Can Creditors Contact Me After a Bankruptcy Discharge?

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If you’ve successfully made it all the way through bankruptcy proceedings and have been granted a discharge of your debts – congratulations! Hopefully, this will mean a new beginning for you and will see you moving toward a brighter financial future.

Sometimes after a bankruptcy discharge has been granted, you may receive communications from some of your creditors, still asking you to make payment on a debt. There are several reasons why this may happen, and luckily, there are solutions to each, as well.

It may take up to several weeks for a bankruptcy discharge notice to be sent by the court and delivered accordingly by the U.S. Postal Service to all of your creditors. If your creditors call you within this time frame, we advise you to tell them that you have filed for bankruptcy and that they should be receiving notice of your discharge very soon. You may also want to give them your attorney’s contact information as well as your bankruptcy case number.

Outside of the initial few weeks, it is possible that the creditor in question never received notice of your bankruptcy. This happens more frequently than anyone would guess. Sometimes the paperwork is legitimately never received by the creditor (or their law firm). It may have been lost in the mail or within the court system. It may also be possible that the creditor did receive the paperwork, but that it was mishandled or filed incorrectly within their system. There may have been clerical errors, such as a misspelling of your name, etc, that caused your bankruptcy discharge to be misfiled, leading them to believe that your debt was still owed. In cases like these, inform the creditor of your bankruptcy information, and ask them to cease contacting you.

Another situation that may arise is that you may have forgotten to list all of your debts when you originally filed for bankruptcy. Again, this is very common and can happen for a few different reasons. One type of debt that is frequently forgotten is medical bills. The reason some medical bills often don’t make it onto bankruptcy filings is because the debtor may receive bills from a multitude of doctors for a single procedure (anesthesiologists, surgeons, reconstructive surgeons, radiologists, laboratories, other specialists, etc). A large bill from one or more of those doctors may arrive after the original petition has been filed, and you will have left that debt off your petition, because you did not know about it.

The bankruptcy court does allow you to reopen your case if you have forgotten to list a creditor, however this is not something that is often done due to how costly it can be. Instead, what usually happens when a debt is accidentally forgotten is that the debt will be discharged along with the rest of your debts, because there is simply no money to pay that creditor with, anyway.

Now, there comes a time when a different course of action is called for – and that is when creditors who were properly listed on your bankruptcy petition and have been informed of same, continue to call, write or otherwise harass you for payment.

In these cases, we recommend that you stop being nice, and start getting aggressive. Many “debt collecting” agencies were not the original holders of your debt, and may have purchased discharged debts in the hope of squeezing a little money out of you if they can effectively scare you. They may use many different tactics to attempt to make you believe that you still owe them money. This type of behavior is strictly prohibited and should NOT BE TOLERATED.

These creditors are deliberately violating the bankruptcy court laws that specifically disallow them from contacting you regarding a discharged debt. As such, you can and should sue them for violating the Fair Debt Collection Practices Act.

 

Image credit: Tim Parkinson

Where Can I Get Free Credit Repair Help in New Jersey?

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If you or someone you know is dealing with relentless creditors, unmanageable bills, outstanding student loans, or a variety of other factors that can negatively affect your credit score – you need a new plan.

You’ve probably already acknowledged that your current financial plan is not working for you, and you may be wondering what step to take first to get the ball rolling in the right direction.

“Legal Advice is Too Expensive!”

If this is the mantra that has been keeping you from getting the help you need, you’re in luck. We realize that retaining an experienced attorney can be intimidating at first! In order to make the process less formidable, Veitengruber Law has decided to provide a series of free, (yes you read that right – FREE) educational workshops throughout Monmouth County and northern Ocean County during 2015.

All of our free legal workshops are open to anyone and everyone. Please feel free to bring a friend, family member or neighbor, who may have similar financial questions or concerns, along with you. All are welcomed and encouraged to attend.

Our next event is coming up soon, so mark your calendars now. The details include:

What:   ‘Your Credit Report & How it Affects Your Financial Decisions’ – a FREE informational workshop

When: March 11, 2015; 7:00 – 8:30pm

Where: Manalapan Township Library (Monmouth County Headquarters); 125 Symmes Road, Manalapan Township, NJ 07726

Why: In a casual format, Mr. Veitengruber will address the following: the far-reaching effects of your credit report and score; how credit reports work and how to properly read and understand yours; when and how to report and correct credit report errors; short term and long term ways to raise your credit score; and how to more effectively manage your money and set up a budget. You will be provided with materials, samples, and other resources so that the workshop is interactive.

Who: Presented by George E. Veitengruber, Esq.

Cost: $0

RSVP: To reserve your space, call the Manalapan Township Library (Monmouth County Headquarters) at 732-431-7220 x 7222.

Prior to the workshop, it is recommended that you request a copy of your current credit report (and score, if you so desire). Remember: requesting your own credit report will not affect your score at all! Come out to the workshop prepared with your credit report and a list of questions that you would like to have answered by an experienced credit repair attorney at NO COST. If you do not bring a copy of your credit report, you will be provided with a sample report to work with during the seminar.

These workshops are provided as a service by Veitengruber Law because of our strong desire to help people like you get out of financial trouble. George Veitengruber specializes in credit repair – along with bankruptcy, foreclosure defense and loan modification. He also deals with issues regarding: real estate, debt collection, estate planning, contract disputes, and adoption. At the end of the workshop, Mr. Veitengruber will be available to schedule you for a free one-on-one follow-up meeting, should you have additional questions that you’d like to discuss in further detail or privacy.

Free legal advice in New Jersey? It does exist!

There is absolutely NO obligation for attending. Our only desire is that you to walk away from the workshop with KNOWLEDGE!

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Divorce and Your Mortgage: The Dirty Little Secret

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No one goes into a marriage hoping to get divorced one day. Unfortunately, many married couples just don’t make it ’til death does them part’ – rather, they end up parting ways, and all of their assets have to get divorced, too.

When any couple decides to divorce, part of the process involves negotiating what is called a Property Settlement Agreement – often referred to simply as the PSA. This agreement can be set up by the divorcing parties themselves if they agree on everything to be divided. Parties who do not see eye to eye draw up their PSA through their respective divorce attorneys. Regardless of how it was generated, all Property Settlement Agreements must be approved by the court in order to be considered enforceable.

During the course of a divorce, emotions typically run high, and for many couples, getting through the negotiations of “who gets what” can be trying. Thus, many people rush through the PSA negotiations, signing off on the agreement without fully understanding what it entails.

There are many portions of the Property Settlement Agreement that will be cut and dry, easy to understand, and without complications. The PSA essentially lays out what property (both marital and separate) shall be distributed to which party. To be clear: marital property includes anything that was purchased by either spouse during the course of the marriage. These assets may have been bought by one spouse or both spouses together. Separate property would have been purchased by one of the parties prior to getting married.

One of the main items for consideration in a divorce is the marital home. If the home is not sold and its equity divided, its ownership will be granted to one party or the other. The spouse receiving the house then takes over the mortgage payments on his or her own, and, according to the PSA, is the sole owner of the home. This is one portion of the Property Settlement Agreement that is fraught with misunderstanding.

Unfortunately, your mortgage company was not privy to, nor does it care one iota about, your divorce agreement. Lenders only care about who was originally approved and signed for the loan. With married couples, this often means that the lender considered the income of both parties when approving them for a home loan. What that also means, is that both parties will remain liable for the loan – whether they remain married or not.

Subsequent to a divorce, the party who was granted ownership of the marital home may wish to refinance the mortgage. Upon making inquiries about doing so, s/he will then realize that both parties’ names are still on the mortgage, and that making any changes to the loan will in fact require the cooperation of both people. As you can imagine, this discovery is quite distressing to divorced couples who believed they had officially ‘moved on’ from the marriage.

Many people who find themselves in this position want to simply remove their ex-spouse’s name from the mortgage, however, lenders are not keen on this idea. Although it seemed you were granted sole possession of the home in your divorce agreement, your lender is not controlled by divorce court. When they granted you the loan, they took both of your incomes and credit histories into account in order to be sure that the loan would be repaid. From their point of view, it wouldn’t be prudent to simply excuse one of you from the terms that you agreed to when you first bought your home.

Although you may have thrown your hands in the air wondering what you can possibly do to finally and completely separate yourself from your former spouse – there are solutions to this problem. Although they are not simple, there are ways around this ‘dirty little secret’ that everyone failed to mention at the time of your PSA negotiation.

In order to essentially ‘remove’ your ex-spouse’s name from the mortgage, you will have to completely refinance your loan. This will result in a completely new mortgage with only your name on it. In order to refinance in this manner, you’ll have to be able to qualify for the loan on your own – so your income, credit score and financial history will all be reviewed by the mortgage company.

If you’ve found yourself in a similar situation and aren’t sure if you’d be approved to assume the mortgage on your own, work with an experienced attorney who knows mortgage refinance like the back of his hand. To find out if you would qualify for a mortgage refinance, or if you have other real estate questions after your divorce, send Veitengruber Law a message today. We offer free initial consultations. Please utilize all of the free information available to you through our law blog, and follow us on Facebook for regular legal tips and financial advice.

 Image credit: Derek Finch

Bankruptcy FAQ: Will I Lose Everything I Bought With Credit Cards?

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If you’re considering filing for Chapter 7 Bankruptcy, chances are pretty good that you’ve been making good use out of a handful of credit cards. In fact, many people who decide to file for bankruptcy admit to relying on their credit cards for the past few years in order to “just scrape by.” Over time, the monthly balances creep higher and higher until even the minimum payment becomes too much. That’s when most people officially start the NJ bankruptcy filing process.

Some of the most frequently asked questions from debtors when considering bankruptcy include, “Will I lose my car?” and “How can I keep my home?” These big ticket items are of the utmost importance due to their high monetary value as well as the critical role they play in day-to-day life.

Once you realize that it is possible to keep your home and vehicles(s), it may dawn on you that a large portion of everything you “own” was actually purchased with a credit card. Naturally, if you’re getting ready to file for New Jersey Chapter 7 Bankruptcy, you haven’t even come close to paying off those credit card debts. Which begs the question: “If I haven’t paid for it yet, do I really own it?”

Those people for whom bankruptcy is the last viable option begin to wonder if they will indeed be left with literally nothing. Luckily, images of walking out of the court house with only the clothes on your back (and sometimes not even that) are far-fetched and unrealistic. Although you may have used credit cards to pay for all of your clothing, shoes, furniture, appliances, and probably even the computer you’re reading this on – the idea that filing for bankruptcy in New Jersey will cause you to lose everything? Just isn’t true.

The number one reason you won’t lose everything when you file for bankruptcy is because the main goal behind bankruptcy laws is to get struggling debtors back on their feet. The laws surrounding bankruptcy are in favor of the debtor being able to wipe out all debts that don’t have a “Security Agreement” attached to them. Major credit card issuers like Mastercard, Visa, Discover and American Express do not have a Security Agreement, which means that the items you purchased with those cards cannot be used as collateral.

An example of a Security Agreement is what takes places when you purchase a vehicle. You will not be given the title (or legal ownership) of the vehicle until your agreed-upon auto loan time-period is up, and/or you have made all of the payments. If, at any time, you cease payments on your vehicle, your auto lender can (and will) take the vehicle away from you.

Often times, store credit cards, like Macy’s, Boscov’s and Sears, do have Security Agreements, which means they would technically be able to reclaim the items you purchased, or the monetary value of said items. Usually, however, you’ll be able to work out a good agreement (with the help of your NJ bankruptcy attorney) if there are some incidentals that you purchased with credit that you really want to retain.

Another thing working in your favor is that creditors usually don’t want used items, so in all likelihood, you’ll be able to wipe out the money you owe while still holding onto most of your “stuff.” The only exceptions here are usually big ticket items, like expensive appliances and jewelry. Even some valuable items that you own outright could be sold by your bankruptcy trustee in order to pay off your creditors, as long as those items are not exempt from bankruptcy proceedings.

 

Image credit: Mike Mozart

Do I Make Too Much Money to File for Bankruptcy?

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Filing for bankruptcy is typically thought of as something you do when you’re completely broke. You’ve got no job or are severely underpaid, and you can barely keep the electric bill paid. You scrape by, paycheck to paycheck, wondering if this will be the month that your mortgage company starts foreclosure proceedings. Your fridge is empty, your kids are hungry, and your bank account has 36 cents in it.

While the above certainly is a common bankruptcy scenario, what about those people who make substantial salaries (above the state median) who find themselves in financial trouble?

As part of the NJ Means Test, your income certainly will be reviewed. It will be compared to the mean income of the rest of the people living and working in New Jersey. However, if you happen to make more (even substantially more) money than the state median income, you won’t automatically be prevented from filing for Chapter 7 bankruptcy.

In order to qualify for Chapter 7 bankruptcy in New Jersey, you do have to be able to pass the Means Test (usually) but it goes beyond simply looking at how much money you make. In short, the Means Test determines if your all of your debts, dependents, child support, unpaid back taxes and other expenses are more than your income can reasonably support at this time.

If, during the first phase of the Means Test, you’re found to have an income above the state median, you’ll move on to part two of the test. During this phase, all of your reasonable living expenses aside, your financial obligations will be added up and compared to your take home pay. If you would not be able to pay back your debtors through a Chapter 13 debt reorganization plan, you will likely qualify for a Chapter 7 bankruptcy.

It’s also important to note that some types of income are not included in your overall earnings for the NJ Means Test. For example, Social Security payments are exempt. Subtracting them from your total income may bring you under the state median.

You may be able to avoid the Means Test if you’re a United States disabled veteran, and can show that most or all of your debts occurred while you were in ‘active duty’ status. Additionally, if you’re currently an active reservist or member of the National Guard, you will not be subjected to the Means Test during your active duty and for 540 days after your active duty ends.

Many people get into financial trouble while trying to start or maintain their own business. If you fall into this category, you may not have to pass the Means Test, however, at least half of your debts must be related to your business. It’s important that you have official paperwork and separate bank accounts to be able to prove where your debts originated from.

If you have questions regarding a high income bankruptcy matter that have not been answered, please click here to message our office directly. You can also give us a call at (732) 852-7295. Visit our website and blog to read more informative articles while you wait for your free consultation appointment.

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Why Did My Credit Score Drop?

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If you have a pretty solid credit history and have recently had an unexpected drop in your credit score, you naturally want to know what happened. Whether it dropped by 10 points or 100, it’s important to fully understand all of the factors that can cause your credit score to rise and fall.

Most people know that major financial events like foreclosure and bankruptcy are surefire ways to knock significant points off anyone’s credit score. What’s less common knowledge, however, is that there are quite a few other reasons for a declining credit score. The more you familiarize yourself with everything that goes into calculating your credit score, the better equipped you’ll be to bring yours back up again.

1. High balances. Even if you’re really good about paying your monthly credit card bills, carrying a significant balance on several cards will bring your credit score down. Put yourself on an “unnecessary spending” freeze and throw as much money as possible at your existing debt, with the goal of getting as close to a $0 balance as you can. At the very most, you should keep your credit card balance(s) under 30% of your credit limit. This tells potential lenders that you aren’t fully reliant on credit cards, and makes you less of a credit “risk.”

2. Late payments. Although this one seems fairly obvious, it’s possible that you’ve had 1 or 2 late payments and not thought much of it. Unfortunately, sometimes being just 30-60 days late paying a single bill can hit your score kind of hard. What’s most surprising is that your score may drop more substantially if it was the first time you ever missed a payment. To avoid missing any more payments, try to set up automated bill pay for as many bills as possible. For all others, set payment reminders on your phone or personal calendar.

3. New loan applications. If you have recently applied for a car loan, mortgage, or even a new credit card, the lender will have done what is called a “hard credit inquiry.” These types of inquiries will cause your score to drop only slightly if you only have a few done over an extended period of time. However, multiple hard inquiries suggest that you may be desperately applying for loans and getting turned down repeatedly. The more hard inquiries you have, the higher the impact on your score. Try to limit who does a hard credit check on you by being selective about applying for loans. Do your research and be sure that you will likely be approved before applying so that the number of people who need to check your credit history is low.

It is important to mention here that you cannot damage your credit score by simply checking your own score.  In fact, some lenders will accept a very recent copy of your credit report instead of doing another check on their own. This is another way you can prevent your score from dropping. If you are planning to apply for a new car loan, request your credit report and score immediately before going to the car dealership. Present them with your credit report and ask them to use it in their decision making process. It never hurts to ask!

4. Closed accounts. In working hard to pay down your debts, you may go ahead and completely close out a credit card account once you pay off the balance. Some people do this thinking it will prevent them from acquiring more debt since the account won’t even exist anymore. Though that may seem like a good idea, doing so will actually negatively affect your credit score! Lenders like to see that you have a long (positive) history of handling your debts. Cancelled accounts essentially cease to exist on your credit report, so it may give lenders the idea that your credit history doesn’t extend very far into the past. The best thing to do is to pay down your credit card balances but keep the account(s) open so that the ‘proof’ of your credit-worthiness remains for all to see on your credit report.

Keep a close eye on your credit report and score once you’ve made some of the positive changes suggested above. If your score doesn’t improve within several months, or continues to drop, seek credit counseling assistance from a licensed NJ credit repair attorney. Your credit score is extremely important, and ignoring a declining score can end up being a very costly mistake.

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Foreclosure or Bankruptcy: Which is the Better Option?

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Many Americans who are struggling to keep up with all of their financial obligations may wonder whether foreclosure or bankruptcy is the better option. Unfortunately, that question doesn’t have one answer that’s right for everyone. Which one you choose will depend on a lot of factors, including your overall financial liabilities, current credit history, and long-term goals regarding where you live.

The cold, hard truth is that lenders really don’t like to see a foreclosure on a potential borrower’s credit history – EVER. To them, a foreclosure says that not only did you fall behind on your payments, but you became so unreliable that your bank actually didn’t want you as a borrower anymore. The bottom line is: lenders don’t care about much beyond whether or not you can pay them back.

Think about this: even if you determine that you just can’t handle your house payments anymore and you want to walk away from your mortgage, where are you going to live? If you’ll need to apply for another (albeit smaller) mortgage or even attempt to rent an apartment, having a foreclosure on your record will make finding a future lender or landlord extremely difficult.

If you’ve fallen behind on your mortgage – even if you’ve already gotten an intent to foreclose notice from your lender – there are things you can do to stop the foreclosure from happening. All of them will involve talking and negotiating with your lender. You could apply for a loan modification, wherein (if approved) your mortgage would be altered slightly so that the payments are something you could handle. Another option to discuss with your lender is to refinance your mortgage. This would essentially quash your current mortgage agreement, replacing it with a new one (with a lower interest rate). The lower interest rate would bring down your monthly payments.

Sometimes it is possible to request a forbearance, which is essentially asking your lender to press the pause button on your payments until you pay off some of your other debts and are better able to resume paying for your home again. This option will only give you several months to play with, though, so it will work if you’re in only slightly over your head.

On the other hand, if you take a good, hard look at your incoming and outgoing money and realize that you’ve got a huge amount of debt other than your mortgage, you may be able to wipe some (or all) of those other liabilities clean by filing for Chapter 7 bankruptcy.

It is possible to keep your home while filing for bankruptcy, but you’ll have to determine if you’d be able to pay your mortgage if you were able to get a fresh start without other debts weighing you down. In order to crunch the numbers, it is important that you at least speak to a professional who specializes in these kind of situations. Be careful, though, and don’t be sucked in by someone who makes outrageous claims about making your debt magically disappear. You’ll want a licensed specialist who has experience with real estate matters like yours. To meet with a bankruptcy/foreclosure defense attorney in NJ (at a no charge consultation): call (732) 852-7295 or click now.

 

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Loan Modification vs Mortgage Refinancing: What’s the Difference?

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Contrary to popular belief, comparing loan modifications and mortgage refinancing is like comparing apples and oranges. Although they both have the potential to be very, very good for you – many of their attributes are actually quite different.

If foreclosure feels imminent, or if you are just beginning to really struggle to make your monthly mortgage payment, it’s important to know your options. Foreclosure is absolutely not your only option.

Loan Modifications

If you have sought the help of an experienced loan modification attorney – congratulations! You’ve taken the first step toward making changes to your existing mortgage so that it once again becomes manageable. Although you can apply for a loan modification on your own, it is not advisable. Your NJ loan modification attorney will negotiate with your lender on your behalf.

Along with your attorney’s help, you’ll apply for a loan modification with your current mortgage lender or bank. Your lender will then review your application, and may negotiate with your attorney about which changes to your loan would make the most sense. Some common changes often made during loan modifications include: extending the length of the loan, lowering the principal amount due, one-time forgiveness of late fees, and possibly lowering the interest rate on the loan.

If approved, your loan modification will be awarded to you on a trial basis first. The trial period typically lasts for three to six months. Making all of your modified payments on time during your trial period is crucial, and if you succeed, the modifications will become permanent changes to your home loan.

Mortgage Refinancing

In contrast to loan modifications, refinancing your mortgage will result in a completely new loan. Your old mortgage will be null and void, and a new one will be generated in its place, with the goal of giving you a new, lower interest rate so that your monthly payments are much more manageable. Qualifying for a mortgage refinance means your credit will be checked again, as will your current income. You will essentially be applying for a loan all over again. If your credit score or job status has changed (for the worse) since you first applied for your original mortgage loan, your mortgage refinance application may be denied.

It is also important to note that you will have to pay origination fees and closing costs if your refinance goes through. You will need to have a home appraisal completed, and real estate market conditions will be rechecked to determine whether you should be awarded a lower interest rate in the current market.

As you can see, both a loan modification and a mortgage refinance have the end goal of making your monthly payments achievable so that you can stay in your home. To find out more about either process, or if your lender has already started foreclosure proceedings, send us a message today. Your first consultation is always free so that you can determine if our services are what you need.

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