If You Live to be 100, Will You Run Out of Money?


With constant advances in medicine, the human race is outliving its life-expectancy and then some. While most of us would likely choose to live forever if given the chance, the fountain of youth (unfortunately) doesn’t exist. Therefore, just as we’re celebrating living longer, we’re also faced with the hard actualities that come with life at older and older ages.

Yes, modern medicine is keeping hearts pumping and lungs breathing while also strengthening bones to hold us up for an extra decade or two. However, simply being alive doesn’t equal being able-bodied enough to earn a living, and that’s where we encounter a significant wrinkle (pun intended).

The retirement years used to be called ‘the golden years,’ because workers put a significant amount of money toward their retirement savings (many via 401Ks) and steadily paid down their mortgages until their homes were paid off.

Even now, many people are able to enter retirement rather comfortably. Typically, though, many retirees soon realize that their monthly expenditures are dipping a little too far into their savings each month. At first, this isn’t a problem, and it may never become an issue for those retirees who live to a “normal” age.

For those older Americans defying their expected life span, however, planning for several extra decades of living wasn’t on their radar when they were young and generating income. Pensions that were calculated during their working years simply isn’t enough to last as long as they’re living.

If you have aging parents who are pushing the odds and living longer than you ever dreamed – consider yourself lucky to have your loved one(s) around! You may become responsible for their care – or at least their finances – if they live well into their 90s or even to 100 and beyond.

You may have to contend with independent-minded adults who want to continue living on their own and caring for themselves. The problem, of course, becomes how to financially make that happen. At this late stage in the game, it’s difficult to fix the fact that your parents simply didn’t plan on living so long. You may have to move one or both of your parents into your home if a retirement home is not desired and/or feasible.

The important takeaway from the fact that people are living longer and running out of money is this: YOU still have time to make sure the same thing doesn’t happen to you and your spouse.

While it may seem impossible to pack away any more money for retirement than you already are, you might be surprised. Talk to a financial planner now, while you’re still smack dab in the middle of your money-making years. You likely still have time to advance your career upwards in order to increase your income.

You can also consider taking a second job, even if only temporarily, or during summers, in order to pad your retirement account substantially. Your financial advisor will be able to put you on a course to save as much money as possible with the assumption that you, too, will be living a long (and now prosperous) life.

Image credit: Gwenn Seemel

Can They Do That!? Illegal Tactics of Debt Collectors


It’s important to know that, even if you are indebted to a creditor (or several), that you still have rights. If you borrowed money from a creditor or lender, and that loan has fallen into default, you may be contacted by a debt collector.

First things first, let’s talk about what happens to a debt that falls into “default.” Default is a fancy legal term that means “failure to fulfill an obligation.” When you stop making payments that you previously agreed to pay, your loan is considered to be in default. It doesn’t matter what reason(s) have rendered you unable to make the payments – at least at first*. Initially, the only thing banks (lenders/creditors) care about is their bottom dollar. If your default is messing with their bottom line, they will become laser-focused on getting you to resume making payments.

Why is a totally different agency contacting me instead of my lender?

Big and even medium-sized lenders often do not have time to chase after borrowers who stop paying, so many of them hire a collection agency to retrieve as much money from debtors as possible. Collection agencies work for predetermined fees or for a percentage of the amount of money they are able to recover. This in itself is precisely why so many collection agencies have engaged in unethical, deceitful and/or ruthless tactics attempting to coerce defaulted borrowers to make a payment.

Is this even legal? How far can collection agencies go?

In 2013-2014, the Consumer Financial Protection Bureau started taking action on behalf of consumers who were being mistreated and even harassed by debt collection agencies. By 2015, the Fair Debt Collection Practices Act (FDCPA) was solidly in place protecting borrowers from agencies who continued to violate the FDCPA.

What follows is a list of things that debt collectors are prohibited from doing under the Fair Debt Collection Practices Act:

  • Call or contact you at times that are inconvenient for you, such as before 8:00AM or after 9:00PM in the timezone in which you reside.
  • Have any form of contact with you at your place of employment if they have been asked not to do so.
  • Present themselves as anyone other than who they really are in order to coerce you into making a payment. They may not, for example, tell you that they work for the US government to try to scare you.
  • Repeatedly call or contact your family members. The FDCPA allows debt collectors to contact third parties about you one time only, and then only if they are attempting to establish initial contact with you. They may ask a third party for your phone number, address and place of employment. Other than those details, they are prohibited from sharing any information about your debt with third parties, with the exception of your attorney and your spouse (if applicable).
  • Make any claims or statements that are not 100% true. Debt collection agencies cannot, for example, tell you that: you are guilty of a crime, that you will be arrested, that you owe more money than you thought, etc.
  • Engage in any behavior that is harassing in nature, like: threatening you in any way, using foul and offensive language, calling you over and over in an attempt to break your will (in hopes that you will pay just to be left alone).

Debt collectors are also forbidden to continue contacting you if you write them a letter explaining that you do not actually owe the money in question (if, in fact, they are contacting you in error). If you decide to do so, remember to write a physical letter, as opposed to an email. Also, be sure to send the letter via the USPS Certified Mail – Return Receipt Requested. Using this mailing method will give you proof that you sent the letter (with receipt) as well as proof that the recipient received it (via electronic signature).

If a debt collector has exhibited any of the behaviors listed above, you can actually take them to court and sue them for violating the FDCPA. You should contact a debt resolution attorney if you feel that the FDCPA has indeed been violated. It is important to note that suing a collection agency for unethical practices won’t wipe out your debt, if you do indeed owe someone money. However, owing a debt does not entitle anyone to harass you, and that behavior is prohibited by law.

Veitengruber Law can help you defend your rights as a debtor. We can also file a lawsuit against any corrupt collection agencies. Most importantly, we will assist you with getting your debt(s) settled in the most effective way possible so that you can stop looking over your shoulder and start getting out from under the burden that your debt has undoubtedly placed upon you*.

Image credit: Alon

Is Unpaid College Tuition Dischargeable in Bankruptcy?


Unless you’ve been living under a rock for a significant stretch of time, you probably already know that student loans are very challenging to discharge via chapter 7 bankruptcy. It’s been that way since the 197os when Congress began putting limits on when graduates could discharge their student loan debt.

Prior to 1976, it was possible to discharge any student loan debt via bankruptcy. However, because so many students were failing to pay back their student loans, a law was passed with the intention of protecting federal investments. Initially, the law stated that a student loan would not be eligible for discharge within five years of its conception.

Slowly, through a series of tweaks to the law over the next two decades, the five year restriction stretched to seven years. 1998 saw the time restriction completely lifted and, in 2005, an amendment to the law was written to include private student loans, making the discharge of any type of student loan virtually inconceivable.

While it isn’t completely impossible to discharge student loan debt, to do so you must be able to prove that paying back your loan(s) will cause you ‘undue hardship.’ Proving undue hardship is exceedingly difficult to do, and those who succeed typically have some kind of severe physical disability that prevents them from earning a living.

What if I owe money directly to the school? Can I discharge that type of debt?

Ah, now here’s any interesting quandary! As it turns out, students or graduates who paid their college expenses (tuition, room and board, supplies) without signing any kind of loan paperwork or promissory note, actually have a decent chance of discharging any past due payments.

The key to whether or not your particular debt is dischargeable in bankruptcy has everything to do with nuance. For example, if you at some point received a bill from your college and failed to pay it, you technically owe the college money but not in the form of a loan.

Therein lies the nuance. Unpaid college fees such as tuition are not the same as unpaid college loans wherein you borrowed money and had a written agreement in place stating that you agreed to pay that money back. Simply failing to pay your tuition bill doesn’t magically turn it into a loan.

If you owe money directly to an institution of higher education that was never in the form of borrowed money to be repaid at a later date, you should be able to include it in your bankruptcy case and have it wiped out with a successful discharge.

However, pay close attention to the wording that your college uses in the near future, as some institutions have begun to change their paperwork/billing in order to make unpaid debts look like they were actually loans. This is an attempt to conceal the fact that your debt is dischargeable if you file for bankruptcy. These practices are not above board and your bankruptcy attorney must be diligent when reviewing any documents received from the school’s billing department.

Do you have unpaid college tuition debt that you feel should be dischargeable based on the description contained in this article? Do you have student loans that are causing you a great deal of financial hardship? In either case, Veitengruber Law can help you determine the best option for you:  a chapter 7 or 13 bankruptcy case, loan consolidation, forbearance, debt negotiation and more. Call now for a free one hour consultation.

Image credit: Seth Sawyers

Frugal Friday: Memorial Day Party on a Budget


If there’s one thing that all of us here at Veitengruber Law all have in common, it’s finding ways to save money. Often this comes in the form of us working to help a client: apply for a loan modification, get a fresh start with bankruptcy, negotiate outstanding debts and learn how to budget so that their financial future looks bright.

When it comes time for us to leave the office each evening, we then turn our attention to our personal lives, and part of that involves how to best keep our own finances in order. We are constantly on the lookout for money-saving life hacks, which we love sharing with our clients and blog readers.

As we approach the end of May, many people have started planning for Memorial Day parties. A day to remember and memorialize those who died while serving our country in the armed forces, Memorial Day has also become the unofficial start to summer. Although summer doesn’t technically begin for several weeks, the last weekend in May now sees a plethora of pool openings, family gatherings, cookouts and beach trips.

This year, if you’ve been nominated to throw a Memorial Day party at your house (voluntarily or not) – why not see just how frugal you can be while hosting an unforgettable party at the same time? Try implementing some of these party hacks to see just how little of your own cash you have to part with this year:

Avoid the “party store.” Buying pre-made party supplies and decor adds up fa$t. Making your own patriotic decorations and party favors is not only a great way to lower your party costs; it can be a lot of fun, too! Check out this site for some really cool money-saving patriotic decoration ideas.

Prepare your own food. It is undoubtedly a lot more convenient to fill up a shopping cart at the warehouse store with pre-packaged food – from burgers and buns to snacks and desserts. Just like the “party store,” however, you’ll pay a premium for that convenience. Instead of forking over hundreds of dollars at BJs or Sam’s Club, roll up your sleeves and get cooking.

In addition to putting your own culinary skills to good use, enlist the other party attendees to each bring a food item with them. This will enable you to focus only on the main dish(es) yourself, while your friends can bring sides, snacks and desserts. Consider making it into a challenge to see who can bring the tastiest goodies.

Make it a BYOB shindig. You may be thinking: “But I already asked them to bring a food dish. Now they have to bring their own drinks, too???” Well, sort of. As the host, you should have the basic bar necessities on hand (if you plan to serve alcoholic drinks). If you don’t already have them stocked, consider a visit to the liquor store for an affordable bottle of: vodka, gin, scotch and rum. Add in a few mixers and you’ll be able to stock your home bar for around 50 bucks.

Alternatively, you could come up with one signature drink for the party that fits in with a patriotic theme, and serve only that drink. For example, a drink called the firecracker settles into layers of red, white and blue. Let party-goers know that if they want to drink wine or beer, they can bring their favorite bottle(s) along. This alone will save you a significant amount of money.

BE the entertainment. The merriment of any good Memorial Day (or any summertime) cookout should center around good conversation with friends and loved ones. If you’re looking for something a little more organized – toss out some brain teasers or get several card games going. Alternatively, crank up the volume and turn your picnic into an instant dance party (talent not required).

One of the keys to living a life free from debt is to plan ahead for special events just like this. Waiting until the last minute will give you little choice but to swipe your credit card more times than you’ll want to admit in order to acquire the party supplies you need.

Proper planning, budgeting, and getting help when you need it (in this case, asking your friends to contribute food and drinks) will keep the cost of a party from getting out of hand. Aside from a slight headache from too many firecrackers or wine, you won’t have any regrets the morning after you throw a penny-pinching Patriotic party.

Image credit: JD Hancock

Buying a NJ Foreclosure Property: The Risks


As we know first-hand here at Veitengruber Law, there are currently an abundance of foreclosed homes in New Jersey. In our practice, we typically represent the homeowner who has been foreclosed upon. Sometimes we help homeowners keep their homes out of foreclosure (foreclosure defense), while other times we walk them through the foreclosure steps (usually combined with a bankruptcy).

The fact that New Jersey has so many properties in foreclosure (although the numbers do appear to be slowing down, albeit very gradually) means that these homes are or will soon be available for purchase at Sheriff’s Sale.

Along with assisting clients who are dealing with foreclosed homes, we also approach things from the other end for those who are interested in purchasing foreclosure properties.

Whether for investment purposes or to simply get a great deal on a future residence, more and more New Jerseyans are realizing the potential that our state’s mass amount of foreclosures represent. For example, a foreclosed NJ property that sold for $1.3 million in 2006 may go for $300,000 at Sheriff’s Sale.* Simply looking at the numbers makes buying a foreclosure property look like a slam dunk.

If everything works out in your favor, buying a foreclosed home certainly can be a fantastic way to get a great house at a fraction of its original market value. With that being said, there are a number of things that you need to be aware of before setting one toe into the foreclosure arena.

The ‘perfect’ house can slip through your fingers at any time. As we work directly with homeowners whose homes are in foreclosure, we can tell you that a homeowner can stop the foreclosure process in the blink of an eye by taking one single action: filing for bankruptcy. If this happens, you may have invested a lot of time and longing into a home that suddenly becomes unavailable.

Even if you buy a home at Sheriff’s Sale auction, make your required down payment (20% of the price you agreed to pay for the home), the original homeowner still has the opportunity to pull off a miracle and decide to keep the home by bringing the mortgage current. They have 10 days following the sale of the home to do so, which is referred to as ‘redemption.’ While redemption is a rarity, you still need to be aware that it is a possibility.

If the original homeowners do not use the redemption period to redeem the home, the IRS has the right to take ownership of any foreclosed properties on which there is an existing federal tax lien. The IRS can take up to 4 months to decide whether or not to redeem a foreclosed property.

Foreclosure properties are sold ‘as-is.’ If you purchase a home at a NJ Sheriff’s Sale, you’ll agree to take ownership of the property without having any opportunity to do a proper walk-through or appraisal.

The unfortunate truth is that owners who couldn’t keep up with their mortgage payments most likely weren’t keeping up with home maintenance or repairs either. There may be significant problems for you to discover only after you’ve signed your name to the property.

Tens of thousands, or even hundreds of thousands of dollars in repairs may be necessary, depending on the size and scope of the home in question.  Whether you plan to rent the home for additional income or live in it, costly repairs will delay both, and could have you actually spending more money than if you’d purchased a non-foreclosure home.

Most importantly, if you still wish to enter into the process of buying a foreclosure property, you need a professional by your side, especially if this is your first experience with foreclosed real estate.

Image credit: Richard Elzey

*example only



Living on a Budget: Frugal or Free Summertime Activities

36353934_e998f5943f_zImage: Dmitry Kichenko

Whether you’re single, coupled or a family with young kids, living on a budget during the summer may seem daunting. There are so many tempting ways to spend money while the weather’s warm and sunny, and the kids (if you have any) are out of school complaining of instant boredom.

If you’re having trouble planning affordable, fun, family-friendly activities for the quickly approaching warm-weather months – read on to find some ideas that should definitely get you started. Each suggestion will be marked as either ‘Frugal’ or ‘Free’ with notations on what costs you should expect to incur (if any).

Beach day – Living in New Jersey makes it significantly easier to stay cool during the dog days of summer without paying for an expensive pool in your back yard or investing in a costly public pool membership every year. Close proximity to the beach means you can enjoy the ocean and all that the Jersey shore has to offer without even paying for a hotel room. Pack your meals, snacks and plenty of cold drinks to avoid buying expensive boardwalk food. Throughout the summer, many shore towns also put on special free events like craft shows, music festivals, air shows, movies on the beach, fireworks and more! [Frugal: You’ll need money for gas to get you there and back, and you may end up spending a little money on the boardwalk or at any of the shore’s special summer events.]

5905217485_244b134806_zImage: A. McGuire

Take a hike – It surprises many people to learn that New Jersey is actually chock-full of beautiful hiking trails. Check out NJHiking.com to find an interesting trail system near you. Bring along a picnic lunch, and don’t forget your camera! New Jersey is beautiful! [Free]

NJhikingImage: NJHiking.com

Backyard camping – This summer activity is great for families, couples, and just about everyone who loves enjoying the outdoors without paying for said enjoyment. If you don’t already have a camping tent, try borrowing one from a friend or making your own! The fun to be had is nearly endless: chasing fireflies, making s’mores, telling (ghost) stories, making shadow puppets with a flashlight, and simply listening to the sounds of nature as you giggle yourselves to sleep. This can also be a great romantic change of pace for couples who are watching their pennies. [Frugal: You may need to buy materials to build a tent (very affordable), and supplies for S’mores, of course!]

8288349686_9e0a24403d_zImage: M. Sheehan

Get thee to a library – Hustling out of the heat and through the library door to be greeted by cool, book-scented air is something that should be included on everyone’s To-Do list every summer. Get your kids (and yourself) temporarily away from screens and into a good page-turner. [Free, assuming you return your books on time.]

4609210182_84e0c07e7f_zImage: C. John

Get crafty! [Frugal: Requires a one-time investment in craft supplies; however, many crafts can be made using recycled items like: empty soda bottles, milk cartons, tin cans, old magazines, toilet paper rolls, bottle caps, candy wrappers and more!]

5546923175_c091d00658_zImage: AJMonday

Plant a vegetable garden – Not only is this a very affordable project, you’ll get a huge return on your (very small) investment! [Frugal: You’ll need to buy seeds and maybe a few gardening tools, but you may be able to borrow tools from a friend or neighbor.]

19779026923_0f0a298ec5_zImage: G. Guerrero

Enjoying the summer on a budget can be done. Don’t let the warm weather steer you away from your budget. Of course, it’s ok to spend a little money once in awhile, but in general, appreciate what life offers up naturally. You (and your bank account) will be better off for having made it through a frugal summer, and you may enjoy it so much that you’ll do it again next year!

What is the Best Foreclosure Alternative?


Veitengruber Law spends a lot of time helping our clients stay in their homes. We work tirelessly on foreclosure defense matters, and we’ve saved countless properties from being sold at Sheriff’s Sale. Since we do focus much of our attention on keeping homeowners out of foreclosure, you may be wondering why.

In other words: if we dedicate so much of our time to avoiding foreclosure – it must be a pretty darn undesirable outcome, right? Foreclosure is right for some people, but many people have gotten themselves into an unfortunate financial jam and would like to get out of it without losing their home in the process.

What is the BEST ‘foreclosure alternative’?

When we are helping a client avoid foreclosure, it’s for one of several reasons:

  1. The homeowner doesn’t want to lose their home;
  2. The homeowner doesn’t want a foreclosure on their credit report;
  3. The homeowner wants to avoid a deficiency judgement.

Therefore, the best foreclosure alternative depends on the desired outcome for each individual client. If you are in danger of losing your home to foreclosure but you really want to keep your home, Veitengruber Law can help you negotiate with your lender to get you approved for a loan modification or refinance. In doing so, we are often able to bring monthly payments low enough for our clients to manage, allowing them to bring their mortgages current and continue living in their homes.

Another way to avoid losing your home to foreclosure is to file for bankruptcy. In doing so, your bankruptcy case will engage an automatic stay. An automatic stay is an injunction that prohibits any of your creditors from collecting or attempting to collect any money from you until such time as your bankruptcy case has been officially settled. The automatic stay also stops any foreclosure action dead in its tracks, giving you and your foreclosure defense attorney time to determine the best course of action regarding your home.

If you don’t want to or wouldn’t qualify for bankruptcy, you would very likely be approved for a loan modification as mentioned above. Getting approved for a loan modification or mortgage refinance would keep a foreclosure and/or bankruptcy from appearing on your credit report

For the homeowner who is ok with the sale of their home, but would really like to avoid the credit score damage inflicted by a foreclosure, selling via short sale may be the answer. A short sale involves getting permission from your lender to sell your home for less than the amount left on your mortgage.

Short sales are great finds for buyers, but why would a bank agree to accept (often significantly) less than what they are owed? The answer is simple: a short sale is the lesser of two evils. Lenders will almost always receive (a lot) more money for a property that is sold through a short sale rather than a foreclosure sale (Sheriff’s Sale).

In addition, if you can find a buyer for your home in a short sale scenario, your lender is much less likely to file a deficiency judgement against you. In a foreclosure, a deficiency judgement can be obtained by a creditor (your bank or lender) for the difference between the sale price and how much you still owed on your mortgage.

Theoretically, lenders can also petition the court for a short sale deficiency judgement, but the reality is that they often don’t pursue one because they’ve received more money than they would’ve if the property had been sold at Sheriff’s Sale. Also, many lenders want to stay in the good graces of their customers, and chasing down already distressed homeowners after a short sale has repaid a significant portion of the debt simply isn’t good for business.

The bottom line is that if you’re looking for a foreclosure alternative, there are a wide variety of potential solutions. Veitengruber Law has seen it all, and we can help you determine the best fix for you and your home.

Image credit: Nicholas Cardot

Will NJ Ever Recover from the Mortgage Crisis?


Some recent statistics show that some areas of New Jersey appear to be pulling out of the Mortgage Crisis (sometimes interchangeably called the Great Recession, the Housing Bubble, the Housing Recession and/or the Housing Crisis).

Rentals at many shore towns are on the rise again, overall sales in the state as a whole are on the incline, but foreclosures still have a tight grip on much of New Jersey. As you have probably read in the news, Atlantic City remains at the top of the nation’s list of cities with the most foreclosures. Trenton follows Atlantic City in a close second place – in the entire country.

Some pockets of New Jersey are experiencing an upswing in the number of homes being purchased, which has led to a sense of reassurance among homeowners in those areas. However, even though more properties are being sold in some New Jersey towns, overall home prices are far below where they were before the mortgage crisis, which started in 2007 and lasted until around 2009.

Unfortunately, there are a number of factors at play that are causing New Jersey’s cities and towns to struggle to turn things around like the neighboring cities of Philadelphia, PA and Brooklyn, NY have successfully done.

Primarily, New Jersey is one of the states wherein foreclosures must proceed through the court system, which makes the entire process lengthier, and when the Great Recession hit almost a decade ago, the number of NJ foreclosures severely clogged up the court systems.

The New Jersey foreclosure timeline stretched out to take years from start to finish. Additionally, at the end of the foreclosure process, foreclosed homes in NJ are sold at a Sheriff’s Sale, where many of the properties are purchased by speculators or investors.

Combine the effects of the recession coupled with damage done by Hurricane Sandy in 2012, and what we’re left with is a large percentage of properties in the state of New Jersey that are now owned by corporations. In turn, the corporations typically rent out the properties, which draws a totally different type of dwellers.

Instead of the devoted members of the community, many towns across the state are now undergoing a demographic shift. Many former homeowners, outed because of foreclosure or damage from Sandy that they couldn’t afford to repair up to code, have been replaced with these new renters who simply aren’t as community-minded as the previous residents were.

Along with older New Jersey homeowners leaving the state because they lost their homes to foreclosure or Hurricane Sandy (or a combination of both), younger home buyers want to live close to mass transit for easy access to exciting urban areas.

What does all of this mean for New Jersey? The good news is that the rate of new foreclosures is slowing down, and the low home prices may very well be a result of homes that have finally reached the end of the foreclosure process and have made it to Sheriff’s Sale, where they’re sold cheaply.

While things still don’t look great in the New Jersey real estate market, and some towns may indeed undergo long-lasting demographic changes, the numbers are trending in the right direction. Real, lasting change may be in our state’s real estate market future, but it won’t happen overnight. As things are now, many New Jerseyans are still affected by foreclosure. If you’re one of them, Veitengruber Law can help.

Image credit: Matt_Lodi

Bankruptcy Discovery: 341 Hearing Vs 2004 Exam



During the course of your bankruptcy case, a lot of time and effort will be spent in the discovery phase to ensure that all pertinent details are out in the open for examination.

One way the bankruptcy trustee can gather information during the fact-finding portion of your case is at the 341 hearing, which is also known as the Meeting of the Creditors. The 341 hearing is often relatively short and although any of your creditors are invited to attend, they usually do not. You, however, are required to attend the 341 hearing.

At the 341 hearing, you’ll be asked to show some financial documents, including: your mortgage statement or lease agreement, banking statements, most recent pay stubs, deeds to any property you own, your most recent tax returns (or any specific returns as requested) and proper photo ID.

Your bankruptcy trustee is in charge of organizing and running the Meeting of the Creditors. The trustee will ask you a variety of basic questions pertaining to your bankruptcy case, ranging from your reason for filing to whether or not you have filed for bankruptcy in good faith. Any creditors who may attend may ask you questions about your intentions; for example – your vehicle loan company may ask whether you plan to reaffirm your auto loan after your bankruptcy case. In general, the Meeting of the Creditors is not a cause for anxiety.

While a 341 hearing is a common proceeding in any bankruptcy case, if the trustee or any of your creditors feel that there are problems with some of your answers or that you are withholding information, a 2004 Examination may be warranted. Lesser-known than the Meeting of the Creditors, the 2004 Exam takes a deeper look at your finances if questions cannot be answered sufficiently at the 341 hearing.

Derived from Rule 2004 of the Federal Rules of Bankruptcy Procedure, the 2004 Examination comes into play when more information is needed in order to proceed with your case. Unlike the 341 hearing, a 2004 exam is more like a deposition, and you will be questioned more intensely.

Typically, a 2004 Exam is requested by either the bankruptcy trustee or one of your creditors when something in your bankruptcy documents and/or financial paperwork raises a red flag. They may have reason to believe that you or a family member:

  • Continued to run up debts immediately prior to filing for bankruptcy
  • Gave preferential payments to one or more of your creditors
  • Have suspicious bank transactions
  • Made a transfer of property out of your name immediately prior to your bankruptcy filing date

Sometimes, the trustee simply needs more information. Many times, financial documents are incomplete, complicated or may need clarification. You may very well still be able to move forward with your bankruptcy even if a 2004 Exam is requested.

You should, however, be prepared for a rather extensive questioning session at the 2004 Exam. Make sure that your answers are as forthcoming as possible so that your bankruptcy will proceed toward discharge or reorganization, allowing you to get the fresh start you need. Your bankruptcy attorney will help you understand what will likely be asked at the 2004 Exam, and he will attend the Examination with you.