How to Kill Zombie Debt For Good

zombie debt

If a debt collector is suddenly asking you to repay a debt you thought was expired or forgotten, this is called zombie debt. Like its ghoulish namesake, zombie debt can be difficult to kill for good. If you are suddenly asked to pay for debts that have fallen off your credit report, here are five things you should know:

1. What qualifies as zombie debt?

Zombie debt can be debts you owe but forgot about, debts you already settled with a creditor, identity theft, debts discharged in bankruptcy, or debts beyond the statute of limitations for when lenders can sue you for payment.

Be careful when paying your bills! Even one payment on an old debt can resurrect it. A creditor will remove old debt from their books and sell it to debt collectors for cents on the dollar. Sometimes, through faulty information transfers, debt collectors can wind up asking for payment on an expired debt. Even if they only collect a small portion of the original debt, they can turn a profit. Don’t fall into this trap!

2. Get Info on Your Debt BEFORE You Pay

Try to find as many records relating to the debt as possible. Old receipts and bank statements can help you provide proof that you have already paid off the debt in question. If you have not paid off the debt, digging through your records can help you remember where this debt came from as well as the terms pertaining to the debt or if the debt was discharged/expired for any reason. Do not make a payment until you know the full story behind the debt.

3. Get a Debt Validation Letter

A debt validation letter will include all the information the debt collector has pertaining to the debt in question. This will tell you the original creditor, the amount of debt remaining, and ways you can challenge the collection of the debt. You can use this information to verify it is your debt and check to see if you have already paid the debt.

4. Look at the Statute of Limitations

The statute of limitations on debt limits how long a creditor can sue you for payment. In New Jersey, the statute of limitations on credit card debt is 6 years—meaning if you have not made a payment on the debt in those six years, the credit card company cannot sue you for payment after that point. Despite this, debt collectors will often still try to sue for payment in the hopes that you make a payment and re-open the debt.

5. What Next?

If you already paid the debt, you can demand via letter that the collections agency stops contacting you. If it is not your debt, you have 30 days to reply via letter to challenge the debt. If you do owe the debt and have the ability to pay, you should make payments to resolve the debt via a written payment agreement. If you owe the debt and cannot pay it, consider seeking the help of an attorney experienced in debt settlement and bankruptcy like George Veitengruber, Esq.

What Does Your Debt-to-Income Ratio Say About You?

Your debt-to-income (DTI) ratio is the percentage of your monthly income that you use to pay your debt and the amount of income you have left over after you have paid all of your bills. Creditors use your DTI ratio to get a better understanding of how your current debt impacts your finances and your ability to afford more debt. If your DTI ratio is too high, you could be a seen as a risky borrower. A lower DTI ratio can make you look appealing to creditors, but it can also mean that your finances are freed up to save for the future. Here is everything you need to know about your DTI and what it says about your finances.

Regularly calculating your DTI ratio is a good way to stay on top of your finances and make sure you have set a reasonable budget for yourself. In order to calculate your DTI ratio, add up all your monthly payments you make to pay off debt: credit cards, personal loans, student loans, mortgages, car loans, etc. Then you will divide this number by your gross monthly income (your income before taxes). Then you multiply this number by 100 to turn it into a percentage. So if you put $2,000 towards debts per month and your monthly income is $5,500 before taxes, your DTI ratio would be 36.37%.

What does your DTI ratio say about you?

While every lender has different criteria for what makes a good DTI ratio, these are some general guidelines for how your DTI ratio will impact your creditworthiness:

  • DTI ratio below 36%: You will likely not be considered a credit risk by almost any lender. You probably have the means to pay your debts as well as contribute to savings and investments.
  • DTI ratio between 37% and 49%: Some creditors may consider you a risky borrower, but others may be ok lending to you. You can likely pay your debts but may struggle to save money or generate wealth through investing.
  • DTI ratio above 50%: Most creditors will consider you a borrowing risk. This can make it difficult to obtain new lines of credit. You may be struggling to pay down your debts.

If you find yourself falling in the 37% to 49% range with your DTI ratio, your financial wellbeing could be at risk. This high DTI ratio can make it difficult to pay for emergency expenses or to handle sudden financial changes like a loss of income or a medical emergency. In order to lower your DTI ratio, you need to reduce your debt and/or increase your income.

The best way to get rid of debt quickly is to make more than the minimum payment every month. If you are struggling to make the minimum payments and feel like you need additional help, seeking debt management services may be the right path for you. It is better to get ahead of your debts early before they snowball into a worse situation.

If you are concerned about a high debt-to-income ratio or are struggling to pay off your debts, Veitengruber Law can help. Our debt management solutions are catered to fit your specific needs. We can help you understand your options and work towards your financial goals.

Borrowing Money for College Without Your Parents’ Help: Student Loan Info for Students

student loan info

For many college students, student loans are an inevitability. Scholarships, grants, and work study opportunities can only go so far to cover the major cost of most institutions of higher education. Often, college students take on the responsibility of federal or private student loans without fully realizing what they are signing up for. Before signing on for student debt, here are four things students should think about:

1. Understand Your Budget

When you take out student loans, understand that you will need to pay them off eventually, often with interest attached. So while it might feel like you are flush with cash after the loan hits your account, it is important to save student loan money for necessities in an attempt to spend less than what you have been loaned.

This money is earmarked for books, tuition, food, and transportation expenses. Spending student loan money on excess expenses like eating out and heading to the movies with friends can cause you to waste your financial resources. Plus, the more money from your loan you are able to save, the easier it will be for you to eventually pay off the loan entirely. Prioritizing how you spend your money now will help you be more prepared for your financial future.

2. Only Borrow What You Absolutely Need

The biggest mistake students make is borrowing more than what they actually need and can reasonably expect to be able to repay. Student loan providers are often more than willing to offer a student much more money than they actually need in the hopes that they will spend it and not be able to repay it right away, thus earning the lender a ton of money in interest fees.

You can choose how much of a loan offer you want to accept. If you leave a portion of a loan unclaimed, that amount will be returned to the lender. If you do opt to take the full loan and find that you do not need it all, you can return it to the lender as a payment.
REMEMBER: The more money you accept as a student loan, the higher your monthly payment will be.

3. Your Career Choices Will Be Impacted

Once you graduate and those student loan payments begin, you must quickly find a job with a salary that allows you to make your monthly payments. When bills are coming in monthly, the importance of your happiness at your job means a lot less than the money you are bringing in. This can prove limiting to students who discover they have entered a career path they do not like. Taking on additional student loans in order to change careers isn’t an option for everyone. The more money you borrow in student loans, the less wiggle room you’ll have to pursue different job options when you graduate.

4. Your Loan Balance Can Increase Even With Regular Payments

Even if you make your monthly payments on time and in full, it is possible that your loan balance will still increase over time. This happens mostly with an income driven repayment plan. If your monthly payments are based on your salary instead of the actual debt owed, it is possible that the payments you make will not be enough to cover the interest you accrue every month. THIS IS A HUGE PROBLEM.

If you anticipate entering the workforce in a low-paying field, you will need to take this into account when accepting student loan debt. It is crucial that you are able to pay off debt plus interest with your monthly payments.

Student loan debt can lead to anxiety, fear about finances, and regret. Many students feel weighed down by their student loan debt. If you are overburdened with student loan payments, or don’t know which choices are right for you, Veitengruber Law can help you find a workable solution. Whether you’re a parent or a student who needs guidance, give us a call to set up a Zoom consultation so we can help relieve your fears.

I Can’t Pay my Credit Card Bill! What Should I Do?

can't pay my credit card bill

Missing just one payment on your credit card or even paying late by just a few days can result in hefty fees, added interest, and a negative impact on your credit score. If you are facing financial difficulties due to COVID-19 and struggling to pay your credit card bill(s), the best thing you can do is let your credit card company know as soon as possible. While this might seem intimidating, it doesn’t have to be. Credit card companies know financial issues arise and it is in their best interest to work with you to make sure they can get paid.

If you need to contact your credit card company to request relief, here are some important steps:

1. Let Your Credit Card Company Know ASAP

As soon as you realize you are about to be financially impacted by the coronavirus pandemic, alert your creditors. You are certainly not alone in needing help during this time and many credit card companies have implemented programs to help those who have lost income due to the pandemic. You will likely need to provide documentation to verify your current situation, but the sooner you reach out, the better your chances of being granted the help you need.

2. Ask Specific Questions About Credit Card Relief Packages

Your credit company likely already has a few options they can provide you as far as credit card relief packages. It’s important that you’re absolutely comfortable with the terms of a package before you agree to it. It is helpful to have a list of questions prepared before the call to help you stay focused. Here are some key questions:

  • If I cannot make a full payment due to issues from the coronavirus pandemic, do you have a financial relief program available?
  • What kind of fees can I expect from these options?
  • Will interest accrue if I lower or defer my monthly payments?
  • How long is the relief period?
  • Will there be an opportunity to reevaluate the relief if I am still unable to make payments at the end of the relief period?
  • What information do you report to the credit reporting agencies?
  • Will I still be able to use my credit card if I request relief?

3. Get a Copy of the Agreement

If you do decide to enroll in a financial relief program through your credit card company, you need to make sure you understand the full terms of the agreement before you sign anything. Once you agree to the terms of the relief option, you need to get a written copy of the terms for your records. Make sure you continue to look at your credit card statements each month to check for errors and to make sure your credit card company is following the rules set forth in the agreement. If anything seems amiss, you should dispute it with your credit card company as soon as you can.

If you are unable to make your credit card payments or reach an agreement with your credit card company, you still have options. We can offer debt management solutions that are specifically tailored to each client’s unique financial situation. Reach out to us if you’ve attempted to negotiate with your creditor(s) without success. Veitengruber Law can (and wants to) help.

Top 5 Reasons You Should Hire a NJ Debt Relief Attorney

nj debt relief attorney

There are so many reasons that an excessive number of people find themselves up to their eyeballs in debt. Income loss, illness, poor spending habits, divorce, and a myriad of other factors can all lead to debt that quickly becomes unmanageable. If you’ve found yourself in this situation, you’ve likely wondered how to get yourself back on track post-haste. You may be considering several options for help. One thing is certain: when you cannot find your way out of debt on your own, you NEED the right professionals in your corner. Number one person to tap? The best NJ debt relief attorney you can find.

You might fight with yourself on whether or not it’s “worth it” to fork out even more money to pay an attorney to sort out your debt. We can tell you that it is 100% over-the-top WORTH IT and then some. Do we say this to convince you to hire our firm so we can get paid? ABSOLUTELY NOT. We are without question NOT that kind of professionals. Our #1 goal is always, without hesitation: helping others find their footing. Today, we’ll tell you the top five reasons why working with an experienced legal debt relief team is worth the money.

1. Expertise

It can be very tempting to try to handle your debt on your own in order to “save money.” Keep in mind that your creditors are experts at collecting debts—they literally do this for a living. A debt relief attorney will grant you not only the time and resources needed to negotiate your debt, but they will also provide the legal expertise needed to arbitrate with your creditors. The right debt relief attorney will know how to work with creditors and use the law to your advantage. They can also stay on top of creditors and hold them accountable to state, federal, and local laws meant to protect borrowers.

2. Stress Relief

When you attempt to reconcile your debt on your own, you are putting all of the stress of the situation squarely on your shoulders. Your debt resolution lawyer will take on the bulk of the workload required to negotiate with creditors and prepare for a court appearance, if necessary. Your attorney will become your one point of contact, keeping all documentation organized and communicating with creditors on your behalf.

3. Options

Everyone’s financial situation, including how they got into unmanageable debt (as well as the best way to get out of it) is vastly different. When you work with a team of pros who handle debt relief on the daily, they will be able to properly advise the right path forward based on what option is best for you. There are many options to handling debt, from bankruptcy to debt consolidation to a home equity loan and more! Each option will impact your financial health and credit score differently, which is another area in which your financially savvy legal team can help you assess all of your options.

4. Superiority Over Debt Consolidation Companies

The quality of debt consolidation companies varies widely, and it can be difficult to even know what you’re getting when you sign up for their services. Some companies are, in fact, nothing but scams, while others have astronomical hidden fees that will result in you falling right back into debit after their “help.” Debt consolidation companies also do not have the legal expertise of an attorney. Reputable, well-known debt relief attorneys will present their fees up-front, and you can be guaranteed that you’re not being scammed.

5. High ROI

Admittedly, it can be really difficult to set out to PAY someone to fix your money problems. It can easily seem like you’d be better off handling it yourself so that you aren’t out even more cash. The GOOD NEWS: when you work with the right NJ debt relief attorney, the return on your investment (ROI) will be so worth it. Do attorneys need to be paid? Yes! However, the fees you’ll pay will be nothing in comparison to the money you’ll save on paying for your quickly growing debt – from compounding interest and late fees – to the effect on your credit score (which will actually also end up costing you more money and can result in many negatives like being turned down for a job, inability to rent an apartment, difficulty being approved for any type of loan, and high interest rates.)

Veitengruber Law is a full service debt relief firm in New Jersey. We have years of experience working with clients to help them manage their debt and get back on the road to financial health. We will explain your options and guide you through every step of the debt settlement process. We know not all debt management solutions are one size fits all, and our results define us as one of the most successful debt relief firms in the area. If you need our help, please reach out to us.

What To Do When You’re Unemployed with Credit Card Debt

Many across the US have experienced job loss or income reduction as a result of the coronavirus crisis. Figuring out how to pay for basic needs and monthly utilities is one thing, but deciding how to handle credit card debt is another thing entirely. Any amount of credit card debt is concerning, but if you are working with a high interest rate, things could go sideways quickly. Here are 4 tips to getting through unemployment with credit card debt.

 

1. Budget to Prioritize Bills and Debt Payments

 

There are some obvious things you have to pay from month to month: mortgage or rent, utilities, groceries, student loan payments, and car loan payments. Look to see where you can cut back in your budget. Unlimited data or international calling can be cut from your wireless plan. If you are locked into a contract, see if you qualify for a hardship plan with your carrier. The same goes for TV. Get rid of cable and stream videos online or drop premium channels. If you pay for services or subscriptions, suspend your account for the time being. All of these small changes will free up some of your budget to go towards the payments that matter—like your credit cards.

 

2. Only Use Your Credit Cards in Emergencies

 

While you are unemployed, you should only use your credit cards if it is absolutely necessary. You may think you can rack up some debt now and catch up on payments later, but the problem is you don’t know how long you will be unemployed. If you continue to carry a balance from month to month, the interest can add up quickly. Out of control credit card debt can tank your credit score. It is best not to use your credit card at all if possible.

 

3. Talk to Your Creditors

 

Keep in mind that credit card companies want to work things out just as much as you do. They want to get a return on their investment, after all. Their options to get these payments are limited. They cannot take your house or car away, put a lien on your unemployment check, or garnish your wages if you do not make the minimum payment. The best way for them to get payment is to work with you. Explain your situation and come up with a plan for how to catch-up on payments.

 

4. Bankruptcy May Be a Valid Option

 

If your unemployment spans long-term and you find you are unable to pay your credit card bills, bankruptcy could be an option for you. In most cases, Chapter 7 bankruptcy will allow you to completely get rid of credit card debt. Filing for bankruptcy is a big decision, but it can also give you a blank slate to start over on better financial footing.

 

If you are struggling under the weight of heavy credit card debt, you have options. Veitengruber Law is an experienced debt negotiation firm. We can personalize a solution to handle your debt issues based on your specific circumstances. Bankruptcy isn’t always the best option, but if it is for you, we will be there every step of the way.

Can You Settle Retail Credit Card Debt?

Retail credit cards can create some of the hardest debt to manage. Retail credit cards are often easy to acquire but in many cases come with astronomical interest rates. Because of this, getting behind on retail card payments can quickly lead to a deep hole of unmanageable debt. When your retail debt gets out of control, it can seem like your options are limited. Fortunately, it is possible to settle retail credit card debt.

Debt settlement is when a debtor negotiates an agreement with their creditor to pay off a smaller portion of their total debt. Normally, this only happens when the borrower has defaulted on the account. The creditor may be more likely to agree to a settlement if they feel they would not receive payment for any of the debt owed. However, if you know you are at risk of defaulting, you may be able to discuss settlement options with your creditor. A creditor knows that recouping some of the debt is better than none of the debt. Settlement can be resolved with a lump-sum payment or with a fixed number of payments.

Settling your retail credit card debt may be the right choice for you, but it is important to know the potential consequences of debt settlement. Your credit score will likely be significantly impacted by a settlement. While you are repaying the settled amount, the settlement itself will be seen as a negative mark on your credit report. Even if you close your credit card account, the settlement will impact your credit score for up to seven years. Because of this, it is important to consider all of your options before you opt for debt settlement.

You may also be hit with surprise taxes if the IRS gets involved with your settlement. If the settlement allows more than $600 to be forgiven, you will likely have to pay taxes on the amount forgiven. If this happens, it is possible for you to reduce your tax liability. If your liabilities exceed your assets, you could qualify as insolvent and therefore wouldn’t have to pay as much in taxes. Before you settle, you need to make sure you can afford the potential taxes of settling.

Of course, no one has the right to debt settlement. You have to be able to provide evidence to your creditors that you have a specific hardship or that your debt is unmanageable. Even if you do compile enough evidence to prove you are facing significant financial difficulty, your creditors still may not be willing to negotiate. If your creditors are demanding payment in full, you may be forced to look into other debt management solutions.

While you can certainly attempt to settle retail card debt on your own, it might be in your best interest to work with a reputable debt settlement firm like Veitengruber Law. As a respected New Jersey debt settlement law firm, we have relationships with creditors and know how to negotiate with them. Because retail credit cards are often facilitated by larger credit card or finance companies, an attorney will typically have better luck negotiating than you would on your own. A debt negotiation attorney knows all the ins and outs of the laws surrounding debt and how this will impact your specific situation. This is especially important if you have had legal action taken against you. Even if you’re facing a lawsuit over your retail debt, the right attorney can demystify the settlement process and help you get back on your feet financially.

Veitengruber Law is a full service debt negotiation legal team. We know how overwhelming credit card debt can be, but you don’t have to struggle alone. Our proven debt negotiation solutions can help you work towards eliminating your debts. We can help you decide if debt settlement is the right choice for you and help you explore all of your debt management options.

How To Calculate Your Debt-to-Income Ratio

Your debt-to-income ratio is your total monthly debt payments divided by your gross monthly income. Lenders will use a debt-to-income ratio to measure a potential or current borrowers ability to handle monthly payments to repay borrowed money.  If you apply for a loan modification, this is often one of the metrics by which the servicer of the loan will approve or deny your request. Calculating your debt-to-income ratio can help you see how your debt comes across to potential lenders before you apply for a loan. Here is everything you need to know about your debt-to-income ratio.

 

When calculating your debt-to-income ratio, add up all your monthly debt payments and divide them by your gross monthly income, or what you earn every month before taxes and other deductions are taken out. For example, the total debt for someone with a $1,000 mortgage, a $200 car payment, and $300 in other debts is $1,500 a month in debt payments. If this person brings in $5,000 a month before taxes, their debt-to-income ratio is 30% ($1,500 is 30% of $5,000).

 

For mortgages, there are two components lenders will look at when determining a DTI ratio: the front-end ratio and the back-end ration. The front-end ratio, also called the housing ratio, shows what percent your gross monthly income goes towards your housing expenses, including your mortgage payment, property taxes, homeowners insurance, and any HOA dues. The back-end ratio shows what portion of your monthly income is used to pay for your monthly debt payments, including mortgage and housing expenses as well as credit cards, car loans, child support, student loans, and any other debts. Most lenders typically agree that the ideal front-end ratio should be no more than 28% while the ideal back-end ratio should be 36% or lower.

 

So why is the debt-to-income ratio important? This ratio was essentially created to protect potential borrowers from predatory lenders and to ensure they do not bite off more debt than they can chew. There is evidence that borrowers with a higher debt-to-income ratio are more likely to have issues making regular monthly payments. Generally, lenders see consumers with a high DTI as risky borrowers. Because of this, 43% is the magic number for debt-to-income ratios. In accordance with the Consumer Financial Protection Bureau guidelines, 43% is the highest ratio a borrower can have and still receive a Qualified Mortgage.

 

There are some exceptions to this 43% rule. Small creditors—those with less than $2 billion in assets and who made no more than 500 mortgages in the previous year—can offer a Qualified Mortgage when your debt-to-income ratio is higher than 43%. Larger lenders may also be able to give you a mortgage loan if your ratio is higher than 43%, but they will need to prove they have made an effort to determine whether or not the borrower can actually pay back the loan.

 

If you need to lower your DTI ratio to get a loan or a loan modification, there are a few things you can do. Start by making a plan to pay down your debts as quickly as possible. Cut out unnecessary expenses and make a budget that emphasizes paying off your debt. You can also try to see if your lenders or credit card company will lower your interest rate. If your account is in good standing and you regularly pay your bills on time, you may be surprised at how willing your creditors are willing to work with you. Consolidating your debt by transferring high-interest balances to an existing or new account with a lower rate may also help you manage monthly payments. Most importantly, avoid taking on more debt until your DTI ratio is where you need it to be.

 

Figuring out your debt-to-income ration can be useful in determining how much debt you can handle. Veitengruber Law is a full service debt negotiation law firm. We can help you determine your DTI ratio and help you lower your ratio if needed. Whether you are looking to lower your ratio to buy a house, modify a mortgage payment, or simply get out from under your debt, Veitengruber Law can help.

Budgeting Tips When You Live Paycheck to Paycheck

paycheck to paycheck

It’s a reality that life’s expenses simply cannot be ignored or avoided regardless of our circumstances. Most people work hard every day to earn the money they need in order to meet those expenses. Some people literally live from “paycheck to paycheck”, scrimping by on mere dollars by the time they get paid again – only to have their entire paycheck GONE nearly as soon as it hits their bank account. Believe it or not, there is also a group of people who don’t even have bank accounts!

If your income is just enough to allow you to squeak by each month but you aren’t able to put any money into savings, your financial future looks bleak. You need to be able to put some money aside for retirement as well as emergencies that arise along the way. If you have children, you’ll also most likely want to be starting a college fund for them.

Don’t think you can do it? Try out some of the following tips to see if you can make your money stretch just a little bit further each time you get paid.

First, you need to know your total monthly costs 

When you have some free quiet time, sit down (with your significant other, if applicable) and set out to determine exactly what your total necessary monthly expenditures are. Be sure to include:

  • Living expenses (rent or mortgage) plus any HOA fees
  • Utilities (gas, electric, phone, internet, water & sewer, trash removal, recycling)
  • Cell phone bill(s)
  • Car payment(s)
  • Gas (for vehicle) OR
  • Public transportation fees (train, subway, bus)
  • Food (include groceries as well as any restaurant bills)
  • Prescription and OTC medications
  • Other

Once you are sure you haven’t forgotten any necessities that you pay for regularly, the total amount is how much you’ll need every single month. If you have money left over, you’re doing great! Stop spending it and start putting a bit of the surplus into a savings account every month. Look for savings accounts that offer the most rewards. You may also choose to start investing some money if you have a monthly surplus, even if it’s a small surplus. Make your money work for you.

Why is living “paycheck to paycheck” so risky?

Chances are good that if you’re reading this blog post, you’re not left with much (if any) surplus after paying all of your necessary monthly bills. The very definition of living “paycheck to paycheck” involves regularly running out of money before your next pay day rolls around. If you’re finding that you need to borrow money from a friend or utilize your credit card for daily living expenses when your paychecks fall short, you’re not alone. Over 60% of Americans report having lived “paycheck to paycheck” at some point in their lives.

This is a very dangerous way to live because you make yourself susceptible to significant financial damage, like skyrocketing credit card debt, foreclosure, payday loan debt (DO NOT TAKE OUT A PAYDAY LOAN), bankruptcy and worst of all: a rapidly plummeting credit score.

Tricks to make ends meet

Consider downsizing – Whether just temporarily or for the long haul, think about relocating to a living situation that is more affordable. If you own a home, consider selling and renting a small apartment while you build up a savings account. Alternatively, buy a smaller home, move to a less expensive area, shack up with family, or take in a roommate (or several). Use the extra money to pad your savings account and bulk up your retirement plan.

Shop around – Look for better deals on all of your utilities. You can shop around for the best energy prices, and regarding other utility companies – it never hurts to ask. Negotiating a lower monthly payment is very possible because most companies don’t want to lose a valuable customer.

Stop using Check Cashing services – If you’ve avoided opening a bank account because of the required minimums, take a look at your local Credit Union. They tend to have more reasonable rates and minimums. You simply must have a bank account in order to make sure that your bills are paid on time, AND if you’re cashing your checks through a Check Cashing service, you’re losing a huge portion of your money due to their exorbitant fees.

Make a budget and stick to it – It is imperative to establish the basic costs of your day to day living and to stick to that number. You may find that making your coffee at home saves you a lot more than you’d realized, and that switching to store brand toiletries results in pretty substantial savings! Clip coupons and read grocery store flyers every week. Only buy what you absolutely need if it’s not on sale or you don’t have a coupon for it.

Pay down your debt – We realize this one is potentially the most challenging to do when you’re just getting by. We’re here to tell you that it is possible to wipe out your debt. That’s right – if you’ve been paying a large chunk of money just to manage your credit card’s minimum payments – we can help you eliminate those payments altogether, giving you a much more solid financial footing to stand on.

 

How to Manage Credit Card Debt During a Divorce

divorce and money

Divorce is complicated. When it comes to divvying out debt, even the most amicably separated couple can find themselves at odds. In New Jersey, you are responsible for any debt in your name—even if your spouse is the one who racked up the bill. It’s easy to become overwhelmed and end up spending buckets of money either paying off your ex’s debts or facing a pile of legal fees. To avoid making a complex situation any more confusing, here are some great money-saving tips for dealing with credit card debt during a divorce.

Deal With Debt Before Divorce

If you’re already facing credit card debt, it could be financially disastrous to add the high cost of divorce to your financial woes. While it may be difficult, your best option is to deal with the debt before you file for divorce. As tempting as it may be to wait for a court to figure out how to divide the debt evenly, you and your spouse will save a lot of money coming to an agreement on your own.

Meet up and discuss exactly what the two of you owe. If you both have your own credit cards, remove the other person as an authorized user from those accounts. Even if you are just an authorized user on an account, your credit can be impacted if your former spouse does not make on-time payments. If you have joint accounts, consider transferring the balance to new cards that you each take out separately. Look for balance transfer credit cards with low interest rates. If you can compromise with your spouse in how to divide the debt evenly, you could save hundreds or thousands of dollars in legal fees.

If You End Up Paying Your Ex’s Debt

Unfortunately, some people don’t have the chance to be proactive about marital debt before a divorce because they only find out about the debt after the fact. If your name is attached to the account the debt is under, you may have no choice but to take responsibility for the debt. You can take steps to getting your name removed from the account, but in the mean time, you will need to make sure the account is getting paid.

In order to protect your credit, you may be stuck paying off debt accrued by your ex. It is important to note that while you can petition the court to have your spouse repay you for these debts, this path is expensive and you may never get the money back—even if you have a court order. This is why it is very important to make sure you and your ex do not share any accounts at the time you file for divorce.

If your ex does not remove your name from an account willingly, you will need to get a lawyer to prove you did not know about the account and did not benefit from the loan. If you do end up being responsible for paying off a portion of this debt, kept diligent records of your payments. If your ex decides not to pay their part, you will be able to prove that you have a history of making good on your payments.

Work on Creating Good Credit Post-Divorce

Whether you are facing the arduous task of building your credit from scratch or working on paying off debts accumulated in your marriage and subsequent divorce, you will need to generate a solid plan to rebuild your finances. Create a list of your debts to determine how much money you can afford to put towards each debt every month. Your new budget will need to absorb living expenses as well as any debt you are responsible for after the divorce.

It can be difficult to adjust to life under one income instead of two—especially if you are struggling under the weight of credit card debt. Veitengruber Law’s experienced financial legal team can help you come up with comprehensive debt-relief solutions catered to your specific needs. Managing debt during and after a divorce can be complicated and stressful, but you don’t have to do it alone. We can help you make a plan to eliminate burdensome debt so that you can start to move toward financial health.