Will My Retirement Funds be Lost if I File for Bankruptcy?

7027606047_cac49c3b79Photo courtesy of Tax Credits

A very common and legitimate question clients frequently ask is, “Will I lose my retirement money if I file for bankruptcy?”

Oftentimes, clients who could greatly benefit from filing for bankruptcy and starting over with a Tabula Rasa, end up dragging their heels about filing due to their fear of losing their 401(k) or Social Security benefits.

As we all know, planning for retirement can be nerve-racking even without the potential of entering into a bankruptcy agreement. Many of us wonder if we will be able to sustain our standard of living in our older years.

Those people with financial difficulties, however, have an even greater pressure to plan for the future because their unfortunate missteps in the past have bumped them off the path of financial security.

So, if you file for bankruptcy, will your retirement money be endangered? The answer to that is: usually not. However, this is not to say that none of your allocated retirement funds will be used to pay off your debts.

As a general rule, the majority of retirement accounts aren’t typically lumped under the broad category of your “bankruptcy estate.” The good news for our clients is that this means that most of your retirement money is not available to creditors.

Examples of retirement monies that are safe include: traditional 401(k)s, IRAs, government retirement accounts, and pensions*.

Your Social Security benefits are also safe from creditors.

A quick and easy way to determine whether or not your retirement funds would be accessible to creditors is to ask yourself one simple question*. Do you have access to your retirement funds without incurring a financial penalty? If you are able to withdraw funds from a retirement account without paying a tax penalty, these funds will usually be considered as part of your general assets when you file for bankruptcy. This means that they would be available to creditors.

If you are not able to withdraw money from a particular retirement account without facing a tax penalty, then you probably have a more traditional retirement account which would not be within creditors’ reach.

Another question frequently asked is whether or not you will be able to continue making contributions to your retirement account if you file for bankruptcy. The answer to that is yes, And, even better news is that continuing to make contributions to a retirement fund may mean that you will be required to pay less money to your creditors. Don’t stop contributing even if you think a bankruptcy case is in your near future!!

Those who are self-employed entrepreneurs have the trickiest decisions to make when it comes to filing for bankruptcy and setting up official retirement funds. Many self-employed people assume that their retirement account is legitimate and inaccessible by creditors. The problem with this line of thinking is that many small business owners do not fully understand all of the requirements that must be met for an account to be officially considered as a retirement fund account.

The bottom line is: if you’re considering bankruptcy, don’t assume that your retirement money would be taken to pay off your debts. Avoid draining those accounts, and don’t make any decisions before consulting a qualified bankruptcy attorney. They know the specific requirements for any and all of your funds when it comes to repaying creditors. Make an informed decision by talking to your attorney before doing something that may negatively affect your standard of living in your golden years.

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Financial Tips for Women During Divorce

2983302382_6cf78e7c60Photo courtesy of Serge Melki

Even with the consistent progress women continue to make toward financial equality with their fellow men, a discrepancy still exists, and divorce is a time when this disparity becomes readily apparent. There are several factors that can leave the divorced woman between a rock and a hard place when it comes to raising any children that may have come of the marriage, and being able to make a decent income.

The usual practice among divorce lawyers these days is to divide any monies and real property acquired by both parties during the marriage equally. The goal is to have both husband and wife able to sustain a quality of life similar to the one they were living whilst married. On paper, this might be able to hold water. The reality, on the other hand, is an entirely different story.

Although divorce has come a long way, there are still many factors that often leave women struggling financially after their divorce is stamped with a gold seal of approval from the court.

Many women who are facing a divorce in 2013 have been, and will continue to be the main caregiver of any children that have resulted from the marriage. Even in cases where shared custody is awarded and adhered to, the hard truth is that moms are still usually in charge of more than 50% of the child-rearing responsibilities. In fact, many women today have spent a significant number of years away from their professions so that they may stay at home and care for the children. When faced with a divorce, it can easily become apparent that the woman now has a much lower earning potential due to childcare responsibilities and those years in her field that may have been lost to raising a family.

Aside from all of the emotional damage divorces cause, the fact that women typically come out with less money and less earning potentially than men means that it’s extremely crucial to make your future financial well-being your priority. Take the following advice to heart to solidify your new, smaller family’s financial stability.

  1. Find the right counsel. It’s true that pretty much any ol’ lawyer can get you divorced. Taking the time to find a family law attorney with a great reputation and success record will mean a better settlement for you in the end because he/she knows state specific divorce laws and has important connections that will also be an asset to you.
  2. Hire a financial planner. If you choose wisely, your divorce lawyer will already work in tandem with a wide variety of financial professionals. The best attorneys aren’t afraid to ask for help from their professional network, and will often have you working with a ‘team’ of attorneys, advisers, and other financial experts. However, if your attorney doesn’t happen to have someone to help with your finances, hire an adviser yourself.
  3. Focus on the future. As much as we are told to ‘live in the now’ – during your divorce proceedings, you’ve got to make sure that your future is secure.
  4. Keep a close eye on your credit score. Before the divorce has been finalized, keep one eye on your credit rating at all times. Life after divorce is going to require you to have a good rating, and your husband may still have access to many of your joint money accounts and credit cards. If he’s spending money on a new girlfriend using joint marital money, keep documenting every dollar he spends.
  5. Get your own bank account. While you’ll still want to have access to joint accounts (after all, it’s your money, too!), open both a savings and checking account in your own name only as soon as possible. Open these accounts at a different bank from your joint accounts. Apply for a few credit cards in your name only as well. Thankfully, in 2012, the Consumer Financial Protection Bureau made it a lot easier for at-home or non-working spouses to apply for an obtain credit cards.

Bonus Tip: BE ON YOUR TOES. Even if he’s never displayed such behavior before, your spouse may very well choose this time to hide assets, so that it appears that he is worth much less than he really is. Result? If he does it successfully, you’ll end up with much less money in the end, and he’ll be sitting pretty. Pay very close attention to his financial moves during this time.

Divorce is never our intention, but sometimes it becomes inevitable. Use all of the plentiful resources that are available to you as a divorcing woman in 2013 to guarantee your financial security as a divorcee.  Keep your eyes on the future at all times, and soon, the future you’ve always wanted will materialize.

I’ve Been Scammed. Now What?

5864191813_3e61573047Photo courtesy of Jamal Neptune

Recently, law enforcement officers across the nation have been fervently urging everyone to be on high alert for a new variety of scam artists. Naturally, people of all ages need to be smart in order to avoid being scammed out of their hard earned cash, however in the past few months, a new and disturbing trend has been unfolding.

The newest popular hoax among rip-off artists is the to pose as the grandchild of an elderly person. Since a grandparent would most certainly recognize his or her own grandchild in person, these scammers make contact with the “grandparents” only on the telephone.  At the beginning of the conversation, they  typically ask their ‘grandparent’ if he or she can guess which grandchild they’re talking to. As soon as a name is offered, the scammer responds affirmatively. Any questions about differences in voice are blamed on having a cold or having recently been hit on the nose or face.

Some scam artists use social media or other websites to acquire additional information about the targeted families, such as names/nicknames, personal details like birthdays, and other facts that may persuade the targeted grandparents to believe they are actually speaking to their grandchildren.

Everyone knows that a grandparent never wants his or her grandchild to suffer, so the (pretend) grandchild invents a distressing story, perhaps that he is imprisoned in Mexico after a crazy bachelor party, or that he was on a trip with friends and his wallet was stolen. Some have even claimed to have been in a car accident, or to have lost their passport (and to acquire a new one they need thousands of dollars).

Usually, the scam artist requests secrecy (to avoid getting in trouble with parents, etc.) in order to keep the grandparents from contacting other family members and finding out that their grandchild is actually not in any trouble at all.

These scam artists typically work with several other people who may also call the grandparents, posing as MoneyGram or Western Union store operators, lawyers or other professionals. These people play an important role because they provide details that back up the initial story and cause the grandparents to fully believe the deception.

After being told that their first wire transfer failed, many of these elderly victims go on to wire two or three additional cash advances, hoping to prevent any harm coming to their grandchild.

Statistics show that the elderly are more susceptible than other age groups to being scammed out of large sums of money, but in reality, this can happen to anyone and it is important to be smart before sending money when asked for help over the phone. Some things to do that will help you keep your money where it belongs:

  • Do not keep any requests for money a secret. Confirm that the person asking for your help really is in trouble. Call friends and family members before doing anything.
  • Ask the person on the phone a question that only he would know the answer to, if he is who he claims to be.
  • Use a secret word that only your family and closest friends know. If the caller can’t tell you the secret word, hang up.
  • Be careful how much personal information you post online. We love social networking as much as the next person, but try to remain slightly anonymous.  This will leave you less susceptible to scams.

If you’re reading because you’ve already been victimized, it is a good idea to seek quality legal assistance to prevent the con artist from taking any more of your money and to ensure that something of this nature never happens again.

Call Veitengruber Law and ask us how we can help. There are security measures that we can help you put into place on all of your accounts and credit cards. We can also investigate your current fraud case and determine whether any of your lost money can be recovered.

If you’d like a consult with one of our attorneys, but you don’t know how you’ll pay for it – we’ve got an easy answer for you. Simply like our Facebook page, and your consultation meeting will be completely free of charge!


Can I Get My House Back After the Sheriff’s Sale?

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During the foreclosure process, it is definitely possible for a delinquent borrower to prevent a property from being sold at Sheriff’s Sale. If you have received a Notice to Foreclose from your lender, it is important that you act swiftly if you desire to keep your home. If you act quickly, you will have several decent options:

  1. Bring the mortgage payments current. Naturally, this is only a viable choice if you have suddenly come up with the necessary funds, whether you have been gifted some money, it was left to you in a will, you’ve gotten a fantastic new job, or have hit the lottery.
  2. Request a forbearance or modification of your mortgage loan. Forbearance is like taking a break from the requirements of your loan while you get your finances in order.  Your lender may grant you forbearance for a set period of time if you can’t make your scheduled loan payments. They may also grant you a lower payment amount that is more appropriate for your income level, which is called a loan modification.  Interest rates and the life of the loan may be reorganized in order to allow you to make the monthly payments and continue to keep your home.
  3. File for bankruptcy. Whether you decide to file for Chapter 7 or Chapter 13, filing for bankruptcy is a potential way to save your home. Chapter 13 would allow you to set up a repayment schedule approved by the New Jersey Courts, so that you can get caught up on overdue payments over a set period (three to five years).
  4. List your home for sale in the real estate market. You can sell your home at any point in the foreclosure process – up to and including the day before it is sold at auction (Sheriff’s Sale). Work with a good attorney who can help you delay the foreclosure process. This may allow you to sell your home, pay off your debt to the bank/lender, and potentially (although unlikely) keep any sum over and above what you owe the bank if you have equity in the home.
  5. Sell your home in a short sale. A short sale means you will be selling your home for less than you owe the bank. Talk to your attorney to find out if this is a good strategy in your particular situation.

If you have failed to act before the foreclosure sale date, the eviction process will begin soon after, as the new owners will want you to vacate the premises. At this point, you have one option left: the redemption period. In New Jersey – borrowers have a set time frame after the foreclosure sale during which they may still be able to save their home.

With that being said, the redemption time period is extremely limited in that a homeowner technically only has 10 days after the Sheriff’s Sale (foreclosure date) to redeem the property.

During the redemption period, you have the right to purchase your property back for the price it was sold for. One last ditch and very difficult approach would be to attempt to sell your house in a rapid short sale during the 10 day redemption period. You will need to work in tandem with an extremely experienced real estate/foreclosure attorney in order for this aggressive approach to work.

The bottom line is this: if you’re in danger of losing your home to foreclosure, the best approach is to keep your head out of the sand. Don’t delay – act today. Call us; we can help.

(Want a free consultation? Like Veitengruber Law on Facebook and get a free appointment today!)

Image credit: Mike Licht

New Jersey Foreclosure: Saving Your Home

Photo courtesy of Steve Snodgrass

Previously, we’ve given you the low down on the New Jersey foreclosure timeline, and how some of the recent changes in New Jersey laws have affected the foreclosure process. While we acknowledge that allowing the bank to foreclose on a property may be the best solution for some people, we also realize that there are many homeowners who desperately want to save their home.

The recent changes in New Jersey foreclosure regulations have definitely made the process of saving your home slightly more challenging than it used to be. Due to reduced funding, the previously state-funded foreclosure mediation process has been eliminated, leaving struggling homeowners scratching their heads when it comes to communicating with lenders.

Luckily, the option of hiring a private mediator is still available to anyone who is in danger of losing his or her home to an unwanted foreclosure. As you have probably already concluded, making meaningful contact with your lender is never an easy thing to do, especially if you’re behind on your payments. What you need is someone to make that contact for you; preferably an attorney who specializes in foreclosures and other real property transactions.

An attorney experienced in these areas has spent years building valuable relationships with members of the banking industry and knows the foreclosure process like the back of his hand. When you team up with your attorney, you’ll essentially have hired someone to do all the talking for you; someone who knows who to call, what to say, and exactly when to say it. The importance of filing important paperwork according to the new foreclosure timeline is crucial as well, and the right attorney knows this.

Recently, at the offices of Veitengruber Law, LLC, we had an incredible foreclosure mediation success. One of our clients had been forced into foreclosure against his wishes due to financial problems that were out of his control. He came to us two years behind on his mortgage payments.

Are you in a similar situation?

Here’s what happened next: His bank filed a Foreclosure Complaint. Soon after, his financial situation brightened, and he once again became able to pay his monthly payments. Problem? He was two years behind, which meant there were significant arrears that the bank was asking for, which our client wasn’t able to pay.

We filed a timely Motion asking the bank to capitalize* the arrears. The lender was amenable to the idea, and formulated a trial mortgage modification, with no lump sum arrears payment required.

Does this mean that our client doesn’t have to pay his arrears???

Well, no.

They’ll be squeezed back into the loan figures as capital owed (hence the term ‘capitalize’)* – which removes the negative effect that arrears have on a credit report.

The bottom line for our client in this situation is that he is able to keep his home and his dignity by getting out of foreclosure and back on track with his mortgage payments. Not to mention saving his credit score from bottoming out, which would have opened up a whole new can of worms.

We handle those worms, too, but this time, our client didn’t have to.

Need help getting out of foreclosure? Let us mediate for you. Call today to schedule a consultation. (Like us on Facebook and get a full office consultation FREE of charge!)