Will too Many Credit Cards Hurt my Credit Score?

While you may be worried that you have too many credit card accounts open, the truth is that there isn’t a magic number of credit cards that is “right” or “wrong”. With that being said, there are some important things to know about holding multiple credit card accounts at the same time.

The average credit cardholder has approximately 5 to 7 credit cards. This includes open and closed accounts. There is no cutoff number where we would tell you “You have too many credit cards,” because what we are more concerned about is your debt to credit ratio.

What Is a Debt to Credit Ratio?

Essentially, the debt to credit ratio means: how much of your total available credit (on all of your credit cards) have you used? In other words, if you have a total of $10,000 of credit available to you spread out over any number of cards and your current balances add up to $9000, you have a very high debt to credit ratio of 90%.

Why is this number important?

The reason why your debt to credit ratio number is significant is because it plays a big role in determining your credit score. Ideally, you want to keep your total credit card balances at 30% or less of the credit you have available to you.

You can have a really great debt to credit ratio with 10 credit cards (many people open cards in order to take advantage of different “points” systems), and you can also have a poor ratio with only one or two credit cards.

How Can I Improve My Debt to Credit Ratio?

While opening new credit cards would seem like the most logical strategy to increase your total amount of credit available, it is important that you don’t open multiple new accounts in quick succession.This will send up a red flag to credit reporting agencies because it may mean that you are borrowing money that you won’t be able to repay.

Try opening one or two new credit cards per year in order to gradually boost your total available credit. More importantly, make sure that you are paying your monthly minimums (or ideally, more) in a timely manner on a consistent basis. In fact, this is actually more important than your debt to credit ratio number. Your credit score is calculated by looking at a number of your financial habits, your income and your total debt. Approximately 65% of your credit score is based on how well you stay on top of paying your bills.

Additionally, your credit score will improve if you have a variety of types of credit. Credit diversity makes up about 10% of your credit score.

If you feel you have too many credit cards because the balances are way too high and you’re having trouble making payments, your problem lies in your debt to credit ratio rather than how many credit cards you have.

To reduce your total amount of credit card debt, you can choose one of many effective and proven methods. If you have already attempted to reduce your credit card debt and feel like you are drowning in debt you’ll never be able to repay – filing for New Jersey bankruptcy may be an option that you should consider.

Image: “Credit Cards” by Sean MacEntee – licensed under CC 2.0

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5 Reasons a NJ Bankruptcy Discharge May be Denied

The desired ending to filing for bankruptcy in New Jersey, or in any state, is a discharge of most of your significant debts. To have your debts discharged means to have them “wiped out” or erased. All debts that are discharged via bankruptcy are no longer your responsibility.

A bankruptcy discharge gives struggling debtors a chance to start over with their finances by presenting them with a (completely or partially) clean slate. While it is usually not possible to eliminate all debts in a bankruptcy because some debts are nondischargeable, the discharge of some or many of your debts can be extremely helpful in getting back on the path toward financial stability.

If you have found yourself buried under a pile of debt that you cannot even imagine pulling yourself out of, filing for bankruptcy is probably the best option for you. Debtors who are struggling to even make minimum payments and sustain their lifestyle desperately need help turning things around.

By working with an experienced New Jersey bankruptcy attorney, you will have a much better chance of having your debts discharged at the end of your bankruptcy case. It is ill advised to attempt to file for bankruptcy without the help of a professional. NJ bankruptcy paperwork is copious, and it is easy to make an error in filing the proper documentation at the right time and to the proper institutions.

If the court denies your bankruptcy case in bad faith, your case will be dismissed. This means that you will not benefit from having any of your debts relieved. You are also prohibited from filing for another bankruptcy for at least 180 days. Because of this, it is crucial that you work closely with a bankruptcy attorney prior to filing and during your case. Your attorney will be able to advise you properly regarding situations and actions to avoid so that your case is not dismissed.

Working with an experienced New Jersey bankruptcy attorney will ensure that you avoid:

  1. Failure to meet the New Jersey bankruptcy eligibility requirements
    You can read about the NJ bankruptcy requirements here.
  2. Incorrectly submitting bankruptcy forms
    Although it may sound insignificant, failure on your part to properly complete any of the required forms within 14 days of your original filing date may lead the court to dismiss your case before it even gets started.
  3. Omitting important bankruptcy documentation and/or information
    This leads the bankruptcy court to suspect that you are being dishonest. You must be completely transparent in order to receive a bankruptcy discharge. If you fail to tell your attorney about property or assets that you own, your case may be dismissed on the grounds that you filed for bankruptcy in bad faith.
  4. Bankruptcy fraud
    This one almost goes without saying, but some people don’t realize exactly what bankruptcy fraud entails. There are many different ways to commit bankruptcy fraud, but in general, if you hide anything or lie on your bankruptcy petition (or in a hearing) – not only will your case be dismissed, but you will potentially face significant fines and even jail time.
  5. Failure to take credit counseling course
    Before your bankruptcy discharge, you will be required to take an approved credit counseling class. This must occur within the 180 days immediately prior to filing for bankruptcy. Failure to take this course will result in your bankruptcy case dismissed.

Because it bankruptcy discharge can positively impact your life so significantly, don’t waste the potential life-changing experience by making disastrous mistakes. Be sure that your bankruptcy paperwork is in order, that your behavior is up to snuff with the bankruptcy court, and that nothing is omitted from your petition. The only way to guarantee all of these things is by working with a successful New Jersey bankruptcy attorney.

 

Image: “Fraud Key” by Jake Rustenhoven – licensed under CC 2.0

 

NJ Mortgage Help for Single Parents

Going through a separation and divorce is never easy, but the complication level increases when you add children to the mix. Establishing a stable family life for your kids is something every good parent strives to do, and divorce can throw a wrench into even the best laid plans.

Supporting the expenses required as a newly single parent is a daunting task as you attempt to maintain as much constancy and normalcy for your children as possible. To that end, the marital/family home is most often where divorced parents elect for their children to remain living.

With that being said, finances don’t always stretch far enough for one parent on their own to pay the mortgage on that family home, along with all other monthly expenses. If both parents are able to pitch in financially to keep the children and one parent in the home, the chances of losing the home are lower. However, the threat of foreclosure for recently divorced single parents is real, and although frightening, it is not something that will go away if you ignore it.

If you are a single parent fighting to keep the home your children have thus far grown up in, you may be overwhelmed by the responsibility of making that monthly mortgage payment on your own. Missed payments are common after significant life events like job loss, illness, death, and, you guessed it – divorce.

The bank will never throw me out since I have young children, right?

Unfortunately, too many people simply give banks and lenders a lot more credit than they deserve. Your bank does not care if you have children, an elderly parent, three sick dogs and a chronic illness – their bottom line is money. You may think, “But there are people working at that bank; surely there is someone there with enough empathy to see that I am struggling.”

While that may be true – of course there are kind people working in banks and lending institutions – they must follow the instructions they are given by their superiors. A mortgage loan that is not being paid on time or at all WILL be sent into foreclosure by the lender. The question is not “If” but “When.”

How can I keep the bank from foreclosing? I just need a little more time!

The best move you can make if you’re in a similar situation is to take action before your home is foreclosed upon by your lender. You may qualify for a loan modification or refinancing. A New Jersey foreclosure and bankruptcy attorney should be the next person you call. Not many attorneys specialize in both areas, so it is important that you work to find a certified NJ attorney who has the experience you need.

Why do I need a bankruptcy attorney? I’m not broke and I want to keep my home.

An experienced NJ attorney who handles both foreclosure defense and bankruptcy matters will be able to stall your foreclosure by using the Automatic Stay. This tactic can only be utilized if the debtor files for bankruptcy.

Even if filing for bankruptcy was not on your top ten list of things to accomplish in life, it is a means to an end that has helped a multitude of people in your exact situation before.

 

Image: “Mother’s Moment” by Leonid Mamchenkov – licensed under CC 2.0

Fear of Death: The Newest American Epidemic

As medical advances began to rapidly increase several decades ago in the United States, the concept of death has become “optional” to a large percentage of Americans. Treatments, cures and therapies all have put a giant safety net under our lives; if one doctor can’t fix you, there is almost always one who is willing to try.

While progress in the medical field has allowed millions of people to live healthier, more fulfilling lives – the most notable change has been the rise in life expectancy rates. Over the past century, the average American has tacked on almost 20 years to their expected life span.

Americans who lived a century ago were not scared of death because of how common it was. Today’s Americans view medicine, science, diet and exercise as a cure for the problem of dying. Now that death has become something that typically occurs in old age, growing old feels like the ultimate failure to many. Denial of death has become the newest American epidemic.

Why is this a problem?

The intense fear of death in our country has put blinders on a large portion of the population, making it impossible to talk about or plan for the inevitable.

As the Baby Boomer generation now edges into old age, many of them are “fighting” growing old with facelifts, hair transplants, fillers, implants and a staunchly oblivious attitude toward their chronological age.

Denial of the eventuality of death has led to a stifled community who cannot even think about dying without breaking into a cold sweat. What this means is that no one wants to talk about their own mortality, or that of their parents (who may be Baby Boomers).

Depending on your own spiritual/religious/personal beliefs, you may not agree that death is something to fear. There are groups of Americans who welcome death as a part of life – a passage into a new beginning.

However, statistics show that most Americans are of the mindset that death is something that can be avoided. Many people in this group simply refuse to plan for their own demise, which leaves a whole new set of problems for those who are left behind.

Overcoming your fear of dying is imperative in that you simply must make plans for your children, your assets, your funeral – even your organs. Prior to dying, you may become ill or unable to care for yourself. Without an Advance Care Directive, no one will know your wishes in such a scenario.

Talking to a therapist about your fear of dying can be immensely helpful. You can learn how to make your life matter so that you develop an acceptance of your mortality. These are important steps for your own mental health, and they will allow you to make decisions about the end of your life – decisions that no one should make but you.

Start here. We’ll help gently guide you through setting up a proper estate plan.

 

Image: “No Fear” by Thomas Leuthard – licensed under CC 2.0

I’m Being Sued for More Money than I Owe!

Is a debt from your past coming back to haunt you in the present? Although not ideal, sometimes it happens. Perhaps you weren’t making sound financial decisions at that point in your life and accidentally (or intentionally) ignored some past due notices until they just stopped coming.

It can feel like it’s easier to ignore bills when you don’t have the means to pay them. However, the end result is almost always going to be substantially worse than your original debt.

While it can take some companies awhile to take action on smaller debts, the bad news is that your (once) small-ish debt has had a load of time to compound upon itself, rolling around in interest rates, gathering late fees and potentially even picking up attorney’s fees. If your original lender or credit card company has hired counsel to address getting you to pay up, it is possible for them to tack their attorney’s fees on to the amount owed.

What can I do?

Your credit card company is hoping that you’ll get scared by the big number they’re asking for – as you should. If you receive a summons and complaint that says you owe double, triple or quadruple your original debt amount – now is the time to obtain counsel yourself.

How can I afford an attorney if I can’t even pay my debt?

Working with a New Jersey debt settlement attorney on a matter like this is highly unlikely to cost you thousands of dollars. In all likelihood, the right NJ lawyer will have the required negotiating skills to bring the amount owed down to a much more reasonable number – simply by making a few phone calls and/or sending some letters.

Your attorney can then work to coordinate a payment plan that is manageable for you so that you can pay off the (now much lower) balance. The lender/credit card company will almost always be happy to get some form of payment from you as opposed to nothing.

What will happen if my case goes to court?

If, by chance, your credit card company does not want to settle via your credit repair attorney, New Jersey courts will set up a mediation wherein the same kind of talks will take place. A court appointed mediator will work with you and your attorney, along with counsel for the opposing side, to negotiate a resolution that everyone can agree to.

The bottom line is: if you have been served with a lawsuit to collect a debt in a much higher amount than you originally owed, you’re probably not going to get out of paying at least part of the debt unless you file for bankruptcy. If you have the means to pay back the amount that your lawyer negotiates for you, you should do so in a timely manner so that your credit score doesn’t take an even bigger hit.

On the other hand, if you are completely strapped and cannot imagine even one dollar of your debt (and likely other debts that you owe) being repaid, it is definitely time to consider filing for a NJ bankruptcy. This will wipe out a significant amount of your total debt, leaving you much more financially stable, which will allow you to “start over” with a much cleaner slate.

 

Image: “Breaking into your Savings” by Images Money – licensed under CC 2.0

How to Defend Yourself Against a NJ Medical Debt Lawsuit

If you owe a hospital or private physician a large amount of medical debt and have been pursued by the hospital or a debt collector they’ve hired, there’s a strong possibility that the collection agency or hospital could decide to sue you for the remainder of the debt.

Don’t panic! We have compiled the steps and strategies that will help guide you if you are served with a lawsuit for your medical debt.

One of the most common mistakes debtors make when they are sued is not responding to the notice, which arrives as a “summons and complaint.” Debtors will often assume that if they do not have the money to pay the debt that they can just toss that summons and complaint in the trash and forget it. However, there are many avenues that are still available to you, even if you cannot currently pay the bill.

If you fail to respond to the summons and complaint, the collector will be awarded a default judgment against you. This will give them the power to pursue collection in more aggressive ways, including garnishing your wages or taking money directly from your bank account. Worse still, they’ll be able to tack on attorney’s fees, court costs, and potentially even accrued interest.

Now that you know you must respond to the summons and complaint, you’ll need to learn how to do so. The one thing you must NOT do is respond by simply saying you cannot pay the bills you owe. That’s like a defense attorney deciding to defend their client by announcing that the prosecution is correct! “Your honor, my client is guilty just like the prosecution says.”

With the help of your attorney, you’ll file an Appearance form before the Return Date listed on your summons and complaint. If you fail to do so, remember, you will be found liable by default. Your attorney will be able to fill out the paperwork for you, or guide you in doing so properly.

When you meet with your NJ debt resolution attorney, he will be able to advise you on the best defense against the lawsuit that was filed. The legal advice you receive will be tailored to your unique case details, with the end goal of proving that you are not responsible for the debt. Alternatively, your attorney may work to reduce the amount of medical debt you’ll have to repay over time.

Your attorney will demand that the collection agency or hospital prove that you owe the amount they claim. Experienced legal counsel knows what documents to demand in court from the opposing side. A strong defense straight out of the gate will often prompt the collection agency or hospital to begin settlement proceedings and reach a mutually satisfactory arrangement.

While it is possible to defend yourself in court against a medical debt lawsuit, you should strongly consider working with an attorney who will be able to take your individual situation into account and offer you the very best defense tailored to your needs. Only an experienced attorney who has complete access to your case will be able to do so.  You deserve the best assistance in your defense so that you can live out a peaceful future, which ideally does not include medical debt hanging over your head.
Image: “Hospital Municipal de Chiconcuac” by Presidenciamx – licensed under CC 2.0

Do You Understand Your Mortgage’s Fine Print?

Now that the housing/mortgage crisis has begun to level out in most parts of the country, it has once again become a buyer’s market, and this time in a much more reasonable manner. Interest rates are good, but not unbelievably good like they were leading up to the 2007 crisis. As we all know by now: if something seems too good to be true, it probably is.

Just because we’re looking at the US Financial Crisis (2007-2008) in the rear view mirror doesn’t mean that getting a mortgage loan today comes without risks, though. In fact, there is a lot to be learned from the mistakes made a decade ago.

In order to ensure that you aren’t getting yourself into something you can’t handle or something that will change over time (and not in your favor) – you simply MUST have a complete and solid understanding of everything contained in your mortgage agreement.

To most people, this probably sounds like common sense. But have you ever looked at a real, live mortgage agreement? They are very lengthy with a lot of industry jargon that can quickly spin you into a confused puddle on the floor.

Your best bet is to find a New Jersey lawyer with real estate knowledge. Make sure you trust him and his team implicitly – in all likelihood a paralegal may also work with you on real estate matters, so be sure to meet everyone in the office who will be helping you understand your documents.

Questions to have ready for your attorney and/or paralegal include:

  • Is my rate variable or fixed? If the answer is variable, find out the lowest fixed rate that you’ll be able to lock in your loan.
  • Will there be penalties if I have to break my mortgage contract?
  • Am I required to pay mortgage insurance? If so, find out why. You may be able to work with a different lender who will not require mortgage insurance. If mortgage insurance is non-negotiable, be sure to ask how long you’ll be paying it, because it can often be a significant sum.
  • How long does my mortgage loan last? Will different terms lower my monthly payment?
  • What fees am I required to pay up front and are there any fees that were tossed into the total loan amount?
  • Do I have a balloon payment clause?
  • What are mortgage “points?”
  • Is a down payment required?
  • What is my monthly payment?
  • What is my credit score? We left this question until the end for a reason. We wanted to leave you with it on your mind. Finding out your credit score should be one of the first things you do even before you begin applying for mortgage pre-approval.

Your credit score will have a significant impact on the interest rate you will be offered by lenders. If your score is less than desirable, or even “fair”, talk to your NJ real estate attorney and paralegal about waiting to buy a home until you can boost your score into the “good” or “excellent” range. Work with your trusted legal team to raise your credit score. They will also be able to guide you in determining the best time to jump into the real estate market so that you qualify for the best loan options. This will save you a lot of money throughout the length of your mortgage.

 

 

Images: “Chocolates 1” and “Chocolates 2” by Windell Oskay – licensed under CC 2.0

Filing for Bankruptcy as a New Jersey Business Owner

Starting and running a small business is a very challenging endeavor, even for the most business-savvy entrepreneur. In fact, most entrepreneurs start a number of businesses before they find one that takes off. Sometimes, a business venture simply doesn’t pan out, no matter how much effort you’ve put into it.

If you’ve started struggling to pay your business lease every month – now’s the time to really start considering your options before problems begin to surface in your personal finances as well.

When your business debts have become more difficult to manage but not out of control, you may be able to salvage things with some refinancing and debt negotiation. On the other hand, if your debts are virtually unmanageable and you see no light at the end of the tunnel, filing for bankruptcy may truly be your best choice.

As a business owner, should I file for chapter 7 or chapter 13 bankruptcy?

Whether you’re filing for bankruptcy on your own or as a business, you can file for either chapter 7 or chapter 13. In both cases, you’ll have to meet certain qualifications in order to file. For example, the only instance in which you’re permitted to file chapter 13 in New Jersey as a business is if you are a sole proprietor. Corporations, partnerships and LLCs (Limited Liability Company) are not eligible for chapter 13 bankruptcy.

You can, however, file for a personal chapter 13 bankruptcy at this time, even if your business doesn’t qualify for chapter 13. In doing so, you’ll be able to keep the business assets while you repay debts through what is called a reorganization plan. This is the best bet if you want to continue running the business after you file for bankruptcy. This option may be appropriate if you made some mistakes along the way that you have now remedied, making it more likely that the business will succeed. If you don’t meet the requirements to file for chapter 13, your business may qualify for chapter 11.

Any business entity has the right to file for chapter 7 bankruptcy. If you the sole owner of the business, you will also be required to file for a personal chapter 7 bankruptcy simultaneously. This is due to the fact that sole proprietors are legally the same entity as their business. Additionally, a business that files for chapter 7 will not receive a discharge of their debts.

Again, if you wish to continue operating the business after the bankruptcy, you’ll want to file for a personal chapter 7. This will wipe out your liability for said business’s debts, which may allow you to get a better hold on things and start over with less debt overall.

If your ultimate goal is to close up shop and move on to greener pastures and your company is a partnership, LLC, or corporation, you can file for chapter 7 as a company. In doing so, you will essentially turn over all of your business assets to the bankruptcy trustee to be liquidated. This means all of your business property will be sold in order to pay back the debts you accrued that you couldn’t repay.

For more information on filing for bankruptcy as a business, request your free case evaluation at the bottom of our website’s home page. Veitengruber Law can help you determine which NJ bankruptcy is right for your unique situation.

 

Image: “Store Closed” by Chris Chan – licensed under CC 2.0

Can I Disinherit My Child in My NJ Will?

In New Jersey, as in most other states, a parent is permitted to legally disinherit a child, provided this intention is clearly stated in a valid will. What follows are the steps you must take to ensure that your wishes are fulfilled with regards to your estate, as well as a few caveats you should be aware of.
In New Jersey, if a person dies without having created a will, any property not disposed of in life will be governed by intestate succession rules. These rules are laid out in N.J.S.3B:5-3 through N.J.S.3B:5-14.

Can I choose to simply leave my child out of my will?
Though it might seem to be the most tactful way to handle this delicate matter, you must clearly state that you wish to disinherit your child in a valid will. Otherwise, the child will be protected by Section 3B:5-16 of New Jersey’s statutes, which protects children from accidentally being left out of a parent’s will.

Include a clause that mentions your child by their full name; this will attest to your having been of a sound mind when the will was drafted. You may keep it simple, saying only, “I have intentionally made no provision for my youngest child, John Doe.”

Do I have to state the reason I wish to disinherit my child?

The reason for disinheritance does not need to be included in your will, though whether or not to do so depends on the circumstances. If no ill will is intended, and there is no acrimony in the parent-child relationship, it is probably advisable to include a clause saying so. “I have adequately provided for my beloved son, John Doe, throughout his life; he is now a successful, independent man. I have therefore made no provision for him.”
There may, however, be good reason to remain silent on the cause for disinheritance. If including the motivation could give the child ammunition for challenging the will, or questioning your state of mind, it would be prudent to refrain from doing so. For similar reasons, it is advised that parents do not speak harshly of their child in a will. The disinheritance is most likely an adequately sharp gesture; there is no need to further attack the child after you have passed away.

Keep in mind that a disinherited child will likely attempt to contest the will. However, if you’ve followed the advice laid out here, your assets will be protected.
The Takeaway:

Here are the steps you must follow to protect your assets:

1. You must create a legally binding will.

2. Update this will any time there is a change in the family: birth, marriage, adoption, or death.

3. Clearly state your intention to disinherit your child in your NJ will, and use your child’s full name when you do so.

4. Include the reason if it will help your child feel more positively about the omission, but exclude it if it will give a hostile child more ammunition to contest your will.
Image: “footsteps” by Catrin Austin – licensed under CC 2.0