under your debts so that you can face whatever challenges the future holds.

When you take on debt, the creditor’s expectation is that you will be paying back that debt. When you cannot pay back that debt, and a bankruptcy occurs, the bankruptcy court will determine which debts can be discharged and which debts the borrower will still be responsible for. The circumstances surrounding debts accrued during COVID-19 are a specific scenario that courts have had little experience dealing with previously.

There are certain rules that govern what debts will be considered for discharge during bankruptcy. For starters, individuals who have incurred debt for “personal use or purpose” are restricted in the debts they can discharge. Generally, if it clear that a debtor is likely going bankrupt, any debts accrued during that time period (deemed unnecessary) cannot be discharged. So, if you lost your job and are unable to pay your bills and therefore know you are likely headed for bankruptcy, you cannot charge an extravagant getaway to your credit card knowing you don’t intend to pay back the debt.

Because of this, debts deemed mostly “consumer debts” can be denied discharge or be converted to be covered under Chapter 13 bankruptcy. Under Chapter 13 bankruptcy, debtors have a set period of time to pay back debts under an agreed upon repayment plan. Consumer debts are considered any debt accrued for personal, family, or household purposes. This includes vacations, clothes, and entertainment—but it also includes food, utilities, and medical debts.

There is the potential for the debtor to argue in court that the consumer debt incurred was not voluntary. Legal precedent does exist for debts to win the argument in court that debts not “voluntarily incurred” should be eligible for discharge under Chapter 7 bankruptcy. But this determination is entirely up to individual courts and judges. For instance, a judge may determine a life saving medical treatment—while clearly for personal use—was not voluntarily incurred and therefore is eligible for discharge, whereas a cosmetic medical procedure would not be.

This entire scenario calls into question exactly what debts are voluntary and which debts are necessary to sustain normal life. The reality of these questions is even more complex in the face of the coronavirus pandemic. The choices made by the debtor when it comes to consumer debts will be closely scrutinized— but so will whether or not the debt(s) could be avoided due to the very unique circumstances we’re all living through.

In many ways, the current situation in the US is unprecedented. Debtors will have to work closely with debt counselors, attorneys, and creditors in order to find solutions to these issues as bankruptcy cases caused specifically by COVID-19 are on the rise in America. Veitengruber Law is an experienced bankruptcy law firm and, more importantly, WE CARE ABOUT OUR CLIENTS. We can provide guidance throughout the bankruptcy process. If COVID-19 is impacting your finances, we can help you find solutions to manage your debt. We promise that if you reach out to us, your problem will not be ignored.

The Effects of COVID-19: How to Talk to Kids About Money Troubles

No family is immune to financial struggle. When these tough times inevitably happen, it is important to understand how to talk to your children about it. While it might seem easier—or even like the right thing to do—to hide financial difficulties from children to shield them from anxiety, kids are smart. Children can sense their parents’ anxiety. It is better to have age-appropriate and honest discussions about financial issues when they arise. Here are some things to keep in mind if you have to discuss financial changes with your children.

1. Let children in on your plans.

After you tell your children that your family is facing some financial issues, share steps you are currently taking to address the problem. If you lost your job, tell them you are looking for a new job. While kids do not need a lot of details, they need assurance that you are working on a solution. Be honest about time frames. If you don’t know when you will be employed again, or when business will return to normal, say it may take a while for things to get back on track.

2. Alert them to potential changes.

Tell your children honestly what kinds of financial changes you will need to make in the meantime. Keep this specific to things that directly impact your children. Family vacations, going out to eat, and entertainment might be different for a while. Explaining these cutbacks as solutions to a family problem can help frame the adjustments as ways to help the family instead of punishments.

3. Older children can sit in on financial budget planning.

Older children who are beginning to understand money can benefit from the experience of watching their parent(s) work toward a brighter financial future. Allow them to sit in on planning the budget for housing, utilities, groceries, and other essentials. This can help them understand how much money goes into living independently and how to make an income or savings stretch over a month. Understanding the worth of a dollar can give them the skills to make it out of their own financial difficulties.

4. Keep it positive.

Let them know that while it may seem like the family is having to give up a lot, there are plenty of positives to the situation. Many families who are trying to save money end up spending more time at home together. You can also start exploring other (cheaper or free) forms of entertainment. Getting a library membership, going on trips to the park, and having a family movie night are all inexpensive ways to spend time together. You may find your kids quickly and happily adapt to (and even thrive with) a more laid back schedule.

Many American families are going through major financial upheaval. No matter how drastic the changes are, assure your child that you are in this as a family. Even if you have to sell your home, change schools, or move to a completely different city, your family will be together. Although no one anticipated or wanted all of the changes that have come with COVID-19, this is an opportune time to teach your children that money doesn’t buy happiness.

 

 

NJ Real Estate During COVID: Sell Now or Wait it Out?

Spring is normally the peak time for real estate transactions. This year, with stay at home orders and widespread economic uncertainty, we did see a bit of a slow down in New Jersey real estate activity. Although NJ real estate transactions have dipped, industry activity hasn’t halted, and there are actually some benefits to buying and selling right now. If you have delayed putting your home on the market because of COVID-19, you might be looking ahead to the rest of 2020: is this year really the right time to sell a house? If you are trying to decide whether or not to put your house on the market during a global pandemic or wait until social distancing restrictions are lifted, here are some thing you should keep in mind.

DO sell now to take advantage of historically low interest rates. The average mortgage interest rate is predicted to stay under 4% for the rest of 2020. Even with stay at home orders lifted, interest rates are expected to remain low. The beginning of 2020 saw a surge of buyers interested in purchasing real estate and lenders have bulked up their operations to handle these loans in a timely manner. This is good news if you are selling because it means potential buyers should be able to find affordable financing options.

DON’T sell now if you have recently refinanced. A multitude of homeowners have been taking advantage of this year’s lower mortgage interest rates. If you can count yourself as one of these homeowners, you can wait a bit to put your home on the market, unless of course you must sell for reasons that cannot be put on pause (*see below). Hopefully, refinancing reduced your monthly payments enough to allow you to afford your home more comfortably.

DO sell now if you are moving out of your starter home. Stats are showing that homes with entry-level prices targeting first-time homebuyers are likely to see a lot of activity throughout the rest of 2020. Be cautious though: people with lower credit scores or smaller savings may have a harder time getting approved for a mortgage.

DON’T sell now if your finances aren’t in order to buy a new home. Even if you have maintained employment throughout the pandemic and economic slowdown, we are not out of the woods yet. A lot can still happen in 2020. If you are worried about your financial future, or couldn’t survive a big setback, it is probably safer to wait until your economic future is more certain.

*DO sell now if you need to move. If you have to move now due to a new job, the need to be closer to family, or a pre-planned life change to a new city, you should still be able to sell your house and find a new one. After all, you aren’t the only one in this situation. Keep in mind, though, that it might be easier to buy or sell depending on where you are moving to and from. New Jersey has seen many of our restrictions lifted, but other states are experiencing surges and subsequent quarantines. A good local realtor should be able to help you with this.

DON’T sell now if you can’t (or won’t!) compromise on sales price. We know some sellers have a specific number in mind and cannot sell below that price. While NJ’s housing market seems to be rebounding nicely, many potential buyers may still be hesitant to rush into the market. Because of this, you may need to prepare to compromise with the buyers that are in the market. If you aren’t ready to compromise, it is better to wait for next spring when there is a better chance of getting what you want for your home.

Veitengruber Law is a full service real estate firm. We work with some of the best agents in New Jersey. With the right team behind you, you can still sell your home in 2020. Reach out to us if you’d like to connect with one of the realtors in our valued network.

What Does Buying a House Do to Your Credit Score?

In the months—or even years—leading up to a home purchase, most people spend a lot of time focused on their credit score. Your credit score influences your ability to acquire a mortgage and the interest rate you will pay on that mortgage. After you are settled in your new home, you might notice that your credit score moves around a bit.

In fact, changes to your credit score are likely to start with the credit inquiries that come with applying for mortgages. During the pre-approval process, lenders pull your credit report. This will alert the credit scoring algorithm that you are looking for a new line of credit, which will cause a small drop in your overall score. One way to limit the impact of this effect is to apply with several different banks or lending companies for pre-approval within a two-week period. This way, the algorithm will register an inquiry, but it won’t be as impactful as many inquiries over the course of several months.

While the pre-approval process of applying for a mortgage will decrease your credit a few points, the action of borrowing the money for your mortgage will cost you even more points—especially if this is your first home loan. The major increase in your total debt will cause a drop in your score, typically by a few points. The good news is installment debts like a mortgage will cause less of a score decrease than credit cards or other revolving debts.

Despite some slight decreases to your credit score, there is a silver lining to gaining a mortgage (besides your new home!). If this is your first mortgage, the addition of this kind of debt to your credit profile can be a good thing. 10% of your credit score is determined by your overall credit mix. The more debt variety you have, the better off you’ll be in terms of your credit score. In fact, after the initial dip from the credit inquiries and the adding of a new account, you might find that your credit score rebounds higher than ever before!

You can continue to improve your score quickly by consistently making your mortgage payments on time and in full. Within a few months of regular payments, your credit score will more than likely be higher than it was before you purchased a home.

When you are purchasing a home, especially if it is for the first time, you need to be prepared for your credit score to drop. The good news is this is a temporary decrease that is easy to correct up to and beyond your pre-mortgage credit score. Knowing what to expect once your home is purchased can save you anxiety and allow you to enjoy your home purchase without regrets.

NJ Real Estate FAQ: Should I Sell My House or Rent it Out?

You’ve made the decision to move and have even found the house of your dreams. But what do you do with your old home? Renting has many financial benefits. You can use income earned from rent to cover your monthly mortgage and then some. Renting out your home can be a great investment, diversifying your income revenues. You can continue to rent out the property after you have retired or sell the home at that time to cushion your transition to your golden years. Today we’ll discuss the most important things to consider when deciding whether to rent or sell your NJ real estate property.

Two of the most important factors to take into consideration are your home’s current valuation and capital gains. If you aren’t thrilled with the valuation, renting it out temporarily can help cover the mortgage and expenses while you wait for the value of your home to rise. But be careful about waiting too long. After three years of renting, you can no longer claim the home as your primary residence. If you sell after this point, you will have to pay capital gains taxes on any profit you make, whereas if you sell after renting for under three years, you can exclude $250,000 of capital gains when you sell.

Be sure to consider the legal and tax implications of renting. You will be taxed on any income you make from your rental, but you will also be able to write off all costs associated with the rental. So if you make $20,000 from rental income, but your expenses on the rental were $10,000, you will only be tax assessed on $10,000. There are other tax breaks you may be eligible for based on your specific situation. Legally, you will be responsible for understanding the landlord-tenant laws and ordinances in your area. Some of these rules could impact the profitability of your rental if you live in an area that favors tenants’ rights.

Can you afford to buy a new home without using the equity you have invested in your old home for the down payment? Coming up with 20% to put down on a new home can be difficult. You’ll need to come up with the down payment and closing costs on your new home without the money you’d make from selling your old home. On the other hand, if you can swing it, renting is essentially someone else paying you to build equity in your property.

The goal of renting is to have a tenant in your rental home year round with them covering all the associated expenses for running the home by paying you rent. But you should also be prepared for the worst case scenario: you will be paying two mortgages if you can’t find a tenant. Even if you no longer have to pay a mortgage on the property, there will be expenses like insurance and maintenance. You also have to consider the difficult and time-consuming process of evicting a tenant who has stopped paying rent or has caused damage to the home. In these scenarios, your rental may fail to make a profit for months.

Like any other investment, renting comes with risks. If you are still not sure if you should rent or sell, speak with a financial planner or real estate attorney to get more specific advice about your situation. The benefits of renting out a property can be incredible and open up new financial opportunities as long as you aren’t getting in over your head.

Moving to NJ Assisted Living in 2020: Weighing the Risks and Rewards

The senior community has been hit especially hard by the coronavirus pandemic. The CDC estimates the fatality rate for older adults between 75 and 84 is between 4% and 11%, while the fatality rate for those 85+ is between 10% and 27%. Seniors and close loved ones of seniors need to be vigilant about social distancing practices. But what if your older loved one requires daily assistance or special care? Is right now the best time to move your older parent or relative into a NJ assisted living facility?

While it may seem like an assisted living environment is extremely vulnerable to the spread of coronavirus, for many people, assisted living is still the best option. It can be more dangerous for those who need extra care to continue living alone without receiving the assistance they need. Living in a facility where your loved one can see people every day and have visitors in a controlled environment can be less lonely than social distancing alone. Seniors who need regular assistance with daily activities, who live alone and have a potentially life threatening medical condition, who have memory impairments that would make following hygiene protocols difficult to follow, or who live with family members that cannot socially isolate are great candidates for assisted living.

Assisted living communities are taking extra measures to ensure the safety and comfort of their residents. In fact, the extra precautions can make an assisted living facility much safer than living with relatives who are unable to socially distance. If you are looking for a NJ assisted living facility or senior community, make sure they have precautions in place to protect your loved one, like visitor and staff screenings, frequent resident assessments, enhanced cleaning procedures, and limited access to communal spaces. Many assisted living facilities are taking these precautions, but some are not. It is important to make sure the facility you are looking at maintains the highest standards of safety and cleanliness.

Assisted living isn’t going to be the best choice for all seniors. If your loved one only needs occasional help, an in-home care provider can still give seniors the assistance they need without risking exposure. An in-home care worker should be someone that can practice social distancing outside of visiting the home and practice good hygiene during the entirety of the visit. Nursing homes might be a better choice for seniors who have more complex medical needs, ensuring your loved one can get expert care immediately should a medical event occur. If your older loved one is more independent but spending more time alone than normal due to social distancing, they might benefit from a medical alert system. This way, they can easily get help in the event of an emergency.

When you are visiting senior loved ones, make sure to follow the CDC recommended procedures. Wash your hands before entering their home or room, wear a mask if it is not possible for you to socially distance, clean your phone frequently, and avoid touching your face before washing your hands. Tell family and friends not to visit if they are not social distancing or are experiencing symptoms of the virus. If it is not possible for you to visit your loved one, make sure you are checking in frequently.

Protecting your loved one during these times can be stressful. But there are professionals in the senior care industry that can help you keep your senior loved one healthy and safe.

Virtual Realty: Touring NJ Homes While Social Distancing

Real estate agents have had to get creative to work around the restrictions put in place because of the coronavirus pandemic. Many in the industry have turned to technology for virtual tours and one-on-one meetings. Prior to the 2020 quarantine, buyers were already able to start their home search with online actions, like contacting agents, searching for homes and applying for a mortgage. Now, COVID-19 has turned nearly the entire home buying process into a virtual transaction. Online virtual tours have increased in popularity over the last few months, adding convenience and safety to buying a home today.

While the rest of the world seems to be on pause, there are still a surprising number of people who have to move at this time. Moving during a pandemic can come with a lot of anxiety because of the roadblocks to the already stressful process of buying a home. Buyers looking for a home naturally want to see every aspect of a potential property. They want to run their fingers over the counter tops, stand what could be their future bathroom, and test out all of the cabinet and closet doors. Right now, that kind of in-person tour simply isn’t possible for many people. Virtual tours offer a way for home buyers to see if they are interested enough in a home to risk going out to see it in person or even put in an offer – sight unseen.

Prospective buyers might be a little unsure about only seeing their future abode through a computer screen, but a good agent will ensure that their client gets the most out of a virtual tour. Before any virtual tours are scheduled, the agent should have a call with the buyer to get an understanding of their needs. Location, timing, budget, and other requirements will help the agent narrow down which houses to show a buyer. Narrowing down options is a critical step because the real estate process takes longer right now.

Typical virtual real estate tours look something like this:

The buyer will receive an e-mail link to a meeting on a video chatting app like Zoom. Once the buyer and agent have entered the chat they can walk through the virtual tour together so the agent can answer any questions and give the buyer more details on the home. Virtual tours consist of a mixture of still photographs and 3D videos. Most tours will take you through every room of the house, offering different views and angles to give you the best perspective possible.

A virtual tour should give prospective home buyers a good idea of whether or not they are interested in pursuing a home further – most will ultimately still want to see a home in person before they sign on the dotted line. It is possible to do in-person tours while maintaining social distancing via lock boxes with codes for self-guided tours or waiting outside while buyers are looking at homes can allow in-person touring to safely take place.

Virtual tours are a great tool for limiting the coronavirus risk to both buyers and agents by reducing the number of in-person home tours are needed. Veitengruber Law can connect home buyers or sellers with excellent agents ready to get creative in order to buy and sell properties during these strange and challenging times.

Can I Sell My Home If I’m Behind on My Mortgage?

If you have fallen behind on your mortgage payments and cannot find a way to catch up, you may think selling your home is the only way to get on top of your finances. As long as your lender has not foreclosed on your home yet, you still have the opportunity to sell your home and get out from under your mortgage. But in this situation you need to move quickly and decisively. Here is everything you need to know about selling your home after you have fallen behind on your mortgage payments.

The foreclosure process will start soon after you begin to miss mortgage payments. Even missing just one payment can cause you to receive a foreclosure notice in the mail. After you are more than 120 days late, your lender is legally able to reclaim your home and sell it in order to recoup their money. At this time, you will be forced out of your home. The foreclosure will also appear on your credit report and can drop your credit score drastically, impacting your ability to get future lines of credit. Fortunately, you have up until the actual day of foreclosure to sell your home on your own.

Even if you think you are heading towards foreclosure, you can still get in front of your situation and take financial control back. How you go about selling your home before foreclosure depends on whether your house is worth more or less than what you owe on your mortgage. You will be able to sell your home and use the profits to pay back your lender as long as the fair market value of your home is greater than what you still owe on your loan. Taking this path will look much like the steps you would take to sell your home at any time: find a real estate agent and hope you receive acceptable offers on your home. You will not normally need to get your lender’s permission to sell your home like this.

If you find your home is worth less than the amount you still owe your lender, you will need to sell your home as a short sale to avoid foreclosure. A short sale is when you accept an offer on your home that will not cover the full amount you still owe on your mortgage. You will need to get the approval of your lender in order to go down this path, however this may be difficult. Lenders automatically lose money on short sales so they may not be eager to approve. You will need to submit a hardship letter explaining why you can’t make your mortgage payments and evidence to support this claim.

Many lenders will eventually accept your short sale offer as long as you meet specific demands to help meet their bottom line. You might find yourself responsible for repairs and many closing fees so you need to decide if you want to take on these costs (and if you can even afford to do so). Your agent and real estate attorney will be able to help you negotiate these terms. A short sale will do much less damage to your credit than a foreclosure and will allow you to stay in the home until the sale is completed.

If you are behind on your mortgage payments, but you want to stay in your home, there are also other options besides selling or foreclosure, like mortgage forbearance or mortgage modification. Veitengruber Law can help you find the right solution for your specific situation.

Unemployed and Over Fifty: Making Adversity Work for You

If you are over 50 and have found yourself unemployed because of the 2020 coronavirus pandemic, you are not alone. The unemployment rate of Americans 55+ has gone from 2.6% in January of this year to 11.8% in May. It is a difficult time for many Americans to find work and make ends meet, but that becomes a bigger challenge for those closer to retirement age. Working against the age bias of potential employers can be a significant hurdle. But you know better than anyone just what you have to offer a workplace. Here is how to make adversity work for you and finally land a new job.

1. Set a Budget

After you have lost employment, the first thing you should do is get a good idea of where you stand financially. Get a summary of all of your financial resources and determine how long you can survive out of work. If you are unemployed for an extended period of time, a solid understanding of your finances can help you stretch your funds further. Those who are unemployed in their 50s should plan to be unemployed for an average of one year.

2. Review your Resume

If it’s been a while since you updated your resume, it’s time to make some changes. Focus on major accomplishments from the last 15 years and provide a brief highlight of your earlier work experience. Showcase your best attributes and play up how valuable your experience can be for a company. While you never want to lie on a resume, it is ok to omit dates—like the year you graduated college, for instance—in order to avoid being screened out for your age. Be sure to address any concerns a potential employer may have about your technological prowess up front: discuss the technology you use that is relevant to your field, including software and computer programs.

3. Stay Active

It is easy to get depressed and wallow after extended unemployment, but try to stay active. This is the best time to explore things you have never had the time for. Start a side project that relates to your career. This could include writing a book, doing pro bono consulting work, or investing your time into your community. This work will keep your brain busy, create networking opportunities, and will show future potential employers that you are still active in your field (during job interviews). You could also look for temporary or part-time employment to help make ends meet while you continue to look for a job in your field.

4. Networking

Networking serves two major purposes: it gets you out of the house to socialize and it opens doors for future career opportunities. Old co-workers, friends, family, neighbors—you never know who might hold the key to a new job opportunity. These people can also be a great support system as you navigate unemployment and your job search.

5. Keep Applying—Don’t Give Up!

Apply to every job you think would be a good fit—and even some you are on the fence about! You should be sending your resume to any open position that fits your skill set. You can also apply directly to hiring managers at companies that may have an interest in an employee with your special abilities and background. Don’t get discouraged by a rejection and keep applying to as many positions as you can.

Just because you have lost your job in your 50s doesn’t mean you will never be employed again. Stay persistent in your job search – the right position will present itself as long as you don’t give up!

What is the Right of Redemption Before Foreclosure?

In the foreclosure process, the redemption period is a specific amount of time wherein the borrower can pay off the debt and “redeem” or “reclaim” their property. All states allow borrowers to redeem a property prior to a foreclosure sale, but New Jersey is one of the states that also allows you to redeem a property after it has already been sold via foreclosure. If you are facing foreclosure and unsure of your rights to redemption, here is what you need to know.

The right to redemption is meant to give borrowers one final chance to keep their home. Redeeming a home can include: 1) paying off the debt in total (principal balance plus interest and any accumulated fees) before the foreclosure sale in order to put a stop to the sale, or 2) providing reimbursement of the purchase price to the party who has purchased the property after the foreclosure sale, or otherwise paying off the mortgage debt including fees and interest.

Utilizing the right to redemption before the foreclosure sale is one of the best ways to avoid foreclosure. In order to redeem your home before the foreclosure sale, you must figure out exactly how much money you will need to present to satisfy the debt. You can do this by requesting a payoff quote (sometimes called a payoff letter or payoff statement) from your loan servicer. Once you know how much money you will need to redeem the property, you will have the chance to make payment anytime between the acceleration of the underlying promissory note and the foreclosure sale.

In practice, redeeming a home prior to a foreclosure sale does not happen very often. The reality is that if a borrower had the funds to redeem the property, they likely would not have fallen so far behind on their payments to begin with. This is where statutory redemption, or redemption after foreclosure, comes into play. Statutory redemption gives borrowers more time to gather the funds needed to keep their home. In New Jersey, borrowers have up until the court confirms the sale or the lender gets a deficiency judgement to redeem their home after a foreclosure sale.

In order to redeem your home after a foreclosure sale, you will need to pay the full amount of the judgement, plus interest, costs, and all reasonable expenses that the purchaser incurred for taxes, assessments, any prior liens, and necessary repairs after the sale of the home. If the purchaser received any amount of income from the property, as a rental, for example, this amount will be deducted from the total you will need to pay.

The right to redemption is a chance to help you save your home, but it isn’t always realistic for those facing foreclosure. If you want to save your home, but don’t think you’d have the ability to redeem it outright, Veitengruber Law can help you determine the best path through foreclosure based on your specific needs.