Can I Still Use My Credit Cards After a Bankruptcy?

credit cards in hand

Filing for bankruptcy is a decision that no one should take lightly. Bear in mind that there are plenty of alternatives to bankruptcy in most cases. You can learn about different financial options by talking to a bankruptcy attorney in your area. If, however, you and your attorney determine that a bankruptcy filing is in your best interest, you will then undoubtedly  have a number of questions about “Life After Bankruptcy.”

The most important thing to keep in mind is that life after bankruptcy will include a hugely reduced pile of unpaid debt! The fact that you are able to discharge your unpaid debt if you’re struggling to stay afloat financially is simply amazing. Bankruptcy can be a life saver to so many debtors who are severely behind on their bills, with no end in sight.

There are only a few things that cannot be “wiped clean” with a bankruptcy filing. At this point in time, overdue student loans are not dischargeable via bankruptcy. Although this can be very frustrating if you have gigantic outstanding student loan bills, there are things that you can do (with the help of your attorney) to make repaying your student loans easier.

If you owe child support arrears (overdue payments that remain unpaid), they cannot be discharged via bankruptcy, either. This policy is in place to keep parents from filing for bankruptcy simply to “get out of” paying child support. To discharge child support would be taking money away from children who need and deserve financial support in order to thrive and succeed in life.

Things that absolutely can be discharged by filing for bankruptcy include your past due utility bills, rent, mortgage, car payment, auto insurance, health insurance, doctors’ bills, personal loans, car accident claims, business debts, civil court judgments, tax penalties, and credit card charges.

The most common type of debt that people are interested in discharging is credit card debt. When living above your means, using a credit card can seem like an easy answer to a paycheck that falls short. Simply charging a few things here and there can feel like no big deal, as it’s “just until you get back on your feet,” or “while you wait for your raise at work.” All too often, credit card usage just gets out of hand, and with high interest rates, even your minimum balance due each month can quickly become more than you can afford.

Because of the above scenario, credit card balances are the most common debt that brings people to their attorney’s office, asking for help filing for bankruptcy. The great news is that all of your credit card debt can and will likely be wiped out when your bankruptcy case is filed!

A common question asked by debtors who are thinking about filing for bankruptcy is, “Can I still use my credit card(s) after I file?” The answer to this is a resounding NO. By filing for bankruptcy, you are giving up the right to charge any more debts to your credit cards. Your credit card company will close your account as soon as they get notice of your bankruptcy, and this includes cards with a zero balance. Your lifestyle of charging everything to your credit cards will have to stop when you decide that bankruptcy is in your future. Although this may feel scary to some people, it’s important to remember that you will have more disposable income post-bankruptcy since many of your debts will be gone. This means that your need to use a credit card will also disappear! In order to prevent yourself from falling into debt again, stick to paying with real money by making a budget.

Image credit: Mighty Travels

New Hope for ‘Zombie’ Foreclosures in New Jersey

foreclosure sign2

Foreclosures are still being filed at a staggering rate in New Jersey, and Atlantic City has the highest foreclosure rate in the country among cities of comparable size. Foreclosures occur when financially distressed homeowners become unable to pay their mortgage bill, and their bank or lender repossesses the home, effectively evicting the homeowner.

Since the number of NJ homes in foreclosure is currently so astronomically high, the court system has become bogged down and way behind schedule. In fact, New Jersey presently holds the title for the state with the longest foreclosure timeline, coming in at an average length of 1,103 days. That comes out to just over three years from filing date to eviction and sale of the home.

When faced with an impending foreclosure, some homeowners hit the panic button. Without knowing much about  foreclosure timelines, these homeowners quickly pack up and move out, likely feeling that they’d rather leave willingly than be evicted by their lender.

These abandoned properties are then left empty and in disrepair for the duration of the foreclosure process. Their owners are gone but they are not owned by the lender yet, either. These empty homes are referred to as “zombie foreclosures” because they’re seen as a threat to the safety of their neighborhood, much like the mindless undead creatures in horror movies. Zombie homes also threaten the vigor of the surrounding housing market. Squatters and/or drug dealers frequently occupy these empty homes, making the area seem seedy and undesirable to potential new residents.

The real horror involving zombie foreclosures affects the home’s original owner who packed up and left town. Under the impression that their lender would follow through with foreclosure, many homeowners wash their hands of the problem, find a more affordable place to live, and move on with their lives without giving their former home any more thought.

Unfortunately, there are circumstances under which a bank or lender simply decides not to follow through with a foreclosure. Oftentimes, this occurs in lower income areas in which lenders don’t see any real benefit in owning property. Rather than become responsible for the home’s taxes and repair costs (particularly if there are squatters involved), a lender may simply cancel the foreclosure altogether.

How Zombie Foreclosures are Haunting their Former Owners

When an abandoned property drops out of the foreclosure process, guess whose name is still on the title? That’s right – unbeknownst to them, those homeowners who fled as soon as foreclosure was mentioned will remain legally responsible for the home if foreclosure never occurs. This can be literally devastating to people who haven’t thought about their former home in possibly years.

When a foreclosure is halted, for whatever reason, the property’s unpaid debts (property taxes, home association dues, property maintenance) default back to the homeowner. As these debts have often been compounding interest for years, the ultimate cost to the homeowner (and his credit score) can be disastrous.

How the U.S. Senate is Trying to Fix the Problem

The U.S. Senate Subcommittee on Housing, Transportation and Community Development wants to help. Subcommittee member Senator Robert Menendez (D-NJ) recently introduced a bill called the Preserving American Homeownership Act. The Act’s main goal is to help underwater homeowners stay in their homes rather than face foreclosure and the financial destruction that comes along with it.

Menendez’s proposal aims to help both homeowners and lenders alike. The best way to help distressed homeowners is by reducing their mortgage principal. Historically, lenders have been hesitant to reduce principals out of fear of losing too much money. The Preserving American Homeownership Act proposes that banks offer a reduced principal to those homeowners that qualify. In return, the bank will receive a fixed amount (up to 50%) of the home’s increased value when it is refinanced or sold in the future.

In order to be eligible for the program, homeowners must continue to make their new, modified payments on time every month. Failure to make timely payments going forward will disqualify them from receiving a reduced principal. This legislation offers a great deal of hope to struggling borrowers, their lenders, and the New Jersey real estate market.

Image credit: T.A. Bain

What is an Underwater Home?

house cartoon

The number of underwater homes is currently at a record high all across the nation, with New Jersey in the lead. Additionally, Atlantic City has the highest number of properties that are underwater when compared with all similar metropolitan areas in the United States. The term “underwater” is being used more and more frequently – but what exactly does it mean?

During the financial crisis of 2007/2008, lenders started granting adjustable rate mortgages to people who weren’t really qualified for a home loan. Many lenders also weren’t requiring buyers to make a down payment, which meant that just about anyone could (and did) buy a house. This led to a housing boom or “bubble” that saw home prices soar.

“Housing bubble borrowers” were able to make their monthly payments at first. However, several years later, many borrowers saw their payments spike much higher than they could afford due to their loan’s adjustable rates. When borrowers could no longer afford their mortgage payments, they started missing payments and quickly defaulted into foreclosure, letting all of the air out of the housing bubble with a giant hiss. Home values tanked rapidly, and the number of underwater homeowners quickly became staggering.

When we talk about “underwater” properties, we’re not referring to that sea pineapple inhabited by an energetic and optimistic sea sponge. Alas, in the real (estate) world, an “underwater” home is one whose owners owe their lender more than the property is actually worth.

Today, the number of Americans who are still underwater on their mortgages is astounding, even eight years after the financial crisis and resultant housing boom. Although we are seeing home prices on the rise again, it’s not enough for those who owe at least 25% more than the actual value of their home.

If your home’s value is less than you actually owe, but you aren’t having any difficulty making the payments, you can ultimately continue living in and paying for an underwater home. It will be more akin to renting, though, due to the fact that you’ll have no equity in the home at all.

Because so many homes are currently worth less than they are mortgaged for, those  homeowners who are struggling are having a hard time selling their home in order to move somewhere more affordable. In order to do so, they would have to actually pay their lender the difference between their home’s value, and what they could sell it for.

Underwater homes lead to missed mortgage payments, which leads to lenders putting home after home into foreclosure because they are afraid of losing too much money.  Currently, approximately 1 in every 594 New Jersey homes is in foreclosure.

While underwater homes and the shocking number of foreclosure filings in New Jersey certainly don’t make for a happy ending, tune back in to our law blog next week when we discuss something even more frightening……

…..Zombie Foreclosures.

 

 Image credit: Stock Monkeys

Do I Have to Pay Rent if My Landlord is in Foreclosure?

for rent sign

As a renter in New Jersey, you may wonder exactly what rights you have if the home you reside in happens to go into foreclosure. First and foremost, you need to know if and when you’ll need to look for a new place to live. Hopefully, the property owner (your landlord) has been forthright with you about any foreclosure on the home, along with your rights during said foreclosure.

Of course, there are many less-than-desirable landlords in New Jersey – plenty of whom only care about their bottom line. If your landlord falls into this category, s/he probably isn’t too concerned with where you and your family (if you have one) are going to stay if s/he fails to make mortgage payments on the home.

In this circumstance, you may not even find out about the foreclosure from your landlord; rather, you may read about it in the newspaper or hear about it from someone you know. It’s possible that you won’t know that the home you’re living in is in foreclosure until you see the foreclosure notice taped to the door. Some renters who do not live in the main building often never even see the notice, thereby leaving them completely in the dark until the foreclosure has occurred. If that happens to you, seek counsel immediately to get your belongings back and to sue your landlord for failure to alert you.

If, however, your landlord lets you know about the upcoming foreclosure, the question remains: Should you continue to pay rent?

It would seem that the obvious answer would be “Of course not!”

If your landlord isn’t paying the mortgage, why should you then be required to pay him rent money every month? Alas, it may not make perfect sense, but in this case, you must continue paying rent to your landlord as your lease dictates. Failure to do so could give him or her a case to evict you or sue you for the rent you didn’t pay. Furthermore, if you retain your tenancy throughout the foreclosure, new owners may allow you to continue renting from them, unless you have a history of not paying your rent.

The bottom line in this case is that you should continue to pay rent even if you discover that your landlord isn’t paying the mortgage. Keep your house in order by making timely rent payments so that your record looks good. This will ultimately make it easier for you to continue living as a tenant in New Jersey. For more information about what to do if your rental home is in foreclosure, you can read more here.

Always seek professional legal assistance in NJ if you feel that you are in danger of being evicted without cause, whether due to your landlord’s financial issues or otherwise.

 Image credit: Beatrice Murch

Budgeting After Retirement: A How-to Guide

budget jar

As millions of Americans who were born in the Baby Boomer era reach retirement age, many of them are surprised to discover that retiring isn’t as stress-free as they imagined. For Baby Boomers who are trying to retire but are finding it difficult, there are some easy ways to get a handle on your retirement budget so that you can once again enjoy your golden years.

Although there are many things that will affect your retirement income (taxes, inflation, investments, part time income), there is one factor that you have total control over. How much money you spend, especially early in your retirement, is something that you can easily control. One of the biggest mistakes made by retirees is spending too much money very early in their retirement. This can happen due to the excitement of finally being retired – a “let’s celebrate” attitude that goes on for too long. Excessive spending can also continue beyond the early part of retirement, becoming chronic, which will eventually deplete all of your retirement funds while you’ve still got a lot of years of living left to do.

The smartest move for all retirees regarding their finances, is to set up and stick to a budget. Your retirement budget may look different from your budget during your working years if you are bringing in less money, but the payoff is in the fact that you no longer have to go to work every day!

In order to create a spending budget for yourself, you’ll need to know exactly how much retirement income you’ll receive each month. Add to this any money that you make from a part time job and any dividends you receive from investments. Combine these with any income your spouse (if applicable) is expected to earn monthly. Make sure that the numbers you are working with after taxes. After you have a good handle on how much money will be coming in each month, you’ll need to do some calculating.

How to Calculate Your Monthly Expenditures

  • Start with all non-negotiable expenses. These include your house payment or rent, utility bills, any car payments/car insurance premiums, food and clothing, and the cost of health care. Health care includes the cost of any medications you take every month, co-pays for regular doctor’s visits, and of course the cost of your health insurance*.*A note about health insurance: Do your research on the cost of health insurance after you retire. Your cost may be higher if your employer had been paying for part of the expense. Many retirees forget this fact, and this causes major problems with their post-retirement budget.Medicare: Many people wrongly assume that Medicare is free. While Medicare A is free, it only covers hospitalization. The rest of the benefits you’ll receive via Medicare aren’t free, and you will pay premiums just like you did for previous health care plans. Recent estimates show that, overall, Medicare will pay for approximately 60% of a retiree’s medical costs. The rest will come from your pocket.
  • Take a look at your ‘other’ expenses. After you’ve added up all of the non-negotiable expenditures, then you’ve got to take into account all other expenses you’ll encounter. These include the cost of leisure activities (going to the movies, eating out, vacations) gifts and luxuries (cell phones, cable, gym memberships). Basically, what we’re talking about here is the “fun stuff.”At this point, you’ll need to take into consideration what type of lifestyle will make you happy during retirement. If you will require more leisure activities than your budget allows for, you’ll have to start thinking about supplementing your retirement income with a part-time job. On the other hand, if you are willing to give up certain things that you previously enjoyed (such as a cell phone or an extensive cable tv plan), you’ll be able to cut your budget and spend more time relaxing instead of taking on a part-time job.

It can be difficult to create a budget for yourself, and it is also something that people often avoid doing because they’re afraid of what the reality may be. However, it is in your best interest to create a retirement budget as soon as you possibly can, so that you don’t run into significant financial problems during a time in your life that’s supposed to be your chance to finally kick back a little.

Need help creating a retirement budget? Let us know here, and we’ll happily consult with you FREE of charge.

 

Image credit: TaxCredits

 

Foreclosure in the Golden Years: A Real Problem in America

old couple

The baby boomer generation has reached their golden years, and for millions of them, life isn’t quite what they had envisioned. In fact, many elderly Americans are finding themselves suddenly homeless and without a place to go. Their dire living situations have been brought about by several factors combining to create the “perfect storm.”

Over the past 20-30 years, many employers have been eliminating traditional retirement pensions. Many baby boomers simply didn’t save enough money on their own, or have outlived the savings they amassed. People are living longer, but they aren’t making and saving enough money to take care of themselves throughout their extended retirement period.

On top of outliving their savings, today’s older Americans have lived through the housing bubble which caused a recession second only in severity to The Great Depression era. Many elderly people ended up using their homes as a bank, which kept them afloat temporarily through refinances that allowed them to essentially take money from their home.

The result of all of this is nothing short of dire for a huge number of older and elderly Americans who should rightfully be able to retire but have to keep working into their 70s, 80s and 90s in order to keep their homes. All of the baby boomers who reverse mortgaged their homes (took out loans for much more than the value of their home in order to have some cash to meet their living expenses) are now facing lenders who want their money back. Unfortunately, these lenders aren’t taking no for an answer, and many banks refuse to negotiate with the elderly to stretch out their payments, because of the possibility that the debtor will pass away before repaying in full.

For the most part, baby boomers who took reverse mortgages on their homes figured they would just work a little longer to pay off a growing mortgage. However, as often happens in our later years, many people fall ill and are not physically or mentally able to continue working. Disability checks, VA benefits and even help from grown children is often just not enough money to hold on to homes with swelled mortgages that resulted in sky high monthly payments.

What that means for many older Americans is falling behind on the mortgage payments, which leads to them eventually facing foreclosure. The thought of being evicted from your home in your golden years is unfathomable to us here at Veitengruber Law. We want older Americans living in New Jersey to know that they have options, and that we are here to help.

Lenders may not want to negotiate with elderly Americans, but that doesn’t mean there’s no hope. By law, no lender can discriminate against a debtor because of his/her age. Simply choosing not to work with elderly borrowers BECAUSE they are older and may not have a lot of years left, is irresponsible and illegal.

Working with our team at Veitengruber Law means that you will no longer have to deal with discriminating lenders – WE will negotiate on your behalf. Our most recent success story involves a disabled veteran who had fallen behind on his mortgage – 83 payments behind! Although he had attempted to modify his loan on his own, his mortgage company (surprise!) wanted nothing to do with him and offered him no solutions other than foreclosure. By working with Veitengruber Law, this disabled vet was able to stay in his home, making payments he can now AFFORD, without putting out any lump sum.

If you need help averting your home from foreclosure, please call us today at (732) 852-7295 for your FREE consultation. We live to keep people like you in your home!

 

 

Image credit: Ulbrecht Hopper

I’m Permanently Disabled: Can My Landlord Evict Me?

wheelchair

Although the housing market has recently become more attractive due to lower interest rates and down payments, millions of Americans still live in rental properties. Many renters say that they prefer to rent rather than own a property. In fact, Americans paid more than $441 billion last year in rent. Some younger renters say they enjoy renting because of the flexibility it affords them. They can move relatively easily for work or family without the added worry of needing to sell a home first.

There is a subset of renters, however, who would own a home if they could. They may be held back by a low income, bad credit, unemployment or underemployment due to a disability.

As a renter living on a small income or disability check, making rent every month can sometimes be touch and go. There may be months where the rent gets paid a few days late. Some landlords say they are ok with receiving rent payments several days late as long as no month’s rent goes completely unpaid. Tenants who start missing whole months of rent payments run the risk of being evicted.

A landlord has every right to evict a non-paying tenant with only a few exceptions, as long as he does so legally and properly through the court system. If you are a renter and you feel you have been wrongly evicted, there are several defenses you may be able to use against your landlord when fighting the eviction:

  • Landlord changed the locks – If you one day find yourself locked out of your rental with no prior legal notification of being evicted, chances are good that your landlord carried out a “self-help” eviction, which is illegal. NJ landlords must go to court and win their eviction lawsuit with a court judgement before eviction can occur.
  • Landlord missed utility payment(s) – If you are being evicted for non-payment of rent because your landlord did not pay the utility bills and you chose to pay them yourself (while deducting the amount from your rent payment) – you have an eviction defense. If your landlord is required, according to your lease, to pay all utility bills, and fails to make good on that part of the agreement, you may be contacted by a utility company. If you choose to pay the utility bill in order to avoid having utilities shut off, your landlord can’t evict you for deducting the charges from the amount you pay him in rent.
  • Landlord didn’t make necessary repairs – NJ landlords are required by law to provide their tenants with heat, running water, electricity, and functioning sewage disposal. They must also meet all NJ state (and local) housing/health codes. If your landlord has failed to meet these requirements, you can make the repairs yourself or pay to have the repairs completed and deduct the cost from your monthly rent payment. To do this though, you must have evidence that you provided your landlord with sufficient notice that the repair(s) were necessary.
  • Landlord is evicting based on discrimination or retaliation – If you have recently exercised your legal rights against your landlord, he is not permitted to evict you within 90 days of your actions. If your landlord attempts to evict you immediately after you have enforced your rights as a tenant under your lease or under NJ state law, it will be considered a retaliatory act, and is illegal.It is also unlawful and illegal for any landlord to evict you based on discrimination. If you are disabled, and feel you have been evicted solely because of your disability, you may have a claim against your landlord.

If you have received notice that your landlord is already in the process of trying to evict you via the court system, it is time for you to hire an experienced NJ attorney who specializes in real estate matters.

Image credit: Warrnambool City Council

What are a Renter’s Rights During a Foreclosure?

foreclosed house

Without a doubt, foreclosure can be a devastating event for homeowners. What’s less commonly discussed, however, are the effects a foreclosure can have on renters.

What, you may ask, does foreclosure have to do with renting? Only homeowners can be foreclosed upon, right? Generally speaking, it is true that foreclosures take place when a mortgagee fails to make his or her loan payments. The bank or lender then steps in to essentially take possession of the home, and the homeowner loses ownership of the property due to non-payment.

That being said, it is definitely possible for a renter to be affected by a foreclosure if they are renting a home or part of a home that goes into foreclosure. The homeowner may still reside in the home along with the renter(s), or the property may be solely inhabited by the renter(s) at the time of foreclosure. For whatever reason, if the owner of the home stops making mortgage payments and the home becomes foreclosed, the renters will be evicted.

Sometimes, whether out of fear, embarrassment, negligence or a combination of all three – a foreclosed homeowner fails to alert the renter(s) to the fact that they will soon be without a place to live. When the foreclosure occurs, tenants will be evicted right along with any homeowners who are living in the home. Unfortunately, if the tenants were not alerted to the upcoming foreclosure, they may find themselves unexpectedly homeless with no warning.

When this happens, the affected tenants do have rights. It is important that renters who find themselves out on the streets due to the homeowner’s failure to inform know that they can take action. If you have been evicted from your rental with no prior warning from your landlord (the mortgage holder) – the first thing you must do is secure all of your belongings that are in the home. If you are only granted access to the property by appointment, do your best to gather friends and family to help you at the allotted time(s) so that you do not lose your belongings along with your place of residence.

As soon as you have recovered all of your personal property that was inside the home, secure a place to stay. You may need to rely on the kindness of friends or a family member during this type of situation, however it should only be temporary. When you are settled, contact an attorney in your area who is familiar with foreclosure and real estate matters. Time is of the essence, so the sooner you hire a real estate lawyer, the better.

With the help of the right real estate/foreclosure attorney, you can file a claim against your landlord (the homeowner) and potentially the new owner of the home for illegally evicting you. In doing so, you may be able to recover some or all of the rent that you paid (in the instance that the home was rented illegally). You may also be able to sue for damages you incurred while you were without a place to live, and when you were denied access to your personal belongings.

 

Image credit: Sarah Gilbert