Am I Liable for My Spouse’s Old Credit Card Debt?

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As much as no one wants to think about their marriage coming to an end, the reality is that divorce rates are still high in the U.S. Although unfortunate, if your marriage has ended in divorce, you’ll need to become as savvy as possible when it comes to money matters so that the divorce is indeed the worst of your problems.

The same is true if and when you remarry. These days, many couples attribute their happiness in second marriages to having made many mistakes (and learned from them) in their first marriage. While it’s wonderful that so many people are able to move on to find satisfaction with a new spouse, if one or both of you has been married before, there could very well be a significant financial mess hot on your tail.

For example, if your new spouse left his/her first marriage with a significant amount of debt, s/he’ll be bringing that debt right along into your new marriage. This can be frustrating for many couples who feel like they’ve gotten a chance to ‘start over’ romantically. The financial strain can begin to stress both new spouses, so it’s a really good idea to know what you’re up against before it has a chance to damage your relationship.

Luckily, for those new couples who reside in New Jersey, this is an equitable distribution state, which means that both assets and liabilities will be divided fairly between two parties when they divorce. New Jersey is not a community property state.

What is a community property state?

In a community property state, any debts that either spouse owes are considered to be owed by the couple, as a whole. Therefore, if you live in a community property state (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin) and your new spouse had incurred a lot of….let’s say credit card debt while s/he was previously married – you may inherit the responsibility for that debt as soon as you say, “I do.”

If a debt collection company in New Jersey is attempting to squeeze money out of you for a debt that your spouse alone is responsible for – you now know that you are not required to participate in the repayment of said debt.

Naturally, debt collection companies often take great liberties when it comes to interpreting community property law. Many companies are operating with unscrupulous behaviors with very few concerns other than how much of your money they can get their hands on.

That’s why it’s crucial that you know your rights regarding your spouse’s credit card debt that was acquired before you were married. After all, you didn’t even know your spouse when the debts were incurred. You did not sign your name for said debts, nor did you benefit in any way from them. YOU ARE NOT LIABLE.

Even if your spouse is involved in a lawsuit for money owed and you have been named in the lawsuit, as long as the debts in question were incurred before you were married and you reside in a non-community property state, your dismissal from the suit will be possible.

As every case is unique, the best way to be sure if you are liable for your new spouse’s old debts is to find a debt relief attorney in New Jersey who will offer you a free consultation.

Image credit: Keirsten Marie
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Avoiding the Short Sale Deficiency: What are My Options?

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If you’re living in a home with zero or negative equity and falling farther and farther behind on your mortgage payments, you may have considered or already applied for a short sale. When approved, a short sale allows the homeowner to sell a home for less than they currently owe the lender.

Oftentimes, lenders will ‘forgive’ this discrepancy amount, for several reasons. Big-name, well-known lenders usually want to maintain a good relationship and reputation with borrowers, and a short sale allows them to recover at least some of the money owed.

However, there are times (lenders) who refuse to forgive the deficiency amount and will sue the homeowner (who becomes the seller) for the difference between how much the home sold for and how much was still owed on the original mortgage.

If you are experiencing a lender who won’t forgive your short sale deficiency, and you have no way of paying said deficiency, it should be noted that going forward with the short sale is not your best option.

What, then, are your best options, you ask?

First and foremost, we would ask if there is any possibility of a loan modification making enough of a difference for you to be able to catch up on late payments. A real estate attorney will be able to negotiate with your lender to work out the modification details, if the numbers crunch just right.

If a loan modification isn’t able to budge the numbers enough to make it a real possibility for you to stay in the home, consider applying for a deed in lieu of foreclosure. Avoiding foreclosure in this way allows you to approach the lender rather than vice versa, and also avoids a Sheriff’s Sale of your home, which can be embarrassing.

For homeowners who get turned down for a ‘deed in lieu,’ the path that makes the most sense would be to file for Chapter 7 bankruptcy. Naturally, we cannot know if you would meet all of the necessary qualifications for a NJ Chapter 7 bankruptcy without having a look at all of your finances.

In a situation like this, it is in your best interest to meet up with a bankruptcy/real estate attorney in New Jersey who has experienced a lot of success pulling through for his/her clients.

Some important pieces of information to bring with you to your FREE consultation with your NJ bankruptcy lawyer include:

  • How much total (unsecured and secured) debt do you currently have? Bring as many credit card statements, auto loan invoices, mortgage paperwork, utility bills, etc as possible with you to your first meeting with your attorney.
  • Proof of any tax debt;
  • Your current and recent total income and expenses;
  • A list of your exempt and non-exempt assets;
  • Your credit score. Come with the most recent copy of your credit report, if possible. We realize your score will be low, but we want to have a starting point we can look back on as we work to get your score moving upward!

Second in importance to working with the right bankruptcy attorney is to GET INFORMED. Read all you can about your options, including:

We have a plethora of other helpful information that will aide you in getting prepared for your attorney consultation. Please visit our blog at your leisure. Like and follow us on Facebook to get real time updates on the successes we experience for our current clients. You can become our next success story!

Image credit: Images Money

How to Avoid Losing Your Money to a Scam Artist

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In today’s technology-driven world, online bill-paying has become increasingly common. You can even pay many of your bills over the phone if time is of the essence. The convenience this offers, along with the paper saved when avoiding manual bill pay, has made making remote payments feel natural for many people.

Our high comfort level with making online and over-the-phone bill payments brings with it some potential (and quite serious) problems. The first of which, naturally, is the possibility of identity theft, especially when paying online while using a non-secure website. For more information about shopping safely online, read this.

Another time to be wary is when you are contacted on the phone by someone who claims you are indebted to them. Sometimes, scammers using this approach will have done some research ahead of time so that they are familiar with places you shop, visit, or receive services or medical care.

Even if you recognize the name of the business that is being used, be sure to ask them to provide you with a written invoice through regular mail before paying. If you have no recollection of owing any money to the business mentioned, and the caller refuses to send you a written invoice, hang up the phone.

Any legitimate business/lender/creditor will be able and willing to send you a written invoice for money you  actually owe.

DO NOT, under any circumstances, simply pay money to a “company” to get them to stop bothering you. If you don’t remember owing the money in question, chances are good that you actually don’t owe it! If you request a written invoice for the bill or loan in question and continue to be harassed for the money without receiving an invoice, it’s time to talk to an attorney, because often their behavior is illegal and can be stopped.

The bottom line is – if you don’t know where a supposed debt is from, and the “collector” can’t or won’t divulge what they money owed was for, you’re being scammed.

If you’ve experienced something like this situation recently, and you mistakenly paid money out – it’s also important to put some important practices into place that will A) Keep this from happening in the future, and B) Protect your accounts that you may have opened up to foul play. By consulting with a licensed attorney who specializes in debt resolution, you’ll be able to arm yourself with the best information available.

In addition, it’s possible that some or all of the money that you paid out to a fraudulent collector can be recovered, and hopefully that particular scam artist will be stopped in his current path of deception – saving others from being taken advantage of in the future.

To learn more about how we can help you, call Veitengruber Law now. You can also gain useful information by reading a number of our blog posts about identity theft and fraud. We look forward to your free consultation with us if you should choose to make an appointment!

 

Image credit: Tim Parkinson

Parents Facing Foreclosure: How Adult Children can Help

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Many older Americans are really struggling financially. Some are forced to keep working well past their desired retirement age, while others retire only to discover that money is much tighter than they realized it would be.

Sometimes, older homeowners who find themselves under water are lucky enough to have adult children who are anxious to do whatever they can to assist their parents. The question then, is: what can be done?

If your aging parents are having a lot of money trouble – so much so that they are having trouble paying their mortgage and utility bills – you undoubtedly want to help. If you could snap your fingers and make all of their money woes disappear, you would. But what is the reality of a situation like this?

If your parents’ home is put up for sale as a short sale, you will have a really hard time being approved to buy the home “back” for them simply because you are not what is considered an “arms length” buyer. In other words, short sale transactions are structured so that no buyer has an advantage over another buyer.

An option that may be a reality if your parents are not paying their mortgage is foreclosure. However, if their home goes into foreclosure and is sold at Sheriff’s Sale, you’d be taking a gamble at being able to buy it back for them (you’d need to have cash on hand and the ability to out-bid other interested parties.

It may be wise for you to help your parents find a reliable attorney who can walk them through filing for bankruptcy. A NJ bankruptcy attorney will be able to ensure that the right type of bankruptcy is filed for your parents’ specific financial situation. They may be able to keep at least some of the equity (if there is any) in their home by using federal bankruptcy exemptions.

Your parents may also qualify for a Chapter 13 bankruptcy, in which their debt would be restructured so that it is more manageable for them, keeping them in their current home with new, lower mortgage payments.

Another solution would be to help your parents (with the assistance of an attorney) apply for a loan modification without filing for bankruptcy. If they are able to pay for most of their other monthly necessities, like utilities, food, insurance and medication, modifying the terms of their mortgage may be all that is needed.

The absolute, #1 answer to this problem is for you to personally bring their mortgage current, if you have it in your power to do so. This will ensure that your parents stay in the home while you decide with them which path is the best option for them to be able to continue making the payments after the dust settles.

Remember that it is always in your (and your parents’) best interest to work with a qualified attorney on matters as important as keeping their home. Ask about a free consultation meeting with a local bankruptcy and loan modification lawyer, and keep in mind that investing in their professional assistance will be worth it when you get the end result that keeps your parents at home.

Image credit: J.B. Hill

Special Financial Rules and Benefits for U.S. Veterans

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Active service members as well as U.S. Veterans experience the same financial struggles felt by the rest of America. However, there are several rules that apply specifically to US service members and Veterans when it comes to their finances. It’s important to know your options if you’re a former (or current) service member who is under a great deal of financial strain.

If you’ve got debt piling up that you just can’t make a dent in and your monthly bills are also going unpaid, it may be time to think about filing for bankruptcy.

In order to file for bankruptcy, everyone must pass the bankruptcy means test. Normally, military income, including VA benefits, would be included in your means test assessment. HOWEVER, New Jersey is a state that uses the federal bankruptcy exemption system. This means that your Veterans benefits would be exempt from the means test (not included), which will give you a much better chance at being approved for bankruptcy.

Disabled Veterans do not even have to pass the means test as long as most of the debts in question occurred while you were on active duty or while you were performing homeland defense duties.

In order to be considered a ‘disabled Veteran‘ according to bankruptcy court, you would have been relieved of your active duty status due to the disability occurring or exacerbating while on active duty. For the sake of the bankruptcy means test, to qualify as being in ‘active duty,’ you would have been a full-time military member.

National Guard members or Reservists may also be exempt from the means test required for bankruptcy approval, but the National Guard and Reservists Debt Relief Act of 2008 is about to expire, so check with your bankruptcy attorney to be sure about the requirements you’ll need to meet.

In addition to the special rules and exemptions afforded to Veterans regarding bankruptcy and the means test, the Service member’s Civil Relief Act (SCRA) protects those military members who are actively deployed. The SCRA works to postpone a number of obligations in order to allow members of the armed forces to focus on their military duty.

As an active member of the armed forces, the SCRA temporarily protects you against: trial, taxes, credit card debt, eviction by landlord, and outstanding mortgage payments. This is very good news for spouses and family members of deployed service members, as it protects them from losing their home while they (or their spouse) is on active duty.

Veterans and active service members who do end up filing for bankruptcy will notice a hefty drop in their credit score, just like anyone else who files for bankruptcy. The good news about filing as a Veteran or service member is that you will likely be eligible to take out a VA loan in as little as 12 months from your filing date (assuming you’ve been paying your bills on time since the bankruptcy). This can help you on the path to righting your finances and living situation.

If you are a U.S. Veteran or are currently active in the U.S. armed forces, please reach out to our New Jersey bankruptcy law firm for a free consultation. We want you to know today, as well as every other day, that we appreciate your service for our country. Now, let us help you get your finances back on track!

Image credit: US Army Africa

 

Why Do I Need an EMV-Enabled Credit Card?

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Although it may seem impossible, credit card fraud still continues to be an ever-increasing problem, and more than 50% of the entire world’s credit card fraud happens right here in the good ol’ US of A.

Credit card companies have stepped up to address this problem by creating a technology that will make it much more difficult for your personal information to be stolen. The technology comes in the form of a small chip that is implanted into consumers’ newly issued credit cards, called an EMV chip. EMV stands for Europay, Mastercard and Visa because these were the companies that initiated the new technology.

Many Americans have heard about the EMV chip and may feel a lot more secure now; however, it’s important to know the whole story before you let your guard down. Simply having a card with a security chip won’t help you at all unless the stores you patronize have upgraded their credit card machines to be able to actually use the chip.

Swiping your credit card through a retailer’s card reader is like dangling your personal information in the face of a data thief. Magnetic stripe card readers are easy to bug and, in turn, easy to commit fraud through. It has been predicted that credit card fraudsters are in the process of targeting as many magnetic stripe payment machines as possible, while they still can.

Those retailers who have switched their payment terminals over to include a card reader will benefit greatly. If any data breaches occur in stores with card readers, the stores will not be held responsible. This is a huge incentive for retailers to get with the program and update their payment machines.

If a breach occurs while using an EMV-ready machine, the bank (who owns your credit card debt) will be responsible to remedy the situation. Luckily, data breaches are much less likely on EMV-ready machines because the consumer’s credit card is inserted into a card reader that will generate a code that is totally unique to that shopper.

This all sounds like a fantastic step toward lowering the amount of credit card fraud that is currently taking place in the US (and around the world). The problem is that stores are not required to implement the EMV readers. Magnetic strip cards will still be processed the same as before – by swiping.

What you should know:

As a consumer, you should protect yourself by using only credit cards with data chips installed. If your bank has not issued you an EMV card yet – get on the phone and request demand one. Once you have received a new card, try to do all (or at least most) of your shopping at stores that have updated their sale terminals to be able to read EMV chips. Insert your card into the card reader; avoid swiping at all costs!

Naturally, you’re never going to be 100% safe, especially if you do a lot of online shopping. The best way to protect yourself online is to limit web-based purchases to sites that have a solid reputation. We will delve into how to safely shop online in an upcoming blog post.

Image (used with permission) by Aranami

Is Equitable Distribution Dischargeable in Bankruptcy?

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The end of a marriage isn’t what anyone plans for when they’re saying their vows. However, the reality is that divorce happens sometimes, and it when it does, it brings a lot of financial negotiations along with it. Child support, alimony, who keeps the family home, who’ll be responsible for paying off marital credit cards – these are all financial decisions that will have to be negotiated between the two parties. If the parties can’t agree on the terms, then your family court judge will make the decisions for you.

Divorce can be financially destructive and leaves many newly single people wondering if filing for bankruptcy would be in their best interest. If you acquired all of the marital credit card debt, the mortgage and car payments, bankruptcy would definitely help you reorganize (if not eliminate) many of those debts. Naturally, you’d more than likely need to find a new place to live, especially if you choose to go the Chapter 7 route, which liquidates as many of your assets as possible in order to pay back your creditors.

On the other hand, there are some financial ramifications of divorce that fall into the category of ‘Domestic Support Obligations.’ These items include child support, alimony and something called ‘equitable distribution.’

What is Equitable Distribution?

Equitable distribution is the systematic division of property and debts that most state courts use to fairly divide the property and debt that was acquired during the marriage. Keep in mind that the division will not be 50/50; it will be based on a number of factors, including: age(s) of the parties, income of each party, standard of living attained during the marriage, earning capacity of each party, and more. If equitable distribution applies to your unique divorce case, one spouse will be ordered to pay the other spouse a set amount of money using all of the factors that apply. To learn more about exactly how equitable distribution is calculated, visit DivorceNet.

As we mentioned, child support, alimony and equitable distribution payments all fall under the umbrella of Domestic Support Obligations (DSOs). Because child support and alimony payments have been court ordered and your former spouse and/or children depend on them for survival, they are almost never dischargeable in a bankruptcy.

The same goes for equitable distribution payments – usually. They are considered a DSO debt that cannot be relieved or ‘erased’ via Chapter 7. It is possible, though, to file for Chapter 13 bankruptcy and include your equitable distribution obligation in your debt schedule. Sometimes, your ex-spouse may realize that striking a deal may work out best for both of you.

Reorganizing your debt via a Chapter 13 bankruptcy would still mean you’d owe money to your ex for the equitable distribution; however, it would be a reduced amount, and that may very well be the best situation for everyone involved.

 

Image credit: Simon Cunningham