Your Rights Under the Fair Credit Reporting Act

7468312536_638cf71b6d_z

At Veitengruber Law, we spend a lot of time helping clients clean up their credit reports and improve their credit scores. Since your credit score and the corresponding report are crucial in so many areas of your life, it’s important for you to know that you have consumer credit rights under the Fair Credit Reporting Act.

What is The Fair Credit Reporting Act?

The Fair Credit Reporting Act is a federal law, originally enacted in 1970, whose purpose is to ensure that all information obtained and retained about you by any consumer reporting agency is fair and accurate. The FCRA is also in place to protect the privacy of your personal information. This law is essentially the backbone of consumer credit rights in the United States, and works together with the Fair Debt Collection Practices Act. Some of your rights under the FCRA include:

  • The right to information.  There are many different consumer reporting agencies, and you have the right to know what information any of them have stored in your file. Typically, you can request the information in your file once a year at no cost. If you have experienced identity theft or if you feel that a fraudulent act has caused errors in your file – you should be able to request a copy of your file more than once per year. Other reasons that may prompt you to request disclosure of your file: job loss, receiving public assistance, or an action taken against you due to something in your credit report or other file.
  • The right to know if information was used against you. If you are applying for a loan, a job, insurance, an apartment, (etc) and have been turned away, it is your right to know why you were denied. The person or company that denied you is required to tell you which credit agency gave them the information that caused your denial. This means you will be able to look into the information that a particular reporting agency has on file about you in order to check for errors.
  • The right to know your credit score. Some credit reporting agencies turn the information in your file into a score. Credit scores are used in order to give lenders and other necessary people/companies an overall summary of your financial history. Your credit score helps lenders make decisions about how credit worthy you are. Because your credit score is crucial in some very important transactions, you are entitled to know your score. Although your credit report is free (once per year), you will be charged a small fee for your numerical credit score – usually around $10.
  • The right to dispute. The number one reason why you should keep a regular eye on your credit report and score is so that you can make sure all of the information they contain is correct. If you should discover that there are inaccuracies within your credit file, you are entitled to have the faulty information corrected or removed.

The Fair Credit Reporting Act is monitored by the Federal Trade Commission. To learn about the rest of your federal consumer/credit rights, visit their website. Additionally, some states have consumer reporting laws that may further benefit you. To find out more, contact your local consumer protection agency.

For help with disputing false information on any of your consumer files, please contact our office for a free consultation.

 

 Image credit: DonkeyHotey

Free NJ Workshop: How to Build a Better Credit Report

VL_blogheaderclr

Having a good, solid credit score is important for so many reasons. A mediocre or low score can prevent you from becoming a home owner because lenders look closely at potential borrowers’ credit reports before approving loan applications. A less-than-stellar credit report can even make it difficult to find a landlord who’ll allow you to rent. Your credit report and score say a lot about your financial stability, and even if all of your money missteps are behind you, improving your credit score and cleaning up your credit report will take some time and concerted effort.

Since you’ve landed on this post, you’ve probably already acknowledged that your credit report needs help. Reaching out for help is a great sign! One word of caution is that there are a plethora of companies that will promise to clean up your credit report in record time, offering you a virtually “new credit identity.” A vast majority of these companies are fraudulent, and should be avoided at all costs. Often, they are engaging in illegal activities that can potentially get you in serious legal trouble if you give them your information.

All hope is not lost, though! Building a better credit report is possible with the help of a qualified and NJ licensed credit repair attorney like George Veitengruber, Esq.

It may seem daunting to consider hiring an attorney to help you improve your credit report. Pay out even more money in order to fix your money mistakes? Lucky for you, Veitengruber Law is offering up a TON of FREE pertinent information that will help you start improving your credit score.

There’s no catch, we promise. You can come out and ask all the questions you’d like. Bring a recent copy of your credit report if you have one, so that you can ask all of the right questions while looking directly at your report – free of charge.

The Details

What:   ‘Building a Better Credit Report‘ – a FREE informational workshop

When: January 29, 2015; 7:00 – 8:30pm

Where: Howell Public Library; 318 Old Tavern Rd. Howell, NJ  07731

Why: You’ll learn: how to start improving your credit score, your rights under the Fair Credit Reporting Act, how to better deal with debt, tips about avoiding $$$ scams and identity theft.

Who: Presented by George E. Veitengruber, Esq.

Cost: FREE

RSVP: To reserve your space, call The Howell Public Library at 732-695-3303.

The NJ Foreclosure Timeline

2959833537_af77ed5003_z

If you’ve missed even one mortgage payment, your lender could potentially start the foreclosure process against you. It’s not likely that just one missed payment will trigger foreclosure proceedings, but it is possible. If you have missed three or more consecutive mortgage payments, it’s highly likely that your lender is thinking that foreclosure is imminent.

If you are facing a potential foreclosure in New Jersey, there are some very important facts about the NJ foreclosure timeline that you should familiarize yourself with. This will help you know what to expect along the way, and also how to stop a foreclosure, if that is what you ultimately want.

Many people who have fallen behind on their mortgage payments live in fear that they will one day be evicted without warning. Luckily, this will not happen. Because New Jersey foreclosures are judicial, the entire process must be completed via the NJ court system. This means that lenders must follow certain rules and timelines in order to foreclose on a borrower.

For example, before your lender can even file a foreclosure lawsuit against you, they must first notify you of their intent to do so. This “Notice of Intent to Foreclose” is a legal document, and must be received by the borrower at least 30 days prior to filing of the complaint. This gives you 30 days to prepare yourself for foreclosure to begin.

When your lender does file a foreclosure lawsuit, they must send you a copy of the Complaint, along with a Summons. The Complaint is a document that contains all of the information about your mortgage – like the amount owed, names of borrowers, address of the property in question, and a requested “relief” from the state court.  The “relief” sought is typically permission to sell the property in order to make up for money they lost due to the fact that you have ceased making payments.

Along with the Complaint, you will be sent something called a Summons. Both of these documents must be sent to you via registered or certified mail, return receipt requested. The Summons basically tells you what is going on, and explains that you have a right to file an “Answer,” or a response to the Complaint. You must file your Answer within 35 days of the date that you received the Summons and Complaint.

If the judge decides in favor of your lender, the sale of your home will be scheduled, but typically not for at least another 30 days or more. Your lender is required to post a Notice of Sale on your property, and the Notice must also be printed in no less than 2 local newspapers for at least 4 weeks.

Because New Jersey is a judicial foreclosure state, you will have a significant period of time (from Notice of Intent to Foreclose) to find another place to live. This time will be extended if you file an Answer and contest the foreclosure.

If you’d like to oppose a foreclosure being filed against you, it’s important to do so with professional assistance. An experienced foreclosure defense attorney who knows NJ foreclosure laws is vital to your success in keeping your home.

Your foreclosure attorney can guide you through the process listed above, and can also file any and all paperwork for you, as well as negotiate with your lender if you oppose the foreclosure and want to remain in the home. If you’re worried about the cost of retaining an attorney: don’t be. The right attorney can help you keep your home, wipe out your late fees, extend the life of your loan, and ultimately lower your monthly payment so that you will end up saving money in the end.

Quality foreclosure defense in New Jersey is hard to find. If you want to stay in your home, contact us now, regardless of how far into the foreclosure process you are. Our client success stories will show you that it is possible to save your home.

Image credit: woodleywonderworks

Will I Lose Everything if I File for Bankruptcy?

5856941321_a5519e0043_z

A common misconception is that filing for bankruptcy means you will lose all of your personal property in exchange for wiping your debts clean. Unfortunately, this causes some people to drag their heels about filing a bankruptcy petition, leading them into deeper and deeper piles of debt.

While the fear of “losing everything” due to a bankruptcy is very common – it’s unfounded, regardless of whether you’re filing for Chapter 7 or Chapter 13. Bankruptcy laws have been created with the end goal of helping struggling debtors get back on their feet. Taking everything they own would be counter-intuitive to that goal, as it would leave them with no debt, but no assets either.

Filing for bankruptcy DOES NOT mean you will lose your home. Additionally, you will almost always be able to keep at least one vehicle, so that you can continue to work.

What Happens in a Bankruptcy Case?

If you file for Chapter 7, your case will be assigned a bankruptcy trustee. This person is not working for or against you; they are working for the Department of Justice. Their job is to ensure that your assets are liquidated properly and that your creditors are paid off fairly, all while following federal and state bankruptcy guidelines.

While your trustee is assigned to liquidate (sell) your assets (property), there are limitations in place for what can and cannot be sold in order to pay off your debts. These limits are set so that you will be left with a place to live, clothes to wear, and furniture to sit on. You will typically be allowed to keep all or most of your household items as well (dishes, toiletries, tools, artwork and other home decor) unless they are unusually valuable.

Some states have what is known as a “Homestead Exemption Policy.” This policy varies from state to state in how much home equity you are allowed to exempt (keep). New Jersey does not have a Homestead Exemption Policy, but debtors who file for bankruptcy in NJ are allowed to use the federal bankruptcy exemptions, which will protect some of your home equity.

Married couples in NJ may be allowed to double the federal exemption amount. Also, if you and your spouse own your home jointly, it may be completely exempt, as long as the outstanding debts you are seeking relief from are not joint debts. This will help married debtors if only one party has a lot of debt, and only if that person files for bankruptcy alone and not jointly with his/her spouse.

If you are filing for Chapter 13 bankruptcy, the ability to exempt your home equity will directly affect how much money you’ll be required to pay your creditors. Your trustee will not liquidate your assets in a Chapter 13, but will add up the value of your exempt vs nonexempt property. The value of any nonexempt property is what you will be required to pay to your creditors, so exemptions will lower your payment amount.

Regardless of whether you’re considering filing for Chapter 7 or Chapter 13 bankruptcy, the important thing to remember is that you will not lose everything. The goal of filing for bankruptcy is to help get you to a stable financial future.

 

 Photo credit: Money Images

Can I Transfer Nonexempt Assets Before Filing for Bankruptcy?

15567997853_f158676c06_z

During a Chapter 7 bankruptcy proceeding in New Jersey, your non-exempt assets will be liquidated (sold) in order to  repay the money that you owe creditors, thus wiping your debts clean and giving you the ability to start over financially. The bankruptcy system wants to get you out from under the burden of your debts so that you can continue to be a productive member of society. Thus, there are numerous assets that are protected from bankruptcy liquidation, and these assets allow you to keep living, working, and providing for your family.

Exempt vs Nonexempt Assets

Property that is exempt is property you will be able to keep. Your bankruptcy trustee won’t be able to liquidate items like: your home, vehicle, household furnishings (up to a certain monetary value), the value of life insurance policies, annuities, and retirement accounts.¹ Exemptions do vary by state and federal law, so verify your exemptions with your bankruptcy attorney.

Nonexempt assets are things that are not considered necessary to meet your basic living and working needs. Some examples of items that are usually considered nonexempt in bankruptcy include: expensive collectibles, additional vehicles, musical instruments (unless you are a professional musician), heirlooms, stock & bonds, and vacation homes.

You may be really attached to a nonexempt item, or perhaps you recognize its high monetary value. You might start thinking about ways to be able to ‘beat the system’ so that in the end, you’ll still have that coin collection. Maybe you could just “give” it to your brother for the duration of the bankruptcy, and then he’ll give it back to you after the smoke clears. No one would ever know, right?

During your bankruptcy proceedings, you’ll be asked if you recently transferred, gifted, or sold any property. Lying to the Bankruptcy Court is a very risky endeavor. Once you’ve been assigned a trustee, s/he will comb through all of your assets and actions over the past several years. Anything that seems even slightly suspicious will warrant further investigation. Your trustee has the right to question anyone to whom you may have sold, gifted, or transferred nonexempt property.

Let’s say your mom lent you $10,000 five years ago to help out with a down-payment on your home – with the condition that you would repay her as soon as possible. Nine months ago, when your aunt passed away, you received an inheritance check, and were finally able to pay back your mom, just like you promised.

Neither transferring nonexempt property (like the coin collection) in order to hide it from creditors, nor paying “insiders” before other creditors is permitted under bankruptcy law. Both are considered fraudulent actions. Your trustee has a “look back” period of one full year for transactions that may have occurred between you and family members or friends (“insiders”). [11 U.S.C. § 101(31)]. Any payments to insiders that took place in the year prior to filing your bankruptcy complaint are considered preference payments. These types of payments are prohibited, and will most likely be reversed so that all of your creditors get equal parts of your assets.

If you are considering filing for bankruptcy and have made a payment to someone who is considered an insider under bankruptcy law, be sure to disclose this to your bankruptcy attorney. He may recommend waiting to file until the payment you made no longer falls within the “look back” time frame. He will also advise you against hiding assets from your creditors. Since bankruptcy law is complex and varies on a case by case basis, it’s best to contact a certified New Jersey bankruptcy lawyer as soon as possible.

 

¹nolo.com

 Image credit: Daniel O’Neil

Which Credit Card is Right for You?

12696032183_0d9622ae98_z

While we maintain that it’s better to pay for things with money you have in your bank account, we acknowledge that most people today have at least one credit card. Whether you keep a card around for emergencies, or keep a running balance from month to month, it’s important to know how to navigate all of the fine print that credit card companies don’t advertise.

Which Type of Card Should I Look For?

First, you’ll need to figure out what you want out of a credit card. Are you looking for perks – like free airline miles, cash back, or other incentives? Perhaps you have had financial trouble and your credit score has suffered. In that case, you’d need to look for a credit card specifically targeted for people with bad credit.

Check your credit score before applying for a credit card so you’ll know what kind of interest rates to expect. The higher your credit score number, the lower your credit card interest rate should be.

If you’re transferring a balance from one card to another in order to save money, beware of cards that offer teaser rates. In most cases where a credit card is offering an unbelievably low interest rate on balance transfers, that super low rate is only temporary, and will skyrocket up after your introductory phase is over. This could be anywhere from 3 months to one year. So, if you’re tempted to move your balance from a credit card with a 12.99% interest rate to a card that offers free transfers and a 3% rate on the balance – get out your magnifying glass and read the fine print!

Many credit card companies make the above (or similar) offers to attract customers who may have a significant balance sitting on a different card with a medium to high interest rate. The other problem with these types of offers, beyond the introductory rate jumping up after a set time period, is that the “free balance transfers” offer itself often has a time restriction.

For example, let’s say you see a commercial for a credit card that is offering new customers “free balance transfers” with 3% interest on said transfer. What isn’t advertised is that many of these offers expire 60-90 days after you’ve signed up. So, you see an ad, apply for the new card intending to transfer your balance from another card, get your new card in the mail, and then…..LIFE HAPPENS. You get busy, and put off making the balance transfer. Several months later (probably while paying bills), you have a light bulb moment – “Oh right! I need to transfer my balance so I can stop paying all this interest!” After all, your new card offers free balance transfers and a much lower rate.

Unfortunately, by the time you remember to make the transfer, the “offer” may have already expired, which means there will probably be a fee on the transfer, and you may not be able to get the super low rate anymore, making the whole reason you switched companies null and void.

Your best bet is to research until you find a credit card with no yearly fee and a low fixed interest rate. This will guarantee you the same interest rate until you’re able to pay off the balance. Also, be sure to pay your bill on time every month, even if you’re only paying the minimum amount. This will help you avoid late fees – and being late with your payments can often cause your interest rate, even if it’s fixed (again: Fine Print) to go up.

 

Image Credit: Sean MacEntee

Loan Modifications and Your Debt-to-Income Ratio

14877276186_268fa13881_z

The new year is starting out on the right foot for home buyers – with extremely low interest rates. In fact, a 30 year fixed- rate mortgage is averaging 3.7%! As interest rates haven’t been this low for several years, many people are considering applying for loan modifications on their existing mortgages.

Although you may be extremely tempted to refinance your existing home loan, it is important to know whether you would even be eligible for a modification before jumping headfirst into the process.

What is your debt-to-income ratio?

You definitely need to have the answer to this question before applying for a loan modification so that you have realistic expectations about what results to expect.

In order to know your debt-to-income ratio, you must first understand how the ratio is calculated.

During any loan application procedure, including traditional loans and mortgage refinancing (otherwise known as loan modifications), your debt-to-income ratio is a critical part of the process. Your debt-to-income ratio, or your DTI, will be a determining factor in whether or not you become a homeowner.

Your DTI ratio is defined as how much of your monthly income (gross) is already tied up in paying for your current debts and financial obligations. You can use a DTI ratio calculator to give yourself a basic idea of your debt-to-income ratio.

There are two ways to calculate your DTI ratio. The first includes comparing your gross income solely to your housing related debts, like your mortgage payment, homeowner’s insurance, property taxes and other house related expenses. This is referred to as your front-end debt-to-income ratio.

The second way to calculate debt to income ratio is a little more aggressive, and compares your monthly income with how much you spend each month on all debts, not just housing related debts. This would mean you would include child support, alimony, credit card payments, car payments and any other recurring debt in addition to all housing related debts. This is known as your back-end DTI ratio.

Your front-end ratio should not exceed 31%. This means that your housing expenses should not exceed 31% of how much money you make each month, before taxes. Lenders look at your front-end debt-to-income ratio to ensure that you have room left in your monthly budget to pay for the loan you’re applying for.

Lenders also use the back-end DTI ratio together with your front-end ratio to determine your eligibility for a loan. All lenders are different, and may have slightly different guidelines for determining what is an acceptable DTI ratio (either front or back-end).

It’s important to approach a mortgage refinance with as much information as possible, so do some calculating before you spend any time applying for a loan modification. If your front-end debt-to-income ration is higher than 31%, don’t panic. There are ways to lower your DTI before you apply so that you are not turned away. For more information, or if you know you need to lower your DTI ratio and want to learn how, schedule a free meeting with us today.

 

Image credit: Jacob Edward (flickr)

Bankruptcy and SSDI: Will I Lose My Disability Income?

11745928835_df9df86a4e_z

Americans who have worked long enough and paid Social Security taxes have a safety net in place if they happen to become disabled and can no longer work. Having paid into the system entitles all (previously or currently) employed workers to apply for disability benefits if the need arises. If you are someone who is currently receiving Social Security Disability Insurance payments, you’ve probably had mixed emotions about your situation.

Naturally, Social Security payments can be quite a relief to anyone afflicted with a chronic, life-altering illness. However, no longer able to perform duties that previously allowed you to work a paying job, it’s easy to become worried about whether you’ll be able to pay your bills. Although Social Security Disability Insurance payments are helpful, most people receive a fraction of what they were previously earning. If you are approved to receive disability insurance payments, the amount you receive is not based on how severe your disability is or how much money you were making when you became disabled. The Social Security Administration averages how much income you paid Social Security taxes on in the past – over many years. They then apply a formula to this average, using percentages called ‘bend points.’ Ultimately, your payments will be a percentage of what you earned throughout your working years.

Most Social Security Disability Insurance payments range from $300 – $2,200/month. In 2014, the maximum disability benefit amount was $2,642/month.

This leaves many people receiving significantly less ‘income’ than they were while working, and can eventually lead to a financial crisis. Previously, paying all of your monthly bills may have been a walk in the park, but if your income was suddenly cut in half or lower, you may quickly start struggling. You may find that it’s barely possible to pay your utility bills, mortgage, minimum credit card payments, and more.

We’ve met with several disabled clients who found themselves in similar situations – not wanting to lose their homes or the ability to properly support their families, they were up in arms about what to do next. Afraid that they would lose their back payments or ongoing Social Security Disability benefits, they were hesitant to file for bankruptcy.

If I File for Bankruptcy, Will I Lose My Disability Income?

You’ll be happy to learn that SSDI payments (including lump sums or back payments) are always exempt in Chapter 7  and Chapter 13 Bankruptcy proceedings.¹ If you are receiving SSI (Supplemental Security Income) payments, they are also exempt due to the strict rules about how that money can be used by recipients. In both cases, lump sum payments may have to be tracked in order to prove that they were indeed Social Security benefit payments.

If you receive private, state or other disability payments (NOT from the Social Security Administration), a certain amount of those payments will also likely be protected in a bankruptcy case.

Filing for bankruptcy while receiving disability payments IS POSSIBLE. You will not lose your only source of income. To learn more, please schedule a FREE consultation with my office today (732) 695-3303. We can help you wipe out many of your debts so that living on a fixed income is possible.

 

¹Nolo.com

Image credit: Simon Cunningham