Should I Pay my Debts or Hire a Bankruptcy Attorney?

bankruptcy attorney nj

When you are face to face with a huge pile of unpaid debt, you might wonder if it would be more cost effective to put a pay-off plan into effect or to make an appointment with a bankruptcy attorney. Naturally, both options are going to cost money – but there are a few questions you can ask yourself to help you determine which option will end up costing you less in the end.

Firstly, it must be said that there isn’t a cut-and-dry, cookie cutter answer to this question, so please take the advice herein with that knowledge. There are a number of variables that will affect the direction you ultimately choose to take, like:

  • How much debt do you have?
  • What type(s) of debt do you have?
  • What is your current income?
  • Do you foresee your income increasing in the near future?
  • Is there a potential financial windfall in your near future (like a work bonus)?
  • How long do you want to spend paying off your debt?
  • Are you ok with losing credit score points (temporarily)?

If you are currently not even (or barely) able to make the minimum payment each month on sky high credit card debt, you’re looking at a very long road ahead and you will have paid a huge amount of interest at the end of your debt pay-off journey. In this case, filing for bankruptcy looks like it would be a better decision, because your bankruptcy attorney’s fees are likely to cost you less than how much you’ll be paying in interest over the years. Also, by filing for bankruptcy, you can rid yourself of your burdensome debts as soon as you case is approved for a discharge. This will allow you to start a savings account, put your child through college, or otherwise focus more of your income in a way that you weren’t able to before.

The bankruptcy route will knock your credit score down for awhile, but if you’re working with a bankruptcy attorney in NJ who knows what he’s doing, you’ll be counseled on how to potentially bring your score even higher than it is now. This can usually happen in 12-18 months after a bankruptcy discharge if you follow the recommendations given.

On the flip side of the coin – maybe you have more debt than you’d like to have but you’re not drowning in debt. This is not an uncommon situation to be in. If your income is substantial enough to handle your monthly cost of living plus (give or take) double your minimum payments on at least one of your debts, you may be a good candidate for avoiding bankruptcy.

It’s impossible to give you a completely straight answer to this question, as mentioned earlier, because everyone’s financial situation is so unique. The above general tips are just that – general – and you should base your final decision off of the in-person advice you get from an experienced NJ bankruptcy attorney. He will be able to comb through your debts and assets in order to properly guide you toward making the choice that will best fit your finances.

Get in touch with a reputable New Jersey bankruptcy attorney today – most offer free consultations, so you have nothing to lose but debt!

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Can I “Cramdown” my Mortgage in a NJ Chapter 13 Bankruptcy?

While it may invoke images of a young parent’s attempt to eat dinner in between meeting the constant needs of a new baby, the term “cramdown” actually has nothing to do with food (at least in our context).

Debtors who file for a chapter 13 bankruptcy have determined that they can no longer stay above water paying their monthly expenses for their current lifestyle. Chapter 13 applicants typically have a dependable job with a decent income, and they are able to pay back at least a portion of the money they owe to creditors.

During NJ chapter 13 bankruptcy proceedings, a reconfigured payment plan will be laid out for the debtor that will allow them to avoid losing valuable assets. A home loan modification and a reorganization of other unsecured debts may also be part of a chapter 13 plan.

What exactly is a “cramdown?”

Another very effective strategy employed in many chapter 13 reorganization plan is called a “cramdown.” In order for a debtor to “cram” a loan down, it must be a personal property loan, like a loan for a car, home furnishings or appliances, or investment property. An important restriction here is that, unfortunately, mortgages on principle residences cannot be crammed down.

Here’s how it works:

Let’s make it easy and use a car loan as an example. These types of loans are often crammed down in chapter 13 cases due to the rapid depreciation of all vehicles immediately upon being purchased.

If a debtor borrowed $30,000 to buy a car a number of years ago, and today still owes $20,000 on that loan, it’s important to learn the current market value of the car. Let’s say the vehicle is only “worth” $15,000 now (we’re using easy figures for this example – your numbers may vary). Even though the debtor technically owes $20,000 to the creditor, a chapter 13 allows them to cram that balance down to the amount the car is actually worth. In this case, the debtor will benefit from a reduction of his loan balance by $5,000, only owing the current value of the vehicle, or $15,000.

This same process can be applied to other personal property loans that are currently upside down. To be upside down on a loan means that a debtor owes more than the property is currently worth. The cramdown strategy can only be used during a chapter 13 bankruptcy.

The amount “left over” when a loan is crammed down in a chapter 13 will be treated like the rest of the debtor’s unsecured debts, which include loans for things that are not physical property. A portion of a debtor’s total unsecured debts can be discharged, but only after they have completed their chapter 13 payment plan (which is usually spread out over 3-5 years).

The most common types of unsecured debts in New Jersey today are credit card debt and medical debt. Other examples include personal loans, student loans, alimony arrears and child support arrears. Not all debt is dischargeable in bankruptcy. Discuss your specific debt with your bankruptcy attorney.

In addition to the lump sum reduction in the amount due on a loan, a chapter 13 bankruptcy cramdown allows many debtors to reduce the interest rate they are currently paying on some (or all) of their personal property loans.

There are other benefits to a loan cramdown as well as some limitations and timelines that must be closely adhered to. Talk to your New Jersey bankruptcy attorney to learn more, and to find out of a chapter 13 bankruptcy could be the answer you’ve been seeking.

Dear Bankruptcy,

Dear Bankruptcy,

As a follow-up to my previous correspondence with you several months ago, I write you now only to keep you apprised of the situation. I want you to know that I am not deliberately trying to hurt your feelings, but I feel it is my duty as one of your staunchest supporters to let you know the truth.

In an attempt to squelch the initial rumors I shared with you, I have worked tirelessly educating the masses regarding the misinformation that was swirling around. While I strongly believe that those who I am able to work with directly are now getting the right message about you, I have to tell you that through word of mouth I have heard that someone is still spreading rumors about you.

My intention here is to clear the air, as I will post this letter publicly in the hopes of putting a stop to what is being said behind your back. Please feel free to do the same on your end so that we can get the correct information in front of as many people as possible.

Ok, I’ll just dive into the details, then. Here goes.

(Deep breath, because these may hurt a little)

I think I told you this already, but I’ve recently opened a second office in New Jersey. Bankruptcy help is one of the main services I provide at both offices. As I’ve moved into a new location, I’ve heard some real head-shakers about you. You would never tell someone they can never get a credit card again, right? RIGHT! I mean, obviously, those who need your help will have to reel in their credit card use until you help right their financials, but I have been telling everyone who asks: YES YOU CAN GET A CREDIT CARD AFTER BANKRUPTCY comes into your life.

A friend of a friend came to me (claiming to be “asking for a friend,” sigh) with this question: Will everyone know if I’m involved with Bankruptcy? Again, I am incredulous that there is still such fear at the mere mention of your name. Times have changed, Man! Bankruptcy doesn’t post a public announcement or install a blinking red light in front of your home. However, as I’ve previously been preaching: Needing Bankruptcy’s help is nothing to be ashamed of.

“But we wanted to own a home one day” – I heard this last week from a husband and wife who approached me in town. As challenging as it may be, I continue working to convince people everywhere that an encounter with you is not a life sentence. After all, you aren’t out to attack or harm anyone; you’re here to help.

Even though you and I know that times have changed, it is apparent to me now that I still have more work to do in defending your honor. You have my word that I will continue in earnest to defeat any and all Bankruptcy myths that I encounter. You and I are in this together, friend.

Veitengruber Law Opens NJ Bankruptcy Office in Bordentown

Since 2010, Veitengruber Law has been providing comprehensive debt relief solutions to New Jersey residents in Monmouth, Ocean and Atlantic Counties as well as part of South Burlington County. As we achieved successful outcomes for more and more clients each year, we started thinking about expanding our reach. What if we could help even more struggling debtors in additional areas of New Jersey?

Our founding attorney, George Veitengruber III, Esq., has always dreamed of expanding the practice into his hometown of Bordentown, NJ. Located along the western side of Burlington County, Bordentown is located approximately 6 miles south of Trenton and 25 miles northeast of Philadelphia.

After putting everything he had into the Wall, NJ office, everything came together this year to facilitate the opening of a second Veitengruber Law office. We are thrilled to be able to announce our new location:

33 Third Street
2nd Floor
Suite 3
Bordentown, NJ 08505

We will be offering NJ legal services in all of the areas of the law that we currently practice, including: NJ bankruptcy, foreclosure defense, debt negotiation, credit repair, real estate transactions, asset protection, estate planning and collections.

As always, we plan to continue our high caliber representation by keeping our focus on a limited number of practice areas. This allows our attorneys and legal staff to become literal experts in our fields. We’ve helped so many clients to get a new financial lease on life via bankruptcy that you would be hard-pressed to find another New Jersey bankruptcy attorney who knows the process better than Veitengruber Law.

At this time, our Bordentown office will be open by appointment only. To schedule a consultation in Bordentown, call: 856-318-2759 OR 609-297-5226.

 

What to Look for in a New Jersey Foreclosure Defense Attorney

If you’ve received a foreclosure notice from your lender, you probably feel the panic rising – especially if you ultimately want to keep your home. Perhaps you have just started falling behind on your mortgage – you haven’t entered foreclosure yet but know it’s a real possibility in the relatively near future. In the worst case scenario – your home’s foreclosure sale (Sheriff’s Sale) is mere weeks away; you were in denial until today, but now you want to know if you have any options this late in the game.

No matter which of the above scenarios best fits the situation you’ve landed in, if foreclosure is in your life and you’d really rather it not be – you need help. Saving a home from foreclosure isn’t a DIY project unless you’ve somehow miraculously come into a large sum of money and can bring your mortgage current. Even this may not be effective if your foreclosure sale has already been scheduled.

What type of professional should you be looking for? The truth of the matter is, most people don’t know where to turn when it comes to foreclosure. It’s not a situation anyone envisions for themselves when they first set out on the path to becoming homeowners, so it isn’t a subject area that most happy homeowners give much thought to.

Unfortunately, even the best laid plans sometimes run afoul. When you’re looking at a future foreclosure, whether it’s just a possibility or if your home’s Sheriff Sale has been listed in the local newspaper already – you need a foreclosure defense attorney. Naturally, the earlier in the process you are when you reach out for help, the better. However, the best NJ foreclosure defense attorneys will tell you, “It’s never too late to save your home.”

Can just any NJ foreclosure defense lawyer help you save your home? The important takeaway here is that not all attorneys are created equally. As you launch your search for the right NJ attorney to help you keep your house – look for these qualities:

Foreclosure experience – You want an attorney who specializes in saving homes. Foreclosure should make up a substantial portion of his practice and he should have a significant number of foreclosure defense cases under his belt. Avoid an attorney who “dabbles” in foreclosure (when he has the time).

Also handles bankruptcies and loan modifications – As you move through the foreclosure process (whether your desired outcome is saving your home or not), you may decide to file for bankruptcy or apply for a loan modification in order to make your finances more manageable. If your foreclosure defense attorney also handles these areas, you’ve gotten a three-for-one deal!

Success rate – Ask your attorney for statistics about his foreclosure defense cases. Sure, he takes on foreclosures, but how well does he handle his cases? Find out his success rate before retaining his services.

Schedule a consultation with your potential attorney before finalizing your decision. Along with the above qualities, you’ll get a vibe when you first meet with him – be sure that your personality jives with his. Pay close attention to how he presents himself. Does he make a lot of eye contact with you? Is he distracted during your meeting or is his focus solely on your case?

Behind any good NJ attorney is a legal team. You’ll be working with your attorney AND his legal assistants. Take the time to speak with the staff while you’re in the office for your consultation. The right foreclosure defense team will make it clear that they care about your case, and about you as a person.

Image by perzonseo – licensed under CC 2.0

 

A Letter to Bankruptcy

Dear Bankruptcy,

Oh how thee have gotten such a bad rap over the years. It’s a shame because of all the good you can do! I know it must hurt your feelings when people believe myths about you that simply aren’t true.

I recently heard the most incredulous Bankruptcy myth: that you don’t even exist anymore! Just because a few more rules have been put into place so people don’t abuse you does not eradicate your existence. Bankruptcy, I know you are real, and I know that you just want to help people.

This next one you might not have even heard yet. Did you know that some people are spreading rumors about me, too? It has been said that “consulting with me (or another one of the law people) about you means we can force bankruptcy upon them.” Haha, seriously! As Bankruptcy law helpers, we are exactly that – helpers. Not to mention, it would be illegal for any of us to force anyone to do anything against their will.

Now – I’ve only heard this rumor from a friend of a friend, but I believe it went something like, “The Jones’s can’t ask for help from Bankruptcy because they still pay all of their bills on time.” I did try to explain that your help is available even before people dig themselves into a hole, but I’m not sure my friend believed me.

Please don’t get offended, Bankruptcy, but there are a few things being said about you that, while they aren’t exactly 100% true – they do hold some merit. I guess I’d say these are more like pieces of misinformation than myths. For example: “Making too much money prevents someone from calling upon you for help.” Obviously, it’s not a person’s income alone that determines how badly they need you, Bankruptcy. I’ll be the one to say it: Means Test!!

Brace yourself, because this one may sting a little. I know you’d never do this, but apparently it’s been said that you can destroy people. I mean, as if! Now, I acquiesce that you are indeed one powerful fellow, and naturally you do pack a bit of a punch when you do your thing, but “destroying” someone has never been your M.O. You hang around for what, 7-10 years, but in name only, right? What about all of the good things you do for people, like taking care of everyone they owe money to and stopping foreclosure single-handedly?

Bankruptcy, I know your intentions are good. You are a superhero in my eyes! Don’t fret about the bad press; I’m working hard every day to set people straight, one rumor at a time.

Sincerely,

George

 

 

 

Can my Landlord Evict me if I File for NJ Chapter 13 Bankruptcy?

Living paycheck-to-paycheck is the way of life for many Americans, and unfortunately, it doesn’t seem as though this has the potential to change any time soon. With the Mortgage Crisis of 2007 having lasting effects on the US real estate market, many former homeowners were forced to give up their underwater homes and downsize. Many of these people did not take on a new mortgage, but decided to become renters – at least until the real estate market righted itself.

The new renters brought on by the Mortgage Crisis (which had aftershock effects lasting well past 2010) plus those Americans who were already renting prior to 2007 combined to create a large population of US renters. While some renters have since been able to secure mortgages, a plethora of tenants feared losing yet another home to foreclosure and have continued to rent property in NJ.

The struggle of not knowing whether or not you’ll have enough money to cover your monthly living expenses is real. As of the end of 2016, nearly 11% of New Jersey residents were living at or below the poverty level, which is an excessively high number. For these New Jerseyans, figuring out how to stretch their low income to pay for food, housing and utilities is a daily burden that weighs on them constantly.

As a renter in New Jersey, filing for chapter 7 bankruptcy no longer prevents a landlord from initiating the eviction process. New legislature in 2005 protected homeowners but not tenants in chapter 7 cases. Those renters who need to file for bankruptcy to get out from under crushing debt cannot do so with a chapter 7 without risking eviction.

Although chapter 13 bankruptcy doesn’t completely wipe out debts like a chapter 7 discharge does, the good news for NJ renters is that it offers protection from eviction. All back rent that you owe your landlord can be included with your other debts when you file. A chapter 13 bankruptcy can save you from eviction by creating a payment plan wherein you will repay your landlord the arrears you owe over a set period of time that is considered reasonable.

As long as you continue to make all of your chapter 13 repayments (made through your bankruptcy trustee who then pays your creditors/landlord) along with your current rent payments, you cannot be evicted due to being behind on your rent. Your chapter 13 repayment plan will be structured in such a way that you can afford in comparison with your unsustainable living expense schedule prior to filing for bankruptcy.

It’s important to note that in order for you to avoid eviction via chapter 13 bankruptcy, you must be able to prove that you have enough income to afford your repayment plan with enough money left over every month to be able to make your current rent payments on time and in full. In addition, any landlord may evict a tenant who has endangered the property in question through illegal activities such as drug use, drug distribution or breaking the lease agreement in other dangerous ways, even if they have filed for a NJ chapter 13 bankruptcy.

 

Image: “Evicted” by Gideon – licensed under CC 2.0

Stripping a Second Mortgage in a Chapter 13 Bankruptcy

Many people have taken out a second mortgage on their home. These second mortgages are usually referred to as home equity loans, because they are based on the amount of equity you have in your home. Your original mortgage loan’s value vs what your home is worth, along with your credit score determines how much money you can borrow through a home equity loan.

Typically, these loans are paid to homeowners in one lump sum so they can do home renovations or repairs. Some people use home equity loans to pay off a large debt with a high interest rate or to buy a vacation home. A home equity loan can seem extremely advantageous if you’re in need of some fast money, however the danger is that if you fail to repay the loan, you could lose your house.

Getting in over your head with your mortgage has been a popular theme in the past decade, so if you’re finding that you can’t make both your first and second mortgage payments, you’re not alone. Luckily, you do have some options.

If you could eliminate your second mortgage, would that make your monthly living expenses doable? Wishing you never took out that home equity loan? Filing for a NJ chapter 13 bankruptcy might be right for you.

A process known as ‘lien stripping’ can essentially erase that second mortgage, but this process is only available to debtors who file for chapter 13 bankruptcy. Additionally, in order to qualify for a lien stripping, your first mortgage balance must be higher than the current value of your home.

For example, if your first mortgage balance is $300,000, but your home is currently worth $275,000, you have zero equity in the property. In fact, you’re said to be ‘upside-down’ or ‘under water’ in regards to your first mortgage.

A $25,000 second mortgage would qualify to be stripped via chapter 13 bankruptcy in New Jersey. Upon application for a chapter 13 bankruptcy, your debts will be reorganized so that you can afford your monthly payments on all of your secured debt. In a chapter 13 bankruptcy, a second mortgage is referred to as a junior lien, and will be lumped in with all of your unsecured debts.

Throughout your chapter 13 repayment plan, you only have to pay a percentage of the total lump sum of all of your unsecured debts because they are considered “non-priority” debts. Upon successful completion of your bankruptcy payment plan, you will be granted a discharge. A chapter 13 discharge will put the lien strip into motion, and you will no longer be responsible for any remaining balance on your home equity loan or second mortgage.

The same is true for homeowners who also have a third mortgage on their home. If you want to stay in your home and would be able to afford your mortgage plus monthly living expenses if only you could “get rid of” your second or third mortgage(s), ask George about filing for a NJ chapter 13 today. You only have debt to lose!

 

Are You Committing Financial Child Abuse?

Although it may be something you’ve never considered, there have been many reports of what is now being called “financial child abuse.” One of the easiest ways to commit financial child abuse is to use your child’s Social Security number instead of your own.

Why would anyone use their child’s Social Security number?

Typically, the perpetrator has found himself with a significant amount of debt that may include wage garnishment. What this means is that any time the adult in question attempts to get a job, his debts follow him and his creditors will be able to take a portion of his paycheck.

Because of this, the adult decides to use his child’s Social Security number when applying for a new job. Oftentimes, the father and the child in question have the same name, making this kind of activity slightly more difficult to detect by law enforcement.

Is it a crime to use your child’s Social Security number?

Not only is it illegal, but to do so would be committing a number of serious crimes including:

  • Identity theft
  • Fraud
  • Tax fraud
  • Social Security fraud
  • Theft

These crimes will almost certainly prevent the adult in question from ever discharging any of his debts in a bankruptcy in the future, and in addition, he may face prison time and thousands of dollars in fines.

Why is it a crime? Who is it really hurting?

The reason it is a crime to use a child’s Social Security number to obtain employment or a loan, etc. is because regardless of whose Social Security number is being “borrowed,” it is illegal to do so. End of story. A Social Security number is not something that can be borrowed, shared, or changed.

It can affect the child in question by tacking on Social Security wages to his SSN that he may have to answer for later in life if the activity is not stopped and reversed. This can cause the child serious legal problems involving Social Security fraud, even though he had no knowledge of the crime being carried out.

What is a better solution to my debt-related problems?

It is always a good idea to avoid committing a crime in order to get out of paying your debts. The reasons? You’re going to end up getting in serious trouble, you may go to jail, you will owe more money in the end, you will cause conflict within your family, and most importantly: There is a better solution!

You can erase the debts that you have. You do not have to borrow someone else’s Social Security number to get around your creditors. It is understandable and admirable that you want to get a job to support your family. Just don’t resort to committing a crime that you will regret later in order to do so.

Filing for NJ bankruptcy will wipe out most or all of the debts that you have racked up (with some exclusions) – allowing you to have a relatively clean credit report and no debts that will be taken from your wages.

Will a bankruptcy appear on my credit report?

It is impossible to avoid a bankruptcy showing up on your credit history, however, taking the responsibility for your debts and doing the right thing is viewed much more favorably by employers and lenders. You will have a much easier time getting a job with a bankruptcy on your record than if you had been convicted of fraud and identity theft.

The bankruptcy will disappear off of your credit report within seven to ten years depending on which chapter you file. Committing a crime like identity theft or Social Security fraud will remain on your criminal history record for the rest of your life. Which sounds more desirable to you? Do the right thing – file for bankruptcy and get rid of your debts so that you can move forward with getting that job and supporting your family the right way.

Disclaiming Your NJ Inheritance to Avoid Creditors

The news that you have been named a beneficiary in someone’s will is generally considered a positive thing; although you (hopefully) aren’t looking forward to the passing of your loved one, it usually feels good to know that they cared enough to bequeath part of their estate to you. There are times, however, when you may not wish to receive your New Jersey inheritance. Do you have the ability to say “thanks but no thanks?”

In New Jersey, estate law says that you can refuse to accept a gift, which in this case is your inheritance. This right to refusal is known as a disclaimer.

While it may seem strange that someone would choose to turn away inheritance money or life insurance proceeds, there are a few reasons for doing so. One of these reasons is avoiding creditors.

Do you have a lot of debt? Are creditors constantly calling? If so, you may worry that all of your inheritance money will go directly to paying off your debts. This is a very valid worry, because that is precisely what would happen if you accepted any kind of windfall while swimming in debt.

If you are attempting to disclaim your inheritance so that your creditors don’t have access to it, you may be hoping to divert that money to your children or other beneficiaries. Unfortunately, in New Jersey, it is illegal to use a disclaimer to get out of paying your creditors. If you choose to disclaim your inheritance under these circumstances, it is highly likely that your creditors will still be able to access the funds due to the Uniform Fraudulent Transfer Act.

Discussing your situation ahead of time with your loved one will give them a chance to protect the money that you are hoping to avoid giving directly over to your creditors. One way to do this is to set up a protective trust or to simply leave you out of the will altogether and instead name your children or other family members as beneficiaries. Your creditors have zero claims to any money that is inherited directly by your children.

Going to these lengths to avoid paying your creditors signals that you are significantly deep in debt. While we understand the desire to keep from handing a large windfall directly to creditors, we also must note that there are steps you should take to get out of debt, and the sooner, the better.

Your options for debt relief in New Jersey depend a lot on the specific details of your situation.

  • How much debt are you carrying in comparison to your income?
  • Are you living beyond your means?
  • What is your credit score?
  • Do you own a home that you wish to keep?
  • How many different kinds of debt are you carrying?

NJ debt negotiation and relief is available to you. Beyond refusing windfalls, disclaiming your inheritance and any other steps you’re taking to avoid paying your creditors, imagine if you didn’t have to worry about those creditors at all anymore. Ridding yourself of a large chunk (or potentially all) of your debt is very possible; your financial future can look anyway you want it to as long as you take the right steps, now.