Divorce Attorney Fees: Can They be Discharged in Bankruptcy?

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When some couples decide to split up, each party typically retains separate lawyers so that both spouse’s interests are protected. Sometimes, one party agrees to pay for both attorneys’ fees, typically because of a significant discrepancy in the spouses’ incomes. For example, a husband who makes $70,000/year may offer to pay for his own attorney and for the attorney of his spouse (who only makes $40,000/year).

Offering to pay for your (soon to be ex) spouse’s divorce attorney is a kind gesture that will undoubtedly be greatly appreciated by your spouse. Although you are moving toward a divorce, things can either end amicably or fraught with tension and anger. Choosing the latter is highly advisable.

Once your divorce has been finalized and you receive the official “Final Judgment of Divorce” from your family court, you will be expected to begin handling your end of the financial agreement. This agreement is commonly referred to as the PSA, or the Property Settlement Agreement.

Moving from a household with two incomes to a one income household can take awhile to get used to. What you thought you’d be able to afford may end up being beyond your means now that you’re on your own. This is especially true if you are now paying child support and/or alimony.

You’re now discovering what it’s like to pay all of the monthly expenses with no help from your ex-spouse. Add in the aforementioned support payments and attorney’s fees, and it’s quite possible that you are simply tapped out. Having been a great money manager in the past, suddenly being unable to stay on top of the monthly bills can be depressing.

Filing for bankruptcy after divorce is becoming more and more common. A divorce is often the cause of new and significant financial problems that didn’t exist during the marriage.

After your divorce is finalized and you’ve had a few months on your own financially, you may come to the conclusion that filing for bankruptcy is the best way for you to get out from under any unsecured debts you have. The simple act of getting divorced may have been the straw that broke the camel’s back, so to speak.

If you file for bankruptcy after divorce in New Jersey, your two best options are chapter 7 and chapter 13. Filing for chapter 7 bankruptcy will allow you to discharge all (or at least most) of your unsecured debts (credit card debt, medical debt, past due utility bills), while chapter 13 will allow you to reorganize your unsecured debts into a more reasonable and attainable schedule.

You may be wondering if it’s also possible to discharge your divorce lawyer’s fees in a chapter 7 bankruptcy. Attorneys’ fees are the same type of debt as medical or credit card debt. Your unpaid divorce attorney’s fees, along with any fees owed to your spouse’s attorney, are unsecured debts and can be discharged in a chapter 7 bankruptcy.

UNLESS…

(There’s always a disclaimer, isn’t there?)

If the payment of your ex-spouse’s divorce attorney’s fees is included as part of your spousal support agreement, then it will be considered non-dischargeable. Any child or spousal support that has been ordered via the court cannot be discharged through a chapter 7 bankruptcy. Your own divorce attorney’s fees, however, may be dischargeable.

 

Image credit: Desi
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Am I Risking Foreclosure for Non-Payment of a Home Equity Loan?

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As we’ve talked a lot about here on our law blog, failure to make your home mortgage payments on time can quickly lead to your lender filing a foreclosure case against you. Lenders file foreclosure on non-paying debtors in order to repossess the home that was purchased with the borrowed money. After they officially foreclose and evict you for non-payment, your lender will put the property up for a foreclosure sale – also known as a Sheriff’s Sale. This allows the lender to recoup at least some of the money that you owe.

Now let’s discuss the concept of a second mortgage (sometimes called a home equity loan). Most second mortgages are taken out by homeowners in order to pay for home repairs or improvements. Some second mortgages are taken out to buy a second home. Second mortgages can also be used to repay a significant debt. It’s never a good idea to take out a home equity loan for something impractical like an extravagant vacation, but it has been done.

Second mortgages, a/k/a home equity loans, are attractive to homeowners because of their relatively low interest rates. Since you’ll be using your home as collateral for the loan, you can usually borrow a significant amount of money this way without having any limits or rules regarding how you use the funds. Also, any interest you pay on this type of loan is often tax deductible.*

Can I lose my home to foreclosure if I default on my second mortgage?

If you’ve had a significant life event that has had an impact on your finances, such as job loss, divorce, injury, disability, etc – it can be tempting to stop making the payments on some of your debts.

Although it may seem like an acceptable option when you’re strapped for cash, failure to make your monthly second mortgage payments can have catastrophic results. Unfortunately, many people do not know what can happen if they stop paying their home equity loan.

Even if you only plan to miss several payments so that you can “catch up” on some of your other financial obligations, your second mortgage lender has every right to begin foreclosure proceedings. Whether they will initiate a foreclosure depends on how much (if any) equity exists in your home.

What is “equity”?

To have “equity” in your home simply means that your home is currently worth more than you still owe on the original (first) mortgage.

If your home has at least some equity when you start missing payments on your home equity loan (second mortgage), your second mortgage lender is likely to foreclose on the property, hoping to salvage at least a portion of the amount you still owe.

Supposing your home has no equity, the second mortgage lender is unlikely to proceed with a foreclosure because they wouldn’t receive any money recovered through the Sheriff’s Sale. In this situation, the original mortgage lender would almost always file for foreclosure and they would be entitled to any funds recovered.

If your home is underwater when you stop making payments on your home equity loan, your second mortgage lender still has a right to money they are owed. Often in these situations, second mortgage lenders will sue delinquent debtors for the amount still owed on the home equity loan. Your wages may be garnished in order for the lender to recover their losses.

 

*Always check with your tax advisor.
Image credit: A.Eelectrik

 

Have Your Wages Been Garnished? You Have Options.

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Wage garnishment is a legal situation in which your employer is required to withhold a specific amount of money from your paycheck in order to repay one or more of your creditors. In order for most creditors to have a valid wage garnishment order, they must have a judgement from the court stating that you legally owe them money and that your wages may be garnished until such time as the debt is repaid in full.

Naturally, when you borrow money from a creditor, you enter into an agreement that states your intention to repay the money you borrow. Whether you owe money to a creditor, the IRS, a secondary learning institution (student loans), a medical institution or an ex-spouse, it is possible that you will have your wages garnished if you fail to make payments on your debt.

It is understandable that debtors should be held responsible for their financial obligations. However, you still have to be able to survive while you are repaying your creditors. If you currently have wage garnishment(s) against you, there are some specific federal and state regulations that you should become familiar with.

  • Not all debts are created equal. Some types of debts do not require that a creditor receive a court order for a wage garnishment to commence. If you’ve received a child support order since 1988, it also contained an automatic wage garnishment order. No additional court order is required. The same goes for any unpaid income taxes and student loans that you’ve fallen behind on. Credit card debt and medical bills are debts that require the creditor to sue you and obtain a judgment and order from the court before your wages can be garnished.
  • Wage garnishments have limits. Federal laws state that your creditor(s) can take 25% of your disposable earnings OR your disposable earnings less 30 times the current federal minimum wage, whichever is less. New Jersey wage garnishment laws further limit how much your creditors can garnish. Under NJ wage garnishment rules: creditor(s) can garnish up to 10% of your wages if you make less than 250% of the U.S. poverty level. If your income is more than 250% of the poverty level, creditor(s) can garnish up to 25% of your wages.
  • You cannot be fired due to a wage garnishment order in New Jersey. Some employers may not like dealing with a wage garnishment order, which may tempt them to fire you so they don’t have to comply. In New Jersey, this is illegal. All employers must comply with wage garnishment orders.
  • Wage garnishments can be negotiated. If you’ve received a wage garnishment order from one or more of your creditors, you may very well be quite upset and anxious about losing a significant portion of every paycheck. A NJ wage garnishment order that will impede your ability to pay all of your monthly expenses can be appealed. Veitengruber Law will sit down with you to go over your living expenses and the garnishment that has been ordered. We will then formally object to the order and request that the court lower the amount of the garnishment.
  • Bankruptcy will halt a wage garnishment order. If you’re in extreme dire straits, you should consider filing for bankruptcy. Firstly, as soon as you file for bankruptcy, something called an automatic stay goes into effect, which prevents any of your creditors from collecting any money from you. (Exempt from this, of course, are alimony and child support.) Secondly, if satisfying a wage garnishment is well beyond your means – you probably should have filed for bankruptcy awhile ago.

To learn more about how we can help you with your wage garnishment dilemma, call Veitengruber Law at (732) 852-7295. We offer free first-time consultations, and payment plans that are extremely reasonable.

Can Gambling Debts be Discharged in Bankruptcy?

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Debts come in all shapes and sizes. Because of our close proximity to Atlantic City, some of our clients have acquired a significant amount of gambling debts. Often, people with a lot of gambling debt feel ashamed and embarrassed, which prevents them from asking for help until their debts have mounted to unbelievable heights.

Like any addiction, gambling has the power to destroy lives and families. The typical indebted gambler is already in a financial bind before their gambling even begins. Hoping to catch up on late utility bills or a missed mortgage payment, gamblers put all of their hope into winning big at the casinos.

Unfortunately, statistics are not in any gambler’s favor. This means that there is a very low chance of winning big enough to pay down all of the money they already owe. However, even unsuccessful gamblers may find it difficult to quit because they believe that ‘next time will be their big win.’ They’ll take out loans with eye-popping interest rates (like pay day loans and credit card advances) just to get one more shot at winning.

As you can imagine, gambling is not a reliable way to make money! However, it is also not illegal in New Jersey, so it can be quite difficult to convince a gambling addict to change his/her behavior before they are up to their eyeballs in gambling debt.

Although it’s legal in New Jersey, gambling isn’t generally considered a smart way to earn a living. Granted, there are a small number of people who have the discipline to make money as professional gamblers, but there are far more people who are simply addicted to gambling, and these people end up losing a ton of money quickly.

Turning Your Life Around: Cleaning Up Your Gambling Debts

For those who truly are addicted, there are recovery centers that specifically treat gambling addictions. Getting help for the addiction is the most crucial step for any gambling addict. Just like a drug or alcohol addiction, the behavior isn’t likely to stop on its own, and therapy can help stop or at least lessen the urge to bet more money.

Getting treatment won’t erase the debts incurred because of the addiction, however. Many gambling addicts feel so much shame at the financial ruin they’ve caused that they don’t know where to go or how to manage the financial side of their actions.

It’s a falsely held belief that gambling debts cannot be discharged via chapter 7 bankruptcy. Why should debts incurred while gambling be treated any differently than debts acquired via extravagant shopping sprees charged to a credit card?

The only hurdle that may be experienced when attempting to discharge gambling debts in a bankruptcy is if a creditor can prove that the gambler obtained loans under false pretenses. This is extremely difficult to prove, and most likely will not hinder the gambler’s right to a bankruptcy discharge of both gambling and other debts.

It is important to note that the bankruptcy court will look suspiciously at a case that is filed immediately after acquiring a ton of gambling debt because it will appear that the debtor never had any intention of paying back the money borrowed. It is best to put several months between your last gambling binge and the filing date of your bankruptcy case.

 

Image credit: Alan Cleaver

How Can I Improve My Credit Score?

Investors bank march flyerWhether you’re looking to buy your first ‘starter’ home or if you’re in the process of downsizing or upgrading your current home, one thing is certain. Your credit score and report will be very important pieces of information used by possible lenders when they determine your credit worthiness.

Not sure what your credit score is? If you have not been tracking your credit score number and have little to no idea what can be found on your credit report – breathe a sigh of relief. This is the easy part; and it’s free, too!

How to order a FREE copy of your credit report

In the United States, there are three national credit reporting agencies:

  1. Equifax
  2. TransUnion
  3. Experian

Each of the three credit reporting agencies (sometimes called credit bureaus) make it their practice to gather pertinent financial information about you as you move through life, making money decisions every day. Every significant financial choice you make regarding your finances (ex.: credit card history, bank account activity, mortgage payment history, utility payments, and late or missed payments) will most likely show up on your credit report and can affect your credit score.

The three credit reporting agencies will provide you with a free copy of your credit report at AnnualCreditReport.com. This is the only site that is federally authorized to share your credit report with you.

One of the areas with a huge effect on your credit score is real estate and mortgages. Buying a home is a huge expenditure, and one that requires most people to take out a large loan. Getting approved for a mortgage loan can be difficult when you’ve made some missteps in your financial history that are reflected in your credit report and score.

If you’ve never given much thought to your credit score before, you are not alone. Many people don’t know what their score is until they are declined by a lender. However, chances are that if you’re reading this, you have learned what your current credit score is, and you want to find out how to make the number go up.

As a certified New Jersey credit repair attorney who specializes in debt negotiation and real estate, I know first-hand how disheartening it can be for my clients when they can’t seem to make a difference in their credit score. Our team at Veitengruber Law works one-on-one to help people in this situation every day.

In addition to consulting with our private clients, we’ve made it a priority to provide free seminars and workshops throughout Monmouth, Ocean, Burlington and Atlantic County. Our next upcoming workshop will focus on the ‘five C’s of credit,’ and will educate attendees about what lenders are looking for when they review your credit report. Event details include:

  • When: March 22, 2016; 7:00 PM
  • Where: Investors Bank; 3265 US Hwy 9, Freehold, NJ
  • Who: Open to the public
  • How much: FREE
  • Why: Consider attending this workshop if you want to gain a better understanding of your credit report and what lenders want to see in order to approve you for a real estate mortgage loan.
  • Who: Presented by Investors Bank and Veitengruber Law
  • More Details: Call Ivy Jacot at our office (732-695-3303 x 103) or Edith Legg at Investors Bank (732-780-0600) if you have any questions or want to learn more about the workshop.

We hope to see you there!

NJ Sheriff’s Sale Adjourned Twice: Am I Out of Options?

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In the State of New Jersey, if your home is in foreclosure, that means that you’ve fallen behind on your mortgage payments and your lender plans to repossess the property.

The foreclosure timeline can be lengthy in New Jersey due to the sheer number of foreclosures bogging the system down. However, your lender’s endgame is to sell your home at what is called a Sheriff’s Sale.

A Sheriff’s Sale is essentially a public sale or auction of property that was seized or repossessed in order to satisfy unpaid debts. If you have not been paying your mortgage payment, or you are in arrears, once your home moves through the foreclosure process, it will be sold so your lender can recover at least some of the money that it was owed.

In New Jersey, foreclosures must proceed through the legal system and must follow a set of procedures so that the homeowner is never caught unaware and blindly evicted. You will have received copies of your lender’s intent to foreclose, as well as a foreclosure complaint and summons.

If the Sheriff’s Sale is approaching and you have not taken the appropriate foreclosure defense actions and you want to keep your home, New Jersey allows homeowners to request adjournment of the sale. The adjournment, or postponement, will push the date of sale out for two weeks. You can request two of these adjournments as long as you provide a good reason for doing so. There is also a small fee for each adjournment.

Once you’ve used up your two adjournments, the court is obligated to follow New Jersey state law and proceed with the sale.

While it’s great that homeowners are given the last minute option of two Sheriff’s Sale adjournments, all totaled they only give you four extra weeks to figure out how you’re going to save your home. If you can’t bring your mortgage current in that amount of time, the sale will proceed after the adjournment period and you’ll still be forced to move.

A much better way to stop a New Jersey Sheriff’s Sale from proceeding is to meet with a NJ bankruptcy attorney as soon as you are notified of the pending foreclosure and sale. Filing for bankruptcy automatically stops your lender from moving any further in the foreclosure process. You will be able to stay in your home, breathe a sigh of relief, and work with your attorney without worrying about your adjournment(s) running out.

Even if you have already exhausted both of your adjournments and the Sheriff’s Sale of your home is scheduled for tomorrow – an emergency bankruptcy petition can still be an option for you. You’ll need to apply for a credit counseling class at least 24 hours before filing an emergency bankruptcy petition.

Veitengruber Law can help you file an emergency bankruptcy petition AND sign you up for the credit counseling course that will make everything stop in its tracks, giving us the time we need to formulate the best plan of action.

Bottom line: if you’re in foreclosure in New Jersey and want to keep your home, our experienced foreclosure defense team can help, even if your home is scheduled for Sheriff’s Sale tomorrow. Call us ASAP so we can help before it really is too late. (732) 852-7295

Can a Low Credit Score Affect My Success as an Entrepreneur?

Your credit score is an extremely important measure of your credit worthiness. Along with the details included in your credit report, your credit score will be used by any lender, creditor or bank in determining whether or not to grant you a loan. As an entrepreneur, you may be even more concerned about your credit score, as it may fluctuate quite dramatically as you start your business. Entrepreneurs often need to borrow large amounts of money to get their business up and running.

One of the biggest influences on your credit score is how you manage your business expenses and monthly bills. If you’re starting up a new business and have taken out large loans, focus on making timely payments on your business rent and utility bills. Your personal credit rating will gradually become less important to lenders, because as your business takes shape it will take on its own credit score and report.

Business credit scores are formulated differently and using different number scales than personal credit scores, so it’s important to become familiar with the business credit scoring system so you know what to look for. You can request your business credit score without running the risk of damaging your score in any way. Stay on top of your business credit rating at all times. As your company grows, lenders and investors will look at how well you’re managing your business’ money before deciding whether to partner with you.

By analyzing your business credit report(s), you will be able to quickly recognize anything that might be dragging your score down. Some things to look for include: reporting errors, outdated information, and signs that someone has stolen your business information to use fraudulently.

If you start to see signs of your business credit score plummeting, you should act swiftly to reverse any damage that has been done. However, if you are busy running a start-up company, you likely don’t have a lot of time to devote to improving your credit score, especially if fraud is involved.

This is when it’s a good idea to seek professional help from a certified credit repair attorney near you. Avoid credit repair companies, as they often attempt to up-sell you on services you don’t need that won’t help you, and many of them have fraudulent practices.

Look for an experienced credit repair attorney with a high success rate helping clients with things like debt relief, bankruptcy and foreclosure defense. Veitengruber Law takes a holistic approach to NJ credit repair and debt negotiations so that you will have a team walking with you through the entire process. We care very much about your end result!

Like you, George Veitengruber, Esq. is also a business owner and understands the high value of building a strong business credit score. Our services are personalized so that your specific credit issues can be resolved in the most effective and efficient way possible. Initial phone or office consultations with our team are free. Give us a call (732)852-7295 to see how we can help you begin to rebuild your business credit, giving you the best chance at entrepreneurial success.

Can Filing for Chapter 13 Help Me Save My Home?

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Have you fallen behind on your mortgage payments and are now at risk of losing your home to foreclosure? Is keeping your home something that you want? Would making your monthly payments be feasible if the amount due each month was adjusted to fit into your budget?

Frequently, we see homeowners at risk of foreclosure who are desperate to keep their homes. Many times, the homeowner has already applied for a loan modification with their mortgage lender. Unfortunately, waiting for a loan modification to be approved can drag on and on for many months.

If you have applied for a loan modification, your mortgage debt (including past due payments and late fees) will snowball while you wait for your loan modification to be approved. Sadly, many loan modifications are not approved the first time around, especially without help from a debt relief attorney. Either way, while you wait for an answer, the amount of arrears will continue to climb, making it more impossible than ever for you to catch up.

We’ve worked with clients who’ve found themselves in this exact scenario. As we recently discussed in our last blog post, many people wait until the last minute to ask us for help saving their home from foreclosure.

Though Veitengruber Law does have last minute strategies that can often help postpone a foreclosure, today we’d like to present you with a way to stop a foreclosure early, giving you many options and the time you need to reorganize your your debts.

While most people associate bankruptcy with chapter 7, filing for chapter 13 may be exactly what you need if you’re facing foreclosure while attempting to obtain a loan modification.

Chapter 13 is a good choice for you if:

  • Your lender has filed a Notice of Default [missed payment(s)].
  • Foreclosure appears imminent.
  • You want to keep your home.
  • A loan modification would make your payments achievable.

How can a chapter 13 bankruptcy help me?

  • Filing for chapter 13 puts a stop to any foreclosure proceedings, known as an automatic stay. Your mortgage lender(s) (and all other creditors) are legally prohibited from collecting payments during the automatic stay period.
  • You are permitted to continue seeking a loan modification during your chapter 13 bankruptcy proceedings.
  • While you are seeking the modified loan, you will still be able to make payments (in the amount you can afford) so that you don’t fall further and further behind.
  • Any unsecured debts that you may have in addition to your mortgage loan can also be reorganized or modified to make repayment achievable. Some unsecured debt may even be dismissed altogether.
  • As soon as you file for chapter 13, you will start communicating with the bankruptcy division within your mortgage company. Oftentimes this results in a loan modification application that gets approved!

Consult with an attorney who specializes in debt relief and loan modifications to find out if a chapter 13 bankruptcy is right for you. Send Veitengruber Law a message now or call us at (732)852-7295 for more information about bankruptcy and foreclosure in New Jersey.

Image credit: Anders Lejczak

Is Fear Keeping You from the Financial Help You Need?

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One of the biggest hurdles for many of our clients is fear. This emotion can be a gigantic stumbling block when it comes to getting assistance in many situations because asking for help is hard. You may think that asking for help means you’ve failed at something, but that line of thinking will only magnify and worsen the problem at hand.

The reason you have trouble asking for the help you need is because we live in a ‘self-help’ society where, for many people, seeking assistance suggests a deficiency of some sort.

Regarding personal finances – it’s completely understandable that many of our clients come to us at the last minute. The hard truth about the extent of your money problems can be really difficult to come to terms with. Feeling out of control and unsure how to fix things, it probably has felt easier not to think about money at all.

When you’ve waited until the eleventh hour to reach out for help, you’re much more likely to be acting in panic-mode, which will cloud your thinking. It can also impair your ability to communicate your needs effectively, making everything that much more confusing for everyone.

Veitengruber Law advises anyone struggling with any of the following to stomp out FEAR and ask for help as early as possible:

  • paying your monthly living expenses
  • outstanding credit card debt
  • imminent foreclosure
  • looming sheriff’s sale
  • job loss (which will quickly lead to financial strain)
  • divorce as a displaced homemaker or stay-at-home-mom
  • overwhelming medical debt
  • identity theft that led to a financial crisis
  • deficiency judgement after short sale or foreclosure
  • any other personal or business financial burden

The earlier you come to us, the better we will be able to help you sort out whatever money situation you’ve found yourself in. We want everyone who needs us to have no fear about consulting with us. In fact, you should be proud of yourself for reaching out to a bankruptcy attorney who has the experience needed to turn your situation around.

With all of that being said – if you have let fear hold you back and you’ve come to the sudden realization that you’re about to be in real, serious trouble, we’re still here with open arms, ready and willing to go to battle for you.

Did you bury your head in the sand as the foreclosure sale date on your home passed? Does it feel like there can’t possibly be any way to save your home from sheriff’s sale?

Even when it feels hopeless, push your fear aside and call us. We’ll have an entire team working to save your property or solve whatever financial puzzle you challenge us with. Last minute solutions aren’t ideal, but when you work with us, they are possible.

We can help you file for NJ bankruptcy, which will automatically postpone a foreclosure, even if the Sheriff’s Sale is tomorrow! We’ll go over your financial details to determine the best plan of attack. No matter what money emergency you’re facing, Veitengruber Law is the team you want on your side. We prioritize legal emergencies. You will not be ignored, pushed to the bottom of the schedule, or left to play phone tag with our voice mailbox.

If you need help saving your home, getting out of debt, filing for bankruptcy, applying for a loan modification, or arranging the sale of your home via short sale – message us today or call us now (732-852-7295) to get the kind of assistance that gets results.

 

Image credit: David Goehring