My Sheriff’s Sale is Looming: Can I Still Save My Home?

dontpanic

Sometimes when you know you’re about to receive less-than-desirable news, it can be tempting to bury your head in the sand rather than deal with the unpleasantness at hand. As they say, “Denial isn’t just a river in Egypt,” and it can often seem like a better alternative than facing your reality.

If you’ve had recent money troubles, you may find yourself taking those ominous looking envelopes that keep arriving and tossing them directly into the trash bin, hoping that if you don’t acknowledge the problem, it doesn’t really exist. Of course, we all know that ignoring a problem will almost always make it worse, but none of us are perfect and everyone makes mistakes.

Eventually, when you’re finally ready to face the music, you will get an abrupt reality check of overdue bills, past due notices, and threatening letters from your creditors. If you haven’t been making your home loan payments, you may potentially find that your mortgage lender has filed for foreclosure. Regardless of how long you’ve been ignoring things, your first instinct may be to panic.

Don’t panic.

Even if you’re looking at a notice that says the Sheriff’s Sale for your home is scheduled to take place next month, instead of panicking, do this: Find the most qualified foreclosure defense firm in your area and describe your situation to them. Experienced legal teams can and will take on your case, even “at the last minute.”

How can I possibly save my home if the Sheriff’s Sale is only weeks away?

The right NJ foreclosure defense attorney will assure you that you still have options even when it feels like you’ve waited too long. HAMP (The Home Affordable Modification Program) is a program that was created by the federal government to help people who have found themselves struggling in a sluggish economy. The main goal of HAMP is to help homeowners like you by modifying your loan so that your monthly mortgage payment doesn’t exceed 31% of your gross income. For those people who’ve been impacted by financial hardships, this can often be enough to take the air out of an impending foreclosure.

Working with a strong legal team who is trained and experienced in dealing with difficult and/or unusual circumstances surrounding foreclosures is the key to your success this late in the game. A proven track record of successful ‘late date’ loan modifications is what you should look for in a NJ foreclosure defense lawyer. An attorney with the right expertise is likely to be able to save you from eviction, and may even be able to negotiate lower monthly payments than you had been making previously.

Ignoring your bills is definitely not recommended. The good news, though, is that even if you had your head stuck in the sand for quite awhile, you’ve now plucked it out and are taking the bull by the horns. No matter what has transpired in the past, you are doing the right thing by trying to improve your situation and asking for help.

Image credit: Jim Linwood

Can I Discharge Business Loans in a Bankruptcy?

store closing

Knowing that a large percentage of your personal debts can be discharged or forgiven by filing for bankruptcy, many business owners  wonder if the same would be true for loans they took out to start a small business.

Unfortunately, nearly all loans taken out by any small business will have been guaranteed by the owner(s) of the business. Lenders do not typically grant loans to new small businesses without the personal guarantee of the company’s owner(s). Therefore, even if you do file for bankruptcy for the loans you took in order to get your business off the ground, you will still be held personally responsible for the repayment of the debt(s). Because of this, filing for small business bankruptcy in order to recoup your initial business loans will not be very effective.

Another faulty belief held by many new business owners is that an incorporated business will mean protection for the owner(s) if the business fails. The reason why this belief is faulty is because, as previously mentioned, most small business owners are required to guarantee any loans they take out for their start-up. Anyone who has personally guaranteed the loan(s) s/he took in order to specifically start their business will not find any protection in incorporation.

Filing for bankruptcy for a failing business usually does not offer a whole lot of help to the business itself. Bankruptcy discharges aren’t even granted for businesses that are closing their doors. Therefore, if your business just isn’t going to make it, don’t waste your time filing bankruptcy paperwork for the business itself. YOU are the person/entity who will need protection, so you should consider filing a personal bankruptcy and attempting to discharge debts related to your business. These kind of debts can typically be discharged in an individual bankruptcy matter.

On the other hand, if you think that your business is going to survive and (at some point in the future) thrive, but you are just having some temporary trouble keeping it afloat, a business bankruptcy may help protect it from going under. It should be noted here, though, that most small business that file for bankruptcy do not make it through to the other side with their doors still open.

Filing for bankruptcy for your small business can give you time to reorganize your business finances and debts. As a business owner who would be able to stay in business with a reconfigured budget and restructured debts, there are two bankruptcy options. Both Chapter 11 and Chapter 13 bankruptcies allow businesses to stay open by organizing a more realistic financial plan for the business owner(s).

Both Chapter 11 and 13 bankruptcies offer you the ability to maintain ownership of any business properties. In order to do so, you’ll be required to sell any unnecessary assets for profit, to help you pay down your existing debts. Additionally, your secured business debts will be modified to make the payments more realistic for your budget.

Where possible, it is advised to file for Chapter 13 bankruptcy if you are the sole owner of your business and if you meet the debt limitations required under Chapter 13 bankruptcy law. It is a less expensive and usually much faster option to file Chapter 13 instead of Chapter 11. However, if you do not meet the eligibility requirements for Chapter 13, you can file under Chapter 11. No debt or income requirements/limits exist regarding filing for Chapter 11 bankruptcy, but as mentioned, it can be expensive and time consuming.

You can learn detailed information about your particular bankruptcy needs by working with a NJ bankruptcy lawyer near you. Each case is unique, and your attorney will review all specifications relating to your business and debts in order to best advise you about your options.

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Will My Foreclosure Hurt My Spouse’s Credit After We Marry?

foreclosure sign

The time leading up to your wedding day can be filled with excitement, romance, and hopefully an overwhelming feeling of happiness knowing that you will be marrying the person you love. On the other side of the coin, sometimes there are a few ‘hiccups’ along the path to marriage that may put a slight damper on your excitement. Unfortunately, money can often be a major stressor for engaged couples and newlyweds alike.

These days, living with your intended is a much more common and accepted practice than it was several decades ago. Many people are of the opinion that living together before marriage is actually a wise decision, as it ensures that you are fully compatible with your mate before taking vows that last a lifetime.

Moving in together before marriage typically means that one person will give up a previous residence. Rental homes or apartments would not present much of a problem as long as the lease was up at a convenient time. However, let’s assume that both partners owned their own homes prior to getting engaged.

In this scenario, moving in together may prove slightly more difficult IF the moving partner is unable to sell his or her existing home before move-in day. Having attempted to sell the home, potentially by listing with several different real estate agents, what will happen if the home simply doesn’t sell and payments on the existing mortgage are ceased?

When the couple in this sequence of events moves in together, the abandoned home will go into foreclosure if no further payments are made on the mortgage loan. It is important to note that the foreclosure process usually takes quite a long time from beginning to end. It could realistically take years before all of the foreclosure proceedings are complete, and by that time, the engaged couple would be married.

The partner in foreclosure typically then begs the question: Would my own personal foreclosure that began before my wedding affect my spouse’s credit once we are married?

Naturally, this is a question that both spouses would like to have answered. One spouse with a foreclosure on his credit report is one thing, but to have two tanking credit scores could be disastrous for your future life together. Two low credit scores (albeit hopefully only temporarily) would mean difficulty getting new credit cards, car loans, life insurance, etc., which could greatly increase the stress already felt in the first few months and years of a marriage.

Luckily, this particular situation would not affect the other spouse’s credit score, even if the foreclosure dragged on well into the length of the marriage. The only credit report and score that will show evidence of the foreclosure will be that of the original owner of the home that foreclosed.

So – although you can rest assured if this particular situation lines up with your life – it’s always a good idea to attempt to work with your lender before your home goes into foreclosure. Negotiating a deed in lieu of foreclosure or consent judgement with waiver of any deficiency will look better on your credit report than having a defaulted mortgage and foreclosure. A foreclosure attorney near you can advise you regarding your best options.

 

Image credit: David S

Can My Bankruptcy Case be Sealed?

sealed envelope

Filing for bankruptcy is a big decision – one that has the potential to give you a fresh financial start. If you’ve found yourself to be significantly under water in regards to your collective debts, it may be your only way to swim out from under water and back up to the surface.

Although it is becoming less stigmatized, some people still feel that filing for bankruptcy is something you’d rather no one knew about. Because of this, you may find yourself wondering if a bankruptcy case can be “sealed” so that the matter can remain private.

Unfortunately, unless you possess a trade secret or find yourself in another extremely rare situation, information in bankruptcy cases will not be sealed. If, for example, you filed a restraining order and need to keep your address private, it is possible that that particular piece of information can be sealed in a bankruptcy. It is important to note, however, that only small bits of information can be kept private, and not the entire case.

Some people want to avoid the embarrassment of their friends, neighbors, and sometimes even family members finding out that they’ve filed for bankruptcy. While that is understandable, it simply isn’t possible to seal bankruptcy matters because all creditors have a right to know when one of their debtors has filed for bankruptcy. Additionally, any future (potential) banks and lenders need the information so they can make fair and reasonable lending decisions.

The fact that you’ve filed for bankruptcy must legally appear on your credit report for 7-10 years (depending on the type of bankruptcy). Thus, anyone who has access to your credit report will be able to see that you’ve had a bankruptcy filing. However, it is typically only lenders, landlords, (and rarely) potential employers who even want to look at your credit report.

If you are concerned about the potential for identity theft, rest assured that the bankruptcy process has been recently updated so that none of your identifying information can be stolen. In addition, children’s names are also kept private to avoid any harm or damage coming to them.

In many cases, people are most concerned about those closest to them “discovering” that they’ve filed for bankruptcy. Firstly: try not to be ashamed! Remember – you are taking control of your finances, and will very soon be living debt-free! If you take ownership of your situation, chances are good that your fear will abate. Your financial stability is much more important than anyone’s opinion about you filing for bankruptcy.

It should be noted, though, that as a general rule, people who file for bankruptcy report that most of their friends and family never even know they have filed. Unless you choose to disclose facts about your bankruptcy, it would be difficult for anyone to simply “discover” that you’ve filed. There is no general internet database of people who’ve filed for bankruptcy, for example. Without access to electronic court records (which only attorneys and other legal professional possess), it would be next to impossible for someone to learn anything about your bankruptcy case unless you share that information.

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I Co-Signed a Loan that Defaulted; What are My Rights?

shredded money

If you ask any finance professional what s/he thinks about co-signing a loan for a friend or family member, the advice is always: Do Not Co-sign a Loan! However, when a loved one is in trouble, most of us simply want to help – no matter what the professional advice may be.

Be aware that once you sign your name on that dotted line, you are just as responsible for the loan as the main borrower. Although you may have an agreement in place between yourselves, in reality, if anything happens to the borrower’s ability to repay the loan, you’re on the line for it.

When you initially co-signed the (school, car, home, or other) loan, you more than likely had full confidence that the borrower would simply make the payments as scheduled, and you’d be off the hook. As we all know, the only constant in this world is change. If the borrower’s financial situation changes drastically, s/he may default on the loan.

What does it mean to default on a loan?

“Defaulting” is defined as failure to make scheduled payments on a loan. Your loan is considered to be defaulted as soon as you miss one payment. Delinquencies of ninety (90) days or more will be reported to credit bureaus, and the borrower’s credit (along with any co-signer’s credit) will begin plunging downward – rapidly.

The main borrower defaulted on the loan I co-signed. Am I on the hook for the payments?

By co-signing a loan, you are promising the lender that if anything should prevent the borrower from paying, that you will make the payments in their stead. So, essentially, YES, you will be held just as responsible for the loan as the main borrower, and the bottom will drop out of your credit score if you simply do nothing.

However, you do have options that can potentially make this type of situation bearable if the borrower is willing to work with you. Most people want to do right by the person who co-signed for them.

  • Ask for a forbearance. This will work only if the borrower’s inability to pay is extremely temporary, and if the lender is willing to give him/her a month or two to get things together. A forbearance is basically a brief “time-out.”
  • Refinance the loan. If the borrower is having trouble making the payments but would be able to pay if the monthly amount was reduced, refinancing the terms of the loan may be the right answer. If the borrower doesn’t want to refinance, you can refinance the loan on your own and remove his/her name from the paperwork altogether. This is risky, though, and you may never collect any rent or further payments from the original borrower. In this case, though, you’d be the sole owner of the property/home/vehicle, and could take possession if necessary. This option would undoubtedly cause a lot of friction, but the situation was probably already pretty tense given the face that the borrower defaulted on a loan and left you hanging.
  • File for bankruptcy. Unless you co-signed for a student loan, filing for bankruptcy will allow you to discharge the loan and start fresh without it hanging over your head. Bankruptcy will lower your credit score and will remain on your credit report for 7-10 years. On the flip-side, having a loan that you can’t re-pay will also tank your credit score, and it will stick around on your credit report indefinitely.

Admittedly, none of the above options sound fun, or easy. That is why it’s strongly recommended that you never co-sign a loan in the first place. It can be a horrible mess if a default occurs, so do yourself a favor and co-sign only with your eyes wide open to all of the potential outcomes.

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Had a Hard Inquiry on Your Credit Report Without Your Permission?

credit report

Your credit score is a reflection of how well you have managed your money. It speaks volumes about you to people who may have big influence on some of your major life goals. For example – mortgage lenders can decide if and when you will own the home of your dreams. Even if your goal is to rent an apartment by yourself – in many areas of the country, landlords are now taking a look at their potential tenants’ credit reports before making a rental decision.

Many places of employment have also started screening job candidates via their credit reports before hiring – especially professions that involve dealing with money on a regular basis. Employers want to know how you’ve handled your own personal finances so they have an idea regarding how well you’ll handle the company finances.

If you do land that dream job – chances are good that you’ll need a vehicle to get yourself to work and home again every day. With fair to low credit, being granted an auto loan will be difficult. You will likely be able to find an auto lender willing to take you on (if your credit score is poor), but your interest rate will be through the roof.

As you can see – the value of a good credit score is priceless, and most of us are striving to get or keep ours into the “good” or “excellent” range. Paying bills on time, keeping your income to debt ratio within acceptable limits, and living within your means are good ways to keep your score on the rise.

If you’re checking your credit report on a regular basis (as we all should be), you should find no hard inquiries on your report without your prior permission. A hard inquiry into your credit report occurs when you apply for a loan or credit card and the lender checks your credit history. Hard inquiries requires YOUR PERMISSION in order to occur, because each one will drop your credit score by a few points. That happens because it is assumed that you are trying to borrow more money or get another credit card when a hard inquiry is made, which means that you may be taking on more debt. A hard inquiry is like a red flag for credit reporting bureaus.

That being said, if you happen to check your credit report and discover that a hard inquiry has been made without your permission, you should take action against the company or individual who requested your credit report. Without your permission or a valid reason set forth by law, it is illegal for them to have checked your credit without your approval. You should contact a bankruptcy or credit repair attorney who will be able to get the hard inquiry removed from your report. Additionally, you may also be able to recover money if you suffered any damages (loss of income, denial of loan, job loss) due to the error.

Always remember the importance of checking your credit report on a regular basis. (Checking your own credit score and report will not drop your score at all.) Errors could be sitting on your credit history right at this very moment.

Image Credit: GotCredit

Can Bankruptcy Get Me Out of Credit Card Debt?

scrabble cc debt

Annie had always been diligent about staying current on her mortgage payment and utility bills – it was important to her to be able to remain in her home and she was proud of paying her bills.

About 18 months ago, Annie incurred a demotion at her place of work, and started bringing in only about half of her former paycheck. Over that period of time, she prioritized her monthly payments and continued to stay current on her home loan and utility bills.

However, the cost of those bills quickly ate away at her new (much smaller) paycheck, and Annie found herself charging many of her living expenses to one of several credit cards. All the while, as she continued to use her credit cards for things like groceries, toiletries, gifts and miscellaneous expenses, she had only planned for this situation to be TEMPORARY.

Ever since her change in job status, Annie had been tirelessly applying for positions that would see her making the money she needed to finally pay down her credit card balances and start using real money for her expenses once again. Unfortunately, due to a challenging job market and her lack of a college degree, she was passed over for all of the higher paying jobs she applied for, and her credit card use continued.

She had been unable to pay her monthly credit card minimums for awhile, and tried to put the rising balances out of her mind until she reached a place in her life where she could adequately deal with them. Still stuck in the same lower paying job a year and a half later, she finally decided it was time to sit down and add up all of her credit card debt so she at least knew what she was dealing with. Imagine her surprise when the total amount was a staggering $25,000+. What she wanted to know now, was:

How can I get rid of this debt and still manage to live my life?

Many people don’t fully understand bankruptcy. It is still taboo in many areas of the country and among certain groups of people. In fact, some people like Annie don’t even realize that credit card debt can be erased by filing for Chapter 7 bankruptcy. Not just lowered, but ERASED! (It is possible to repay your credit card debt on a modified schedule with a Chapter 13 bankruptcy – but this requires that your income will allow you to do so.)

If you’ve found yourself in a credit card situation that you never thought you’d be in, do not be ashamed. It happens to A LOT of people! You did what you had to do to make it through a tough situation. Perhaps you made some less-than-optimal money decisions. The important thing is that you now recognize that there is a problem and that you are taking steps to rectify it. Contacting an attorney should be the next thing on your To-Do list, so that s/he can discuss your case specifics with you, and create a plan of attack that will see you with the brightest financial future possible.

 

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Can I Include My Spouse’s Medical Debt in Chapter 7 Bankruptcy?

medical bills

Due to billing errors and providers with questionable pricing regulations, medical debt has now risen to the top of the list of reasons why Americans file for bankruptcy. In fact, of all of the money tied up in debt collections, medical debt exceeds all other types of debt. It may be hard to believe that Americans have more outstanding medical bills than student loan bills, but the data shows it to be true.

What is a person to do when they fall ill and either don’t have insurance or need care that falls outside of their current benefits plan? The choice is simple when faced with life or death – it’s the aftermath that’s the problem.

How Can I Get Out of Medical Debt?

Firstly, it’s true that the medical billing system in the United States is filled with mistakes and flaws. Your first move should be to keep a close eye on all of your medical bills or insurance paperwork as they start arriving in the mail. If you feel there are inaccuracies,  talk to your insurance provider on the phone. Some studies suggest that between 50-80% of health insurance claims contain erroneous information or data.

Often, your medical insurance provider will be able to spot mistakes made by doctors’ offices, clearing up the problem quickly. However, there are times when people legitimately find themselves up to their eyeballs in authentic medical bills. When this happens, it is possible to negotiate with many providers to set up a payment plan that you can afford.

I Can’t Even Afford a Payment Plan for My Medical Bills!

If you’ve scoured your medical bills for errors and come to the ultimate conclusion that you ARE responsible for more than you can handle, you should know that, unlike student loans, medical debt is dischargeable in a bankruptcy.

Filing for a Chapter 7 bankruptcy in New Jersey will enable you to absolve yourself from the mountain of medical bills that you are currently buried under. At the very least, you will be able to discharge a portion of your medical debt.

Some debtors are deep in medical debt due to a spouse or child’s medical condition. In a Chapter 7 bankruptcy, not only is it recommended, but it is required to include the medical debts of your spouse and/or children on your bankruptcy paperwork. You will likely be able to discharge most (if not all) of your spouse and/or child’s medical debt.

The catch, however, is that even though you will not be liable for their debts, your spouse will still be liable if the debts were hers. Often, medical creditors don’t make a distinction, though, and your entire family’s medical debt may be erased. This is especially true if the debt belongs to your minor child, because you are financially responsible for the medical expenses related to your own children.

Consulting a bankruptcy attorney is extremely important if you are considering filing for Chapter 7 bankruptcy to discharge your medical debt. It is possible to be denied a discharge of debts due to faulty paperwork if you file on your own.

 

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Can I Discharge Income Tax Debt in a Chapter 7 Bankruptcy?

income tax

It’s a common misconception that income taxes cannot be discharged in a Chapter 7 bankruptcy. Most people assume that, even if they are deep in tax debt, that they would not be able to erase their tax debt through a bankruptcy proceeding. The good news is that those assumptions are wrong; however, there are some specific rules that apply when a debtor wants to discharge his or her owed back taxes.

The rules surrounding dischargeable tax debt are commonly referred to as the 3 – 2 – 240 rules. Any person wishing to discharge back taxes must meet all three of these qualifications, and the only type of taxes that are eligible for discharge via bankruptcy are income taxes.

A little more about the 3 – 2 – 240 rules:

The Three-Year Rule simply states that anyone wishing to discharge his or her back tax debt in a bankruptcy cannot file for bankruptcy until at least three years have passed since the taxes in question became due. For example, if Debtor A owes back taxes from the year 2013, he would not be able to file for bankruptcy until 2016. As tax day is almost always April 15 of any given year, Debtor A’s 2013 taxes would have come due on April 15, 2013 and therefore, he would not be able to file for bankruptcy until April 15, 2016.

 The Two-Year Rule sets out that a debtor must have filed the taxes in question at least two years prior to filing for bankruptcy. This rule applies even to debtors who filed their taxes late, as long as they were filed. For example, if Debtor B owed income taxes on April 15, 2014 but did not actually file her taxes until March 15, 2015, she will not be able to file for bankruptcy until May 15, 2017. This date puts her two years out from when she actually filed her taxes and also meets the Three-Year Rule as stated above.

The 240 Day Rule states that any tax assessment that is completed must take place at least 240 days before the date of any bankruptcy filing to discharge income taxes. This is usually only an issue if a debtor files a correction or is audited. For example, Debtor C files her taxes on time on April 15, 2012 but is audited by the IRS and is determined to have made an error in her tax paperwork. The date of the IRS’s new assessment of how much she owes didn’t take place until March 15, 2015. Because of this assessment and Debtor C’s error, she will now be unable to file for bankruptcy until October 12, 2015 (March 15 + 240 days), which meets all three of the 3 – 2 – 240 rules.

Obviously, anyone who commits tax fraud or willful tax evasion will not be eligible to discharge his or her taxes in a bankruptcy.

There are, of course, special considerations and your case may be unique, so if you wish to discharge your income tax debt via Chapter 7 bankruptcy, but aren’t sure if you’d qualify, seek out the advice of a seasoned bankruptcy attorney in your area.

Benjamin Franklin was quoted as saying, “In this world, nothing can be said to be certain, except death and taxes.” As it turns out, you may have other options!

Image credit: Alan Cleaver