4 Financial Goals to Hit Before You Start Your NJ Home Search

While owning a home is an integral part of the traditional “American Dream,” getting your finances in that sweet spot that allows you to comfortably purchase a home can take years. It can be tempting as you inch closer to your goal to start your house search before you are truly ready. But you likely won’t be able to snag your dream home—or be able to pay for it—if you miss the mark on your financial planning. Here are some financial goals you should accomplish before you even begin your home search.

1. Curb Excessive Spending 

Avoid extravagant purchases in the year or so leading up to when you want to start your house search. Buying a car or going on an expensive vacation can cause you to accumulate a large amount of debt quickly, which will negatively impact your debt-to-income ratio. This ratio is an important part of your credit score and can cause your score to decrease a lot in a short time frame. Even after you are preapproved for a mortgage, you will need to keep your debt-to-income ratio relatively steady throughout the home buying process.

2. Build (and Uphold) a Respectable Credit Score

All lenders will take a look at your credit score before pre-approving you for a loan. A positive credit score means you are less of a risk since you have a proven record of paying off your debts on time. So if you do not have good credit—or if you don’t have any credit at all—you should start working on that post-haste. Sign up for a free credit monitoring service and check your score regularly to confirm your number is increasing over time. This will also help safeguard against fraudulent activity that can impede your home buying plans.

3. Maintain Steady Employment

Job hopping can be just as detrimental to your mortgage prospects as bad credit. Lenders want to be able to forecast your income. Steady paychecks from a salaried job is the preference of most lenders. While a career change does not automatically mean you will not be approved for a mortgage, you will likely have to provide extra documentation to prove you have a stable income.

4. Limit Extra Monthly Expenses

Cut down on monthly expenses outside of your basic needs. Subscription services, from grocery delivery to extra channels added to your cable plan, are convenient. But the price you pay for this convenience can cut into your plans for home ownership. Go grocery shopping instead of eating or ordering out. Monitor your utility usage. Even small changes in your month to month expenses can add up big time to help you reach your real estate (and other financial) goals.

If you think you are finally ready to start looking for your dream home in New Jersey, Veitengruber Law can help. We can connect you with experienced real estate experts and provide legal advice throughout the home buying process.

10 Personal Finance Challenges NJ Millennials are Facing

According to a recent survey done by Credit Karma, 61% of millennials said money was their #1 source of daily stress. Having grown up or entered the workforce during the Great Recession, millennials face some unique financial challenges. Even rising wages cannot keep up with the ever-increasing cost of living for this group of young consumers. When it comes to personal finance, NJ millennials face a number of burdens specific to their generation.

1. Higher Than Ever Student Loan Debt

Crushing student loan debt is so universal to the experience of millennials that it has spawned countless think pieces, endless memes, and has even influenced national political campaigns. The average student loan debt per graduate is $17,126 according to Business Insider. The number of students taking out loans to pay for college has increased by 10% since 2000 and students are borrowing more money now than ever before to afford their education. This kind of debt means millennials are often entering the workforce with major deficits.

2. Saving for a House Takes Longer

As home prices continue to climb, millennials buying homes today will pay an average of 39% more for their first home than baby boomers did. Home ownership for millennials is at an industry low as millennials avoid taking on more debt and spend years saving up for that 20% down payment. Buying a home has become less of a next step and more of a dream for millennials. This is true of many “milestones” ranging from buying a car to getting married and having children.

3. Living Paycheck to Paycheck

Besides struggling with more debt and higher costs of living than previous generations, millennials are also often unemployed or underemployed. 44% of recent college graduates report struggling to make ends meet with dead-end and low paying jobs. Making enough money to get ahead of their expenses is increasingly difficult. The “side hustle” has become a way for millennials to use their skills to make money to supplement their regular income, but even with a supplemental income, millennials continue to struggle to build wealth.

4. Caring for Elderly Parents

Despite earning less, millennials are spending much more on care for aging parents than previous generations. On average, millennials who pay for elderly care spend 27% of their income on care services. This is coupled with the fact that many millennials (53% according to the Country Financial Security Index) have had to receive financial assistance from parents or family members since turning 21. This generation is ill prepared for the burden of caring for elderly parents.

5. Poor Planning for the Future

Too many millennials have little or no savings, struggle with being un-insured or under-insured, and tend to put off retirement planning. Most millennials are only saving on average 5.3% of their income. Even if millennials are working towards the suggested $1 million retirement savings, things aren’t looking good for them. Based on inflation rates, $1 million dollars today will have the spending power of $306,000 in 40 years. These numbers mean many millennials will be facing poverty level finances in their golden years.

6. Ignoring Credit Scores

Many millennials don’t pay attention to their credit score until they need it to buy a house, a car, or to get a personal loan. It can be easy to ignore your credit score, and many generations struggle with bad credit. But for millennials, who are already dealing with higher debt and younger credit histories, it is especially important to spend some time working on building better credit. Good credit can be the pathway to making some of those sought-after big purchases millennials keep putting off—like buying a house.

Are you a millennial? Share in the comments what financial hurdles you’re experiencing, especially if it wasn’t mentioned in today’s post.

Self-Employment Budgeting Tips

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When you’re not working a 9-5 job with a stable, predictable salary dispensed into your bank account on a set schedule, budgeting for recurring monthly expenses can be a bit tricky. While being self-employed can afford you the freedom to work flexible hours, have a varied office location and the ability to do something you love, it does not always provide the easiest and most consistent stream of income to rely on. This is where careful, diligent budgeting comes in handy.

 

1) Always budget for the necessities first!

While you are most certainly deserving of a dreamy resort vacation this summer, that doesn’t mean it qualifies as a necessity, as your vacation can easily be delayed until you can truly afford it. Necessities solely include staples like your rent or mortgage payment; groceries, gas, medical insurance, car insurance and car payment or other required transportation costs; utilities like electricity, phone, internet, water, sewer and garbage. It is also critical that you budget for your income taxes, as they will no longer be automatically deducted from your income. Anything else not featured on the aforementioned list does not qualify as a necessity and therefore you can live without it and save up for it before purchasing it.

 

2) Establish an emergency fund.

If you haven’t done so already, creating an emergency fund that has enough money to sustain 3-6 months worth of your necessary expenses is an absolute must for the self-employed. Not only does this provide you with added financial security and stability, it also buys you time to find a new job or side gigs if your self-employment opportunity does not prove lucrative enough to afford your expenses.

 

3) Once you have your emergency fund in place and have mastered budgeting comfortably for the necessities and have some wiggle room left over in your budget each month, you can start budgeting for “little luxuries.”

When I say little luxuries, I mean just that. Not living large, but treating yourself to small and affordable indulgences in moderation but on a regular basis. This may include something as mundane as ordering a Netflix subscription and Chinese takeout once a month, or something as exhilarating as a night out at a rock climbing gym with friends depending on your tastes and interests.


Pro tip: seek out experiential luxuries whenever possible as they don’t generate physical clutter that you’ll have to deal with down the road. The memories you’ll gain are much more valuable in the long run.


 

4) Think big: now that you’re managing all your monthly expenses (including little luxuries) like a pro and have a solid emergency fund in place, it’s time to consider your long-term financial goals.

When you’re self-employed, saving for retirement is even more important than it is for your peers who participate in employer-sponsored retirement programs. Given that you don’t have the opportunity to participate in employer-based matching programs, you will need to be proactive and learn to not only save diligently toward your retirement fund, but also actively invest your money wisely to make it work for you. There are tons of great retirement-planning resources available online, but if you’re feeling overwhelmed at the prospect of managing your own retirement accounts, consider consulting with a local retirement specialist who can help get you on the right track. If you’re more concerned about meeting more immediate financial goals like purchasing a home or a new vehicle (or even that resort vacation), a financial planner will be able to help you adequately allocate funds for each important goal while still contributing to your retirement so that it can continue to grow as you meet your other major milestones.

Veitengruber Law can guide you through your NJ asset management needs as you get older; with advances in medical care extending life expectancies, you may be facing difficult choices over health care and your legacy. We also have close relationships with expert financial planners and NJ CPAs with whom we are happy to connect you.

Top Money Arguments Couples Have and How to Stop

Facing money problems for couples is not unknown territory. Chances are, if you and your partner are like most couples, money can often be a touchy subject. Unfortunately, studies have proven that fights about finances are able to predict divorce rates. The scary thing is, these arguments can begin even before you and your partner get hitched. Today, we’ve got a few tips to help you avoid and/or resolve these challenges.

Problem #1: Differences in Spending Habits

One of the most common financial issues that a couple may face is how they are going to manage spending. More often than not, one partner gets labeled the “spender” and the other one the “saver,” but labels are never beneficial for a relationship and can lead to tension. When one person takes care of the grocery shopping, bills, and ensuring that the family and home needs are met, and the other spends their money on frivolities, one can see how frustration can easily boil over into arguments. The key to avoiding an argument is to side-step any surprises. A budget will assist in planning out monthly spending so that both parties know how much money is necessary for bills and other living expenses. This will help “the spender” to understand that they are possibly spending too much money on unnecessary things. Creating a budget together is a great way to improve communication and get closer as a couple, as well.

Problem #2: Past Debts

Most people come to the altar with some kind of financial baggage, whether it’s school loans, credit card debt, car loans, or even alimony and child support if this is a second marriage. If you are entering into a relationship and you have a lot of financial strife, it can sometimes feel like you’re dragging your partner down, but it’s important to remember that no one is perfect. Dealing with debt as a couple can actually strengthen a relationship, and in fact, by working together, you can reduce the debt more quickly. Again, working out a plan to pay down your past debt together (even if the debt is one-sided) will increase feelings of being on the same team.

Problem #3: Separate or Joint Accounts?

Should you have separate account for personal expenses and a joint account for household expenses or two totally separate accounts? From which account will you draw money to take care of your children? These are just two examples of the many questions couples frequently find themselves asking when determining how to best merge finances. Many times, this argument can leave one person feeling hurt because they feel that their partner doesn’t trust them enough to share a bank account together. The desire for separate accounts does not indicate that your partner doesn’t want to be close to you. In fact, it can be a good idea to keep separate accounts for many couples. Finding what works for you and your spouse will take time and some “from the heart” conversations. Whether you create a joint account or continue to maintain your own bank accounts, approach this subject with love and care, so as to avoid unintentionally hurting your loved one.

Solution: Good Communication

As we all know, good communication is the key to any successful relationship – romantic or otherwise. In order to navigate the maze of marital finances (spending habits, debt, bank accounts and more) – you need to come together as one. Approach financial conversations with an open mind, while being cognizant and respectful of your partner’s personality and opinions. If at all possible, discuss your ideas about finances when you are still dating. It never hurts to get the ball rolling as soon as possible on a topic as loaded as this one. The sooner you begin to get comfortable talking about money, the better off you’ll be – long after you say “I do.”

 

 

Can I Close My Bank Account to Avoid Repaying a Payday Loan?

First, let’s be clear: Payday loans are illegal in the State of New Jersey. NJ state laws prohibit interest rates above 30% (which is exceptionally high already) and payday loan interest rates are much higher. Additionally, New Jersey banking laws prohibit the concept of advancing money based on a post-dated check.

What is a payday loan?

A payday loan is a very dangerous undertaking. It is process that is only entered into by those who find themselves in extremely dire financial straits.

The payday “lender” provides the borrower with a relatively small loan (usually less than $1,000). This cash loan is due to be paid back in full to the lender within a very short window of time – often when the borrower next receives a paycheck.

Those who are desperate for immediate money and don’t want to have their credit checked can often be fooled into thinking that a payday loan is the perfect solution to their problem. Borrowers who take out payday loans typically say that they don’t want to borrow money from friends or family, and their credit scores are usually already suffering, so taking out a proper bank loan isn’t on their radar.

Why do payday loans get such a bad rap?

In theory only, the concept of a payday loan is perfectly fine:

“You need rent money and your landlord is breathing down your neck about it. Due to unforeseen expenses this month, you’re short a few hundred dollars. If only you could simply borrow $400 to keep your landlord happy; you’ll have NO problem paying it back the next time you get paid.”

Sounds ok, right? The inherent problem with payday loans is this: if you are even a day late in repaying it, interest starts to accrue at an astronomical (up to 400%) rate. This, combined with the fact that by the time someone considers a payday loan, they are already having money trouble, leads the borrower down a path that can only end badly.

All payday loan borrowers talk themselves into believing that they’ll have the money to repay the loan on time. Most of them, however, arrive at their loan’s due date confounded and overwhelmed. Although they let themselves think their next paycheck would be enough to cover the cost of the loan plus their usual expenses, this is almost never the case.

Therefore, the average payday loan borrower ends up late in repaying their loan, either partially or in full. As soon as that interest starts building, their amount due climbs FAST. What started out as a $400 loan can end up as thousands of dollars in debt, leaving the borrower unable to even begin to make good on their promise to repay.

How can I get out from under a rapidly rising debt?

It can be an extremely scary feeling to know that your debt is rising higher and higher day by day at a rate that you can’t really even determine how much you owe. Drastic measures, like trying to close your bank account or moving away from the payday lender – will not solve your problem. Creditors can garnish your wages (up to a certain percent) until they get their money back, and unless you plan to leave the country and change your identity (not recommended) – they’ll go the distance needed to find you.

Although payday loans are illegal in New Jersey, that doesn’t mean that NJ borrowers aren’t taking out payday loans in neighboring states. If you’ve found yourself indebted to a payday lender, or if you are right now considering taking out a payday loan, you should consider filing for bankruptcy instead. Not only will this wipe out the money you owe to the payday lender, but many of your other debts can also discharged – giving you an opportunity to take stock of your money management with a clean(er) slate.

 

How to Invest in Your Future When You’re Broke

If you find yourself “barely” living paycheck to paycheck, the worry of not having any money saved can eat away at you. The concept of planning for future events like sending your kid(s) to college, helping them get married, and enjoying your own retirement can feel impossible when you can hardly afford your current lifestyle.

Although it may seem completely unimaginable, you can make a plan for your future; in fact, strategic financial planning may be the one thing that also helps you live better now as well.

The main reason most people don’t have a real savings plan in place is because they simply feel they don’t have enough money to do so. The change that needs to happen isn’t in making more money (although that is obviously not a bad thing) but in getting a new mindset.

The first step in getting a new money mindset is to change your inner dialogue from “I’m broke! I can barely even pay my bills!” to “Let’s see if I can find ways to improve how I spend money.”

While you may feel that you are barely able to meet the financial demands of your life, most people find that they’re spending too much in at least one area that can be cut back. Take a good, hard look at where all of your money goes for at least one complete month. Write down each and every cent that’s spent, organized into three categories:

  •  Necessary/survival: Housing (mortgage payment or rent), utility bills (electric, gas, water/sewer, trash removal), all forms of necessary insurance (homeowners/renters, car, health, life), food (for eat-at-home meals only), vehicle payment(s), vehicle maintenance, gas.
  • Debt: College/student loans, credit cards, personal loans, and any other forms of debt.
  • Luxury: These are things that, while dearly beloved by many of us, can be eradicated without causing you extreme hardship. Examples include: cable/satellite tv packages, streaming services (Netflix, Amazon, Hulu, HBO Now), high speed internet connection, Xbox Live membership, restaurant meals, magazine/newspaper subscriptions, cell phone(s) and their service plans, gym memberships, satellite radio, hair/nail services, frivolous (unnecessary) purchases like new electronics, expensive clothing/shoes, and other items that you simply don’t need.

Once you have a clear picture of exactly what you’re spending all of your money on, you will be able to create a plan to start saving money – it’s that simple!

Your mindset must remain steadfastly dedicated to saving money in order for this to work, however. See that list of luxury items? You are going to have to decide which of them you can either cut out entirely, or scale back. You will likely be surprised at how many companies will be happy to work with you to lower your monthly bill when you explain your situation. They’d rather keep your business at a lower profit than lose you altogether.

Instead of having your nails painted professionally, invest in the supplies needed to do your nails at home. Listen to the (free) radio in your car or pop in a CD rather than paying for satellite radio. Cut out your cable tv and keep your streaming services. Cancel your gym membership and get outside to exercise or start an indoor workout program – there are a multitude of free exercise videos on Youtube.

Even something as simple as not stopping before work to get a coffee and breakfast on-the-go can make a difference. If you spend $5 every day for a breakfast to-go, you can put that money directly into your savings account by eating breakfast at home. This habit can save you over $1,000 a year!

Another potential way to save money every month is to negotiate your interest rates with any lenders or credit card companies. You may also qualify for a loan modification (even for your mortgage loan) wherein the terms of your loan would be adjusted in order to make your monthly payments lower.

After you have found several good ways to save money each month – be sure to put the money saved into the right place! The best way to make sure this happens is to put a set amount into your savings account before you pay any bills or spend any money. That way you will train yourself to live on the money you have left after you’ve already invested in your future.

 

5 Expert Recommended Methods to Raise Your Credit Score

If you are researching how to raise your credit score, regardless of the reason, we give you major kudos. Perhaps you are trying to repair a credit report that was damaged due to years of poor financial choices. On the other hand, maybe your credit score is fair and you’re getting ready to make a big change in your life that will be much easier with good to excellent credit, like buying a new house or starting a family.

You should always strive to have the best credit score possible, but many people experience dips in their credit score just as we experience ups and downs in life. Such is the nature of the beast. In order to raise your credit score effectively, we’ve gathered some expert-recommended tips that can make a significant difference in your overall credit report and number.

Before making any changes, you’ll want to make sure you pull your own credit report and have a good look over everything listed on it. Comb through each credit report from the three main credit reporting bureaus (Equifax, Experian, and TransUnion) very carefully to check for any mistakes that may have been made like debt that is being reported that doesn’t actually belong to you.

You can contact the reporting agency about any errors on your own or you can work with a New Jersey credit repair attorney to help you make the contact and clear up any errors that may be unnecessarily dragging your credit score down.

After you have determined that there are no errors currently weighing down your score, take the following expert-recommended steps to boost your score higher than ever before:

Pay monthly credit card bills before their closing dates

Even if you are managing to pay your credit card bills in full each month, you may be paying after your lender has already reported your balance to the credit bureaus. This will make it seem that your balance is high every month. What you must do is contact your credit card company or lender and ask when they make their monthly credit bureau reports. Henceforth, make your monthly payment well in advance of that credit card company’s closing date so that your balance will be reported to the bureaus as zero.

Create a debt paydown strategy

In order to optimize your credit utilization ratio (which means keeping it lower than 30% but optimally under 10%), work hard to pay down the balances on your card(s) that have the highest balances first.

Pay your debts every time you get paid

Most people pay their bills once a month, but there is a better way! Since it is common practice for most employers in the US to pay their workers on a biweekly basis, make it your new practice to make two payments on your credit card debt per month. Pay your monthly minimum as soon as you receive your first paycheck of the month, and then pay a little bit more with your second paycheck of the month. This will nudge your balance down much more quickly than only making one payment per month.

Lower your credit utilization ratio by requesting a higher credit limit

Although this is something that should not be attempted if you don’t trust yourself to stay within your own self-imposed spending limits, requesting a higher credit limit from your credit card company can lower your overall credit utilization ratio. Naturally, this will only work as long as you refrain from racking up anymore debt.

Consolidate multiple credit cards from the same issuer

With the ultimate goal of keeping your total credit limit the same, if you have more than one credit card with the same institution, consider requesting a consolidation of those cards. The goal of this is to increase the average age of your overall revolving credit, so request that your newer card be combined into the older card. This will eventually eliminate that newer card from your credit history and your debt will have an older overall age, which will help improve your credit score.

 

Image: “5” by Steve Bowbrick – licensed under CC by 2.0

Financial Consequences of a NJ Divorce from Bed and Board

New Jersey couples who want to separate but not completely divorce have the option of choosing a legal process called divorce from bed and board. This is New Jersey’s version of a legal separation.

Why not just sever all ties and get divorced?

While there are many reasons why a married couple may not be ready to commit to a final divorce (irony noted), for the purpose of our finance-focused blog, we’re going to, as usual, hone in on MONEY.

Most spouses who are interested in a bed and board divorce are generally still amiable and see the benefit of working together to end their marriage in the best financial way possible for both parties.

Health Insurance Benefits

Probably the biggest money-saving reason to consider a divorce from bed and board is so that the dependent spouse can retain health insurance benefits even after the couple separates. Oftentimes, married couples have one insurance policy through one spouse’s employer. A bed and board divorce is especially applicable in cases wherein one spouse was a stay-at-home-parent or was otherwise unemployed in the capacity that would allow them to acquire health insurance of their own.

Private health insurance coverage is expensive. Divorcing couples in New Jersey in which the dependent spouse needs access to healthcare on a regular basis (ie. those dealing with a chronic illness) can choose the limited (b&b) divorce option, allowing the dependent spouse to remain covered under their working spouse’s policy until such time that he or she is able to obtain independent coverage.

Tax benefits

New Jersey homeowners who are joint owners due to marriage may be unsure how they want to divide the marital home. Moving from one household into two is, as you can imagine, enormously expensive.

Some married couples who no longer wish to be married recognize that it is wise for them to temporarily continue owning property together. This may mean that both spouses remain living in the marital home until both parties have a better hold on their independent personal finances. Additionally, continuing joint ownership of the marital home helps couples avoid property tax repercussions because the IRS views a divorce from bed and board as identical to a legal separation.

Retaining joint home ownership also gives couples who want it the time they need to transfer the title from both spouses to one spouse. This is because there are generally no time limits on property transfers between spouses who are divorced from bed and board in New Jersey.

Survivor benefits

A limited divorce from bed and board allows survivor benefits on many pension plans to remain unchanged. This is also true of many federal and social security retirement benefits. This can be very important for older couples who are nearing retirement age as well as younger couples who have children.

Although it is true that a divorce from bed and board offers many financial advantages, it is important to work with a family law attorney who has experience in this arena. It is crucial to be sure of the language in your specific benefit package(s) before making any decisions. If your personal finances are keeping you from getting the final divorce you want and need in order to move on and be happy, you may also want to consider filing for NJ bankruptcy.

 

 

Image: “Marriage Rings” by Robert Cheaib is licensed under CC by 2.0

Bankruptcy Law and Family Law: How They’re Connected

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Anyone who has been through a divorce knows that, second only to your love life, your finances are often the hardest hit area during a split. Many people continue to have financial difficulties long after their divorce is finalized, as well. Family lawyers who handle divorce cases know from experience that financial strife can be a huge contention between divorcing couples.

While your family law attorney will assist you in creating a Property Settlement Agreement that settles some of your money troubles (you may begin receiving child support or alimony payments after the divorce is finalized), oftentimes divorced couples will struggle with things like losing their family home to foreclosure, credit card debt, and potential bankruptcy.

As much as your divorce attorney may want to assist you with all of the above money matters, they have to focus their attention on everything within their own wheelhouse to ensure that you (and their other clients) achieve the desired outcome from your divorce. Their duties are many, and include drafting your PSA, attending court dates, negotiating and corresponding with counsel for your soon-to-be ex-spouse, handling domestic violence matters, and much more.

Frequently, family law attorneys find it very beneficial to work in tandem with an attorney who specializes in bankruptcy, real estate and/or debt relief. Because financial strain is a given in most divorces, it can be helpful for everyone involved to work as a team. Your divorce (family law) attorney will walk you through all of the steps of your divorce. With your permission, ideally he would then discuss your case with his tandem bankruptcy attorney, whom you would then work with to clean up your finances.

Of course, family law attorneys attend to matters other than divorce, like name changes, parenting time, grandparents’ rights, pre-nuptial agreements, child custody (unrelated to divorce), adoption, restraining orders, and domestic violence. Some of these matters can also be made easier by working with an attorney who specializes in finances. For example, the financial aspect of adoption matters can be quite intense. While your family law attorney will handle much of the adoption paperwork, he can refer you to a financial specialist like Veitengruber Law if you need more help organizing the necessary finances.

Every attorney has a lot on their plate every single day, regardless of their practice area(s). The best attorneys limit their focus to a limited number of practice areas so as not to get overwhelmed and spread too thin. If your family law attorney attempts to do it all himself, you may find that he’s too busy to set aside time to keep you updated on your case. On the other hand, a smart divorce lawyer will say, “Hey, while I’m working on negotiating your child visitation schedule, why don’t you go see George Veitengruber to start sorting out the fact that you can’t afford your mortgage payment?”

When attorneys work together, their clients always have a better result. Mutually beneficial relationships between experienced professionals give clients a well-rounded experience and optimal outcome. Veitengruber Law welcomes family lawyers in New Jersey (Monmouth, Ocean, Mercer, Burlington, Camden, and Gloucester Counties) to reach out to our firm if and when your clients need our services. We will gladly return the favor so that our mutual clients are well-cared for and happy with our services.

Image credit: Kamaljith KV

I Received a NJ Bankruptcy Discharge: Now What?

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Having all or many of your debts erased in a New Jersey chapter 7 bankruptcy is referred to as a bankruptcy discharge. Most people filing for chapter 7 feel a great relief when their discharge is granted.

While you are deeply immersed in the bankruptcy process, it can be easy to view your discharge as the finish line. However, once you’ve passed that finish line, you’ll have new goals to reach for, and achieving these goals will be the true measure of your future financial success.

After bankruptcy, you’ll be aiming for repairing your credit score, which will take a hit when your bankruptcy is reported. Lenders will want to see that your credit score is slowly rising post-bankruptcy. While this isn’t always easy to do, it’s definitely not impossible. You can:

Apply for a secured credit card – While significantly different from a traditional credit card, secured cards are backed-up by money you pay up front. While few banks will see you as an ideal borrower right after bankruptcy, some offer secured card programs to borrowers who need help rebuilding their credit. This is a temporary solution that you should only use until your score rises enough to make you eligible for a traditional credit card.

Apply for a secured loan – This type of loan typically involves a credit union or a local community bank. You can either “borrow” from funds that you supply to your own loan account, or borrow money wherein you must make certain necessary payments before any funds will be released to you. While not a typical loan, these baby steps help your credit score because your loan activity will appear on your credit report, helping other lenders to see that you’re moving in the right direction.

Ask a family member to co-sign a loan or credit card – It’s true that we typically do not advise our clients to co-sign loans for friends or family members. A co-signer is putting a lot of faith into you, because they are essentially letting you “borrow” their good credit. The only times we recommend considering co-signing is after bankruptcy and when you truly have zero other options.

Request to be an authorized user – An alternative to finding someone to co-sign a loan or credit card is to request to be listed as an authorized user on a family member’s credit card. This is probably the option that will have the least positive effect on your credit score, but it can help a little bit. However, ensure that the lender in question reports all payment activity to credit bureaus for all authorized users, not just the main account holder.

As you begin your journey post-bankruptcy, the most important thing you do will be to make every single payment you owe to anyone ON TIME. This includes the aforementioned secured loans as well as utility bills and any other monthly expenses. Bankruptcy discharge should have given you a huge break from significant debts, leaving you with enough money to pay for your living expenses with a little bit left over each month. This means there are no more excuses for late payments.

When we work with a bankruptcy client, we also offer credit repair assistance after your discharge. If you’ve received your NJ bankruptcy discharge and you’re still struggling, we’re here to help you figure it all out.

Image credit: John Eisenschenk