What Should my Budget Look Like After a New Jersey Bankruptcy?

New Jersey bankruptcy

When overwhelming debt and missed payments start to control your life, bankruptcy can offer a fresh start to begin rebuilding your finances. It is important to take advantage of this clean slate by doing everything in your power to learn from past financial mistakes and create better habits for your future. Debt can accumulate from overspending, a medical emergency, or the loss of employment or income. No matter how you found yourself in debt and filing bankruptcy, there are steps to take to make sure it doesn’t happen again. One of the best ways to become more aware of your finances and prepare yourself for unexpected expenses is to create a household budget.

A household budget will allow you to track your spending and find opportunities to build your savings. Every budget will look different for every household, which is why you need to make sure you are creating a realistic budget that works for your household. Learning how to use this helpful tool will help you manage your money and bounce back fast after bankruptcy. Here are some steps to creating a household budget while recovering from bankruptcy:

1. Track Your Expenses

Take the first thirty days after bankruptcy to track how much money you are spending and what you spend your money on. The best way to do this is to create a spreadsheet listing different categories of expenses and then tracking these expenses throughout the month. Make sure you include every purchase you make to ensure you are getting the most holistic view of your finances. After you spend one month tracking your expenses, subtract your total expenses from your total monthly income.

2. Adjust Your Spending Habits

What are the results? Pay attention to where your money is going. You should never be spending more than you earn in a given month. If you have more money going out than coming in, it’s time to figure out where to make some spending cuts. You should start by determining which expenses are essential, like groceries and utilities, and which expenses are not. Start cutting back on any non-essential expenses.

3. Allocate Your Income

Once you know where your money is going and where you can start to make some cuts in spending, it’s time to figure out how you’re using your money. The best way to do this is to determine what percentage of your monthly income goes to specific expenses. For instance, if your monthly income is $4,500 and you spend $1,000 a month for your mortgage payment, you’re spending 23% of your monthly budget on your house. Here are some suggested percentages to compare with your budget:

  • Medical: 5-10%
  • Housing: 25-35%
  • Transportation: 10-15%
  • Savings: 10-15%
  • Food: 10-15%
  • Utilities: 5-10%
  • Insurance: 10-20%
  • Recreation: 5-10%

These percentages are only meant to serve as rough guidelines and they will not work with every household, but this is a great jumping off point for creating your household budget. If you find your spending in the above categories is significantly higher than recommended, you may want to start cutting back on those costs.

4. Finalize Your Household Budget

Based on the above information, you should be able to create a monthly budget that works for your household. Continue to track your expenses to keep yourself accountable for your spending and to make sure your budget is realistic. Staying aware of your spending habits will help prevent former bad habits from resurfacing. Pay specific attention to growing your savings and emergency funds. These financial reserves can really save you in the event of an emergency.

At Veitengruber Law, we know that life is unpredictable and rarely goes according to plan. A monthly budget can’t account for everything life will throw at you, but it can help you prepare for unexpected life events and sudden expenses. Creating a household budget will help bring some stability to your financial status and ensure you can weather the set-backs. If you need help making your post-bankruptcy budget, we can help!

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Will a New Jersey Bankruptcy Resolve My Plastic Surgery Debt?

new jersey bankruptcy

Medical debt is one of the leading causes of excess debt in the US. Even when covered under medical insurance, many NJ residents find themselves facing bankruptcy as they struggle under the pressure of medical debts. Bankruptcy can seem intimidating, but it can be a great way to get a fresh start if you find yourself struggling to pay back medical debts. Whether you choose to fully discharge these debts under Chapter 7 bankruptcy or enter into a more manageable repayment plan with a Chapter 13 New Jersey bankruptcy reorganization, filing for bankruptcy can set you on the path to financial health.


Bankruptcy is meant to allow people to move forward from previous financial mistakes or setbacks.


What about plastic surgery debt?

While it is true that plastic surgery is a medical procedure, it is elective and that choice makes the difference when filing for bankruptcy. Plastic surgery is considered a luxury debt. Luxury debts include any goods or services you purchase with a credit card that are not considered necessary to the maintenance of you or your dependents. Also in this category are jewelry, home décor, beauty products/services, vacations, electronic devices, and even alcohol. It is important to include any luxury debt when you file for bankruptcy, but that doesn’t mean these debts will be discharged.

The timing of the purchase of these products and services is what is crucial to whether or not they will be discharged in your bankruptcy case. In NJ, if the debt was accrued within the 60 days immediately before you file for bankruptcy, it is within the right of the credit card company to refute your claim. The credit card company could argue that you made the purchase using credit you had no intention of paying back. This is called constructive fraud, or fraud that occurs when a debtor’s actions imply fraud even if their intentions weren’t to commit fraud. Any luxury purchases totaling $1,150 or more made in the 60 days just prior to your bankruptcy is filed could be scrutinized as constructive fraud.


There are a plethora of myths and misconceptions surrounding bankruptcy proceedings. Turn to an expert when you have questions.


If either your credit card company or plastic surgeon decide to sue for nondischargeability of the debt, you will become the defendant in a lawsuit. It will be your responsibility to prove to the court that the purchase was necessary. You will also have a chance to defend yourself against the suit if you can prove you had the intention to repay the debt and show that you made an effort to do so before filing for bankruptcy. If the court decides this purchase was unnecessary—or that it was considered fraudulent—your plastic surgery debt will be deemed non-dischargeable and you will still be responsible for paying off this debt.

Luckily, this only applies to luxury debt accrued within the 60 days before filing for bankruptcy. It is very likely that debt from plastic surgery accumulated before the preceding 60 days will be included as dischargeable debt in the final decision for your bankruptcy case. Whether the plastic surgery debt was from elective surgical or non-surgical medical procedures should not make a difference in making it eligible to be discharged under either Chapter 7 or Chapter 13 bankruptcy. Bankruptcy is meant to allow people to move forward from previous financial mistakes or setbacks, and plastic surgery debt is no exception.

There can be a lot of myths and misconceptions surrounding bankruptcy proceedings. Veitengruber Law is experienced in providing full-service debt relief solutions. We understand the stress caused by seemingly insurmountable debt and we work hard to offer solutions to even the most difficult financial problems. We know that bankruptcy is not the end of the line, but a chance for our clients to get back on their feet and on the road to financial health. We offer customized bankruptcy analysis based on your specific goals and financial needs. Call us today at 732-852-7295 for your free, no-obligation consultation with our experienced team of bankruptcy experts.

Will I Lose my Alimony if my Ex Files for Bankruptcy?

When it comes to the complexities that come with divorce, most divorced couples find that one of the most stressful aspects is – you guessed it – money. Both parties will feel the effects of their divorce in the two places it hurts most – the heart and the wallet.

Regardless of how intertwined you and your (soon to be ex) partner kept your finances when you were married, going from living on two incomes to scraping by on one is never easy. This is especially true if you are the spouse who makes less money, was a stay-at-home parent, or have been otherwise dependent on your partner financially.

If your marriage resulted in children and they’ll be living with you after the divorce, you’ll be able to benefit from child support payments from the non-custodial parent.

Children or not, you may also benefit from alimony in order to help you maintain the quality of life you enjoyed while married.

In theory, the concepts of child support and alimony can help a newly single parent stay out of debt and continue paying all of the bills on time. The reality, of course, is that not every person will come through with the payments – for a number of potential reasons. A big question on many splitting couples’ minds is:

What Happens if my Ex Files for Bankruptcy?

Prior to 2005, filing for bankruptcy in New Jersey could help lower the amount of child or alimony support an ex-spouse had to pay each month. Luckily, amendments made in 2005 to the Bankruptcy Code set stricter enforcements into place to protect individuals who are entitled to domestic support obligations.

In Section 523, the U.S. Bankruptcy Code delineates that “domestic support obligations” are not dischargeable when an individual files for bankruptcy. In addition to alimony, “domestic support obligations” also include child support and money owed to the petitioner’s former spouse, child, legal guardian, or the government.

The spouse entitled to receive support may understandably be quite nervous if the other party files for bankruptcy after their divorce. Because of the 2005 amendments, the receiving spouse doesn’t even have to file a claim with the Bankruptcy Court.

What About the Automatic Stay?

As soon an individual files for bankruptcy, all creditors are obligated to stop collecting debt money. This is known as an automatic stay. The collection of alimony or child support does not fall under the enforcement of an automatic stay; rather, it is held in higher priority under the Bankruptcy Code. In other words, before any other debts from creditors are considered, alimony and child support need to be paid.

There is no difference between Chapter 7 and Chapter 13 bankruptcy when it comes to alimony. Individuals who file for either chapter are still required to pay (in full) any alimony and/or child support obligations.

Are There any Exceptions?

There are two very specific situations in which “alimony” can be discharged in bankruptcy.

  1. Sometimes, a divorce decree states that one spouse has a monetary obligation to be paid to a spouse, and it is mis-labeled as “Alimony.” If it is determined that the obligation is not actually alimony, then it can be discharged. For example, the divorce decree may state that “Husband shall be responsible for $10,000 of a debt accrued during the marriage (often credit card debt).” At times, items like this can be labeled incorrectly as alimony, when in fact, it is completely separate from alimony. Once this monetary obligation has been legally determined as “non-alimony,” it then becomes dischargeable.
  2. The second exception occurs if an individual has a monetary obligation to a third party. For example, Bob and Mary Jones divorce, and Bob is required to pay Mary $1000.00 per month. Bob decides not to pay the alimony, so Mary assigns her father the responsibility of collecting the alimony. Mary still needs the money and her father distributes it to her, but there is no record of that. Now that Mary’s father is responsible for collecting the alimony, if Bob files for bankruptcy, the order to pay alimony can be discharged since it was assigned to a third party.

Help with a New Jersey Bankruptcy

If your ex does file for bankruptcy, they may be granted forgiveness of other debts like credit card debt, or past utility bills.


TO BE CLEAR: It is not possible for your ex to file for bankruptcy in order to get out of paying domestic support. They can file for bankruptcy, but they cannot discharge child support OR alimony.


 

Paying alimony or being entitled to receive alimony while filing for bankruptcy can be a sticky situation for all of those who are involved. Rifts between family members can occur, and they normally don’t end well.

If you are the person filing for bankruptcy, work with an experienced NJ bankruptcy attorney rather than trying to go it alone to ensure that all of your obligations are being met. In the end, it will be well worth your investment of time and money.

Fear of Filing: What’s Keeping You from Bankruptcy Relief?

Without a doubt, money incites emotion.

What emotion depends on the specifics of your financial situation. Suddenly getting a substantial raise at work gives a feeling of success and relief. Coming into an unexpected windfall of money can evoke a sense of thrill and excitement. Steadily watching the number in your bank account dwindle inevitably leads to anxiety, stress, and panic.

Realizing your debt is higher than you can handle can provoke a fear that feels like you’re drowning. Learning that you have solid options to get out of debt when you thought it was an impossibility should instill a solid sense of comfort. Unfortunately, the thought of filing for bankruptcy comes with its own set of complex and confusing emotions.

Even though you may know and logically understand how the New Jersey bankruptcy process can eradicate a large percentage of your debts, you may hesitate to take the necessary steps to file. You’re not alone. In general, those who know they need to file for bankruptcy but are afraid to do so, are afraid of one (or more) of the following:

Ridicule/social embarrassment

Yes, it is more socially acceptable today to file for bankruptcy, but this fear isn’t unfounded. You may have some naysayers and Negative Nanceys if you file for bankruptcy. While they may tsk tsk behind your back, what’s most important is getting your financial life back on track. What will the naysayers have to cluck about when all of your bills are current and you’re able to rise above your strife? Keep your eye on the prize, and kick any and all negativity to the curb.

Job loss/difficulty finding future employment

In order to assuage this particular fear, it’s always a good idea to discuss a potential bankruptcy with your current employer before filing. An informed boss is much better than one who finds himself “hoodwinked.” As long as your higher-ups and HR department give you the green light, you’ve got nothing to fret about.

As for future employment, as long as you keep your nose to the grindstone and make the most of filing for bankruptcy, chances are good that a potential future employer will look at your overall financial picture rather than zero in on just one incident. Bankruptcy discharge is your opportunity to get a strong foothold where your finances are concerned. By using bankruptcy as a tool, you can get out of (and stay out of) debt, improve your credit score, and completely turn your life around.

Inability to buy a home/fear of losing your current home

It’s true that filing for NJ bankruptcy will lower your credit score temporarily. This does mean that making large purchases that will require a loan are off the table, but only in the short-term! By remaining steadfastly dedicated to cleaning up your financial past, a lender will see that you’ve made a lasting change. In just a year or two, you will be able to make large purchases again.

Losing your home is a huge fear for almost everyone when they think about bankruptcy, although this fear is largely unfounded. Now, if you should decide that your home mortgage is out of your budget – you can decide to go forward with a short sale or foreclosure in order to downsize. However, if you would be able to successfully make your mortgage payments if your other debts were gone or significantly reduced, filing for bankruptcy in New Jersey triggers the automatic stay.

Do you have other fears about filing for bankruptcy that weren’t mentioned here? Call us; talk to us. We can walk you through what you’re afraid of and help you understand the process. We’ll give you real, honest feedback, even if that means bankruptcy isn’t right for you.

I’m too Embarrassed to File for Bankruptcy!

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The over-use of credit cards has become very commonplace in today’s society. Don’t have enough money? Just swipe this card through, or type in a simple series of numbers online. No problem; worry about it later.

The problem results when ‘later’ finally rolls around. Even charging small amounts can add up FAST. Virtually anyone can suddenly find themselves up to their eyeballs in credit card debt, being unable to make even the minimum payments. On top of that, missing only a few months of payments will tack hefty late fees onto an already mind-blowing amount of debt.

Most people who find themselves with mounds of credit card debt did not intend to end up in dire financial straits. In fact, the majority of credit card users start out determined to pay off their credit card balance on time, every single month. “As soon as the bill arrives, I’ll mail out a check. I’m just waiting for my __________(paycheck, tax return, raise, new job to start, etc).” For some people, the timing is right and as soon as they get paid, they knock out any credit card payments that were due. For others, however, the self talk turns to something like:

“I can’t believe I racked up so much credit card debt! I’m so embarrassed!”

The fact of the matter is that everyone makes mistakes sometimes. Good people occasionally make bad judgement calls that can at times snowball out of control.

Even if you had the most honorable plan when you began charging things to your credit card, if even one of your life circumstances takes a wrong turn, you can find yourself falling short.

Many factors can alter your course, and unfortunately sometimes your course can start going steadily downhill. Perhaps you’ve encountered one or more of the following unexpected hurdles:

  • A growing family
  • Work demotion
  • Job loss
  • Injury or chronic illness
  • Divorce
  • Lay-offs
  • Special needs children
  • Death of a spouse
  • Elderly parents in need of care
  • Moved to a location with higher cost of living
  • Gambling addiction
  • Medical bills
  • Drug addiction
  • Poor communication about money

Any of these factors can lead you to make bad choices regarding your finances, either willingly or because you were left with what felt like no other choice. When dealing with difficult life events, charging groceries to your credit card may feel like no big deal. After all, your family has to eat, right? And, even if you’re out of work, you still need to put gas in your car to go to job interviews. With no disposable income, you might find yourself using your credit card for almost everything very quickly.

It’s natural to feel embarrassed when you can’t pay your bills. Human nature tells us that as responsible adults, we should be able to keep our finances in order. However, don’t let your embarrassment stop you from taking steps to get back on track.

Even deep in debt – you have choices! You can continue to let your debt roll over until you lose all of your possessions, OR, you can be proactive and file for bankruptcy NOW.

By filing for Chapter 7 bankruptcy, you’ll be able to wipe out ALL of your credit card  (and most) medical debt. You’ll be able to keep your home and car as long as you can afford the payments. Your credit score will suffer, and the bankruptcy will remain on your credit report for a decade, but that’s actually much better than your current situation.

A fresh start free from the burden of your credit card debt will allow you to get current on your mortgage, car payments, and utility bills. Staying current each month will slowly but surely bring your credit score back up to a respectable level, and avoiding credit cards in the future will keep it there.

Image credit: Justin Maier