How to Buy a Home After NJ Bankruptcy

NJ bankruptcy

Buying a home is at the core of the American dream. The advantages are clear: tax incentives, stability, investment, and being independent of a landlord. Since the housing market crash of 2008, banks have become much more scrutinous of potential homebuyers’ credit history. Do you have to give up on your dream of home ownership if you’ve had a NJ bankruptcy discharge? You may be surprised to learn that owning a home is a real possibility.

In chapter seven bankruptcies, an individual’s assets are liquidated and used to repay their debts, with any remaining debts are discharged, or cleared. This will give you a clean financial slate to start over with. In a chapter thirteen bankruptcy, you can keep some assets but you will have to abide by a payment schedule for repaying your debts over three to five years. After the time period is over, your remaining debts are often dismissed. There are several different types of home loans that have different requirements for post-bankruptcy discharge.

New Jersey Housing and Mortgage Finance Agency (NJHMFA) Down Payment Assistance (DPA)

If you are a potential first-time home buyer you may want to look into the NJHMFA Down Payment Assistance program. It provides $10,000 towards a down payment and/or closing costs. The DPA is considered a second loan with no interest or payments. Once a buyer has lived in their home for five years, the loan is considered paid. There are several qualifications that must be met in order to participate in the program:

  • You must wait 24 months after chapter seven or chapter thirteen bankruptcy discharge.
  • You need to have a FICO credit score of 620 or above and meet debt-to-income requirements.
  • Only homes purchased in New Jersey are eligible.
  • The DPA must be paired with an NJHMFA first mortgage loan which is a 30-year fixed interest, government-insured loan through participating lenders.
  • The property must fall below purchase price limits.
  • The borrower’s income must fall below limits of 140% of median area income.

Qualifying for $10,000 interest-free is a huge incentive to acquiring an NJHMFA loan. After your bankruptcy discharge you can work towards meeting these requirements and getting your credit score above 620.

Federal Housing Authority (FHA) Loan

If you’re not a first-time home buyer or don’t otherwise qualify for the NJHMFA loan, an FHA loan is your next best bet. An FHA loan is a government-insured loan which has less requirements than conventional loans.

In regards to chapter seven filings, you’ll need to wait two years after the date of discharge (with a notable exception). If you can prove that you filed for bankruptcy due to no fault of your own, you can apply for a twelve-month exception. These circumstances may include illness, divorce, or theft. You will also need to demonstrate responsible financial behaviors in the months following the discharge.

Chapter thirteen filings require ongoing payments for three to five years so if you wish to purchase a home during that time, you will need to involve the court in your loan application. This is where a skilled bankruptcy attorney like George Veitengruber can assist you and present your purchase in the best possible light. First, you must make twelve months of payments to creditors. You will need to show the court that the reason you filed for bankruptcy was an anomaly.

Conventional Loans

Conventional home loans have tougher requirements for post-bankruptcy home buyers. Both chapter seven and chapter thirteen bankruptcies require a waiting period of 48 months after discharge to apply. In the exception of bankruptcy that was beyond your control, the waiting period can be reduced to 24 months. A conventional loan requires a twenty percent down payment on a property. Down payments of less than twenty percent are subject to mortgage insurance, which can be removed after the 20% has been paid. Conventional loans also traditionally require a higher credit score than an FHA loan.

The good news is that bankruptcy does NOT mean the end of your financial independence. You can rewrite your story and craft your new future. Since each of these loans requires a waiting period, take that time to plan carefully rebuild your credit so that you can embark on your new home purchase with a solid financial foundation.

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Can a NJ Bankruptcy Forgive Gender Reassignment Surgery Debts?

NJ Bankruptcy

Bankruptcy is one of the more maligned aspects of the law. Unfortunately, some people feel like bankruptcy means they are a financial failure. But the truth is that bankruptcy can be a true lifeline when all other options have been exhausted. People on the brink or already in financial ruin can be given a clean slate and a chance to start over.

One specific group of the population for whom mounting debt is a real problem are those undergoing gender reassignment surgery. In some cases in NJ, gender reassignment surgery can be covered by health insurance when deemed medically necessary. However, even if a patient’s plan does cover the surgery, the costs can still be overwhelming. The process can span over a few years, and includes ongoing treatment including hormone therapy. Many gender reassignments require multiple procedures and/or surgeries as well.

Many aspects of a person’s transformation are considered “cosmetic” by health insurance companies and are therefore not covered. Some of these include voice alteration, jaw reduction, chin implants, hair removal, lip reduction, pectoral implants, and more. The costs can quickly spiral out of control. Medical bills can easily cripple your finances and declaring bankruptcy may be the only viable solution.

 

What Chapter Is Right for You?

It’s important to have a lawyer on your side who can help you navigate the confusing differences in the various bankruptcy filings. Veitengruber Law can guide you through the process of determining which chapter will be right for you and your future financial health.

Individuals can file for New Jersey bankruptcy in one of two ways: Chapter 7 or Chapter 13. There are important differentiations between these two types of bankruptcy and it’s important to choose the right one for your unique situation. If the medical bills from gender reassignment surgery are your chief debt, you can find relief through debt discharge in both of these filings.

 

The First Step

Before any individual may file for either Chapter 7 or Chapter 13 bankruptcy, they must receive credit counseling from an approved non-profit counseling agency within 180 days.  Veitengruber Law can assist you in this process. We can help you choose an agency that qualifies, that will work with you on the fees if necessary, and that will be the most beneficial for your financial education. The main objectives to the credit counseling are to instruct you on how to remedy your current poor finances and how to achieve and maintain financial health.

It is entirely possible after credit counseling to discover that filing for bankruptcy isn’t actually necessary for your situation. You may be able to work out payment plan(s) or pay negotiated sums to pay off your medical debts. In addition to your medical debts, you can naturally include other non-medical debts within the same bankruptcy. Some creditors will be more willing to accept reduced balances if they are aware that you are beginning bankruptcy procedures. To them, a portion of repayment is better than discharged debt, which will mean they end up with no payment at all. If, however, you are unable to come to a solution after attempted negotiations, bankruptcy may in fact be the best course of action.

 

Chapter 7

If you don’t own property or many assets, this may be the course for you. In Chapter 7 cases, the debtor’s assets are given to a trustee who sells them off to pay your creditors. Certain personal property is considered exempt, however it is important to know the rules specific to your state. There is a list of federal property exemptions and NJ state exemptions. You can choose which list you are going to use, but you cannot use both. That is why consulting with a local bankruptcy attorney can be the difference in saving thousands of dollars of lost property. If you have no personal property to liquidate, it can still be possible for you to file for Chapter 7 with the help of an experience New Jersey bankruptcy attorney.

After your assets are liquidated and creditors paid based on priority, the remainder of your debts will be discharged – with certain exceptions – like student loan debt.

 

Chapter 13

Chapter 13 bankruptcy is that it gives the debtor a chance to reorganize. The petitioner must file a plan of repayment to creditors that will usually take place over a period of three to five years. After the repayment period ends, the debtor will receive a discharge of the remaining debts. The key difference between Chapter 7 and Chapter 13 bankruptcy is that in Chapter 13, the debtor remains in possession of their assets. If you own a home or other property, you will want to consider Chapter 13. This is another situation in which a knowledgeable bankruptcy attorney like George Veitengruber is invaluable, because he can guide you to the type of bankruptcy that will be most beneficial for your situation.

 

Post-petition Debts

From the date that you file your claim, any additional debts you incur will not be included in your bankruptcy case. This can be a major consideration in your decision to file if you are trying to clear debts from gender reassignment surgery. Medical bills can be extremely slow to process. Each doctor’s office must bill medical insurance, wait for the claim to process, receive the claim, and then bill the patient. It can be weeks or months from the date of a procedure to when you receive the bill. If you are accumulating debt from multiple procedures, you may want to wait until after you have been billed for all of your procedures and appointments before filing. When you file your bankruptcy claim you will be required to provide a detailed list of all the creditors and amounts due. Any debts that are incurred after the date your petition is filed, will not be discharged and you will be responsible for paying them back.

Undergoing a major transformation like gender reassignment is a life-changing experience. If you need to go through bankruptcy proceedings, don’t be intimidated.  George Veitengruber is an experienced attorney who can guide you through the process every step of the way: seeking credit counseling, negotiating credit balances, choosing the right chapter, maximizing your property exemptions, minimizing your post-petition debts, and making sure much of your debts are discharged, including medical debt from gender reassignment surgery.

Filing for Bankruptcy in NJ = Finding Financial Freedom!

filing for bankruptcy in NJ

If you find yourself facing unmanageable debt from credit card bills, loans, medical expenses or a variety of other potential issues, bankruptcy can provide a path towards a brighter financial future. Filing for bankruptcy in NJ can be an excellent way to take control over your finances and make the process of repaying your debts much more affordable. Unfortunately, despite the many benefits of filing for bankruptcy, many people are hesitant to file when they should. Some debtors feel a sense of failure or shame in filing for bankruptcy and wait years to file, while their financial situation becomes more unmanageable in the process. This delayed filing can be disastrous for your financial future.

A recent study by the Consumer Bankruptcy Project (CBR) found that nearly two-thirds of those who eventually file for bankruptcy report struggling under the weight of their debt for two or more years before filing. The study found that most people are filing for bankruptcy only after years of significant financial hardship. This period of time is commonly referred to as “the sweatbox.” While in the sweatbox, debtors are constantly bombarded by debt collectors, face the threat of losing their homes, and many even experience wage garnishment. Debtors in the sweatbox can find themselves in lawsuits over unpaid debt and may even be unable to pay for basic needs like food and electricity. Often times, these financial situations could have been avoided by filing for bankruptcy earlier.

When we meet with clients in the sweatbox, they almost always wish they had talked to us sooner. Often, those who wait to file for NJ bankruptcy do so with fewer assets and a much higher debt-to-income ratio than those who file earlier. Essentially, the longer you wait to file, the worse your financial situation is likely to be. On top of this, the stress and uncertainty of struggling through years of unmanageable debt will take a very real emotional and mental toll on anyone. And yet, many of our clients who finally file for bankruptcy long after the pros greatly outweigh the cons still express feelings of failure and shame.

At Veitengruber Law, our goal is to help people see bankruptcy as an opportunity for positive financial change—not as the end of the line. We work with our clients to dispel some of the prevailing myths about bankruptcy. We know that many of our clients face bankruptcy due to a number of circumstances outside of their control. Loss of employment or underemployment, divorce, medical expenses, and student loan debt are some of the most common obstacles to financial security that our clients face. We understand that no two clients are the same, which is why our debt relief solutions are created to fit your particular needs and goals. Bankruptcy is just one of the many tools we can help clients use to restore financial health.

Struggling through years living under the enormous weight of crushing debt is not a measure of personal integrity, nor is it financially advisable. Waiting too long to file for bankruptcy can put your financial security at greater risk. Don’t spend years struggling in the sweatbox. Veitengruber Law’s holistic approach to debt management and bankruptcy strategies will ensure that you receive personalized service for your specific needs. Filing for bankruptcy can be an intimidating process, but you do not have to do it alone, and working with us will not put you further in debt. Don’t wait until it’s too late.

When you call us for your free consultation, we will answer any questions you have and help you decide if bankruptcy is the right choice for your circumstances. If bankruptcy is not the right option for you, we will offer you alternative solutions that are viable in your specific situation. No risk – no obligation. We’re here to help!

Image: “FREEDOM!” by Gonzalo Baeza – licensed under CC by 4.0

Filing for NJ Bankruptcy isn’t the Only Solution to Unpaid Debt

nj bankruptcy

School loans, medical bills, mortgage payments, credit card bills, auto loans, past due utility bills, overdue taxes: what do they all have in common? They’re all forms of debt. If you’re dealing with multiple types and sources of debt, you know that they can deplete your bank account and tank your credit score. If the concept of getting out of debt feels like scaling Mt. Kilimanjaro, it’s beyond time to take action. Fortunately, filing for NJ bankruptcy isn’t your only option, even if your debt mountain feels insurmountable.

First and foremost, it’s crucial to be aware of exactly how much money you owe. It can be challenging to really SEE the true culmination of your debts, but trust us when we say that facing the reality of your situation is the only way to make a change. Ask yourself if you are more inclined to stay on top of a digital plan or if the act of physically writing things down works better for you. Then, sit down with a pad and pencil or your laptop. Compile a comprehensive list of your debts, being sure to include the following information:

  • Type of debt (Ex.: Mortgage, Student Loan, Credit Card, etc)
  • Name of creditor (Ex: Bank of America, Sallie Mae)
  • Total amount of each debt
  • Monthly minimum payment amount
  • Interest rates applicable to each debt
  • Due dates for each debt

IMPORTANT NOTE: Don’t disregard the list once you’ve made it. Refer back to it often, especially when paying the bills. As your amount of debt fluctuates, and hopefully decreases, make sure to update the list. Watching your total debt amount go down is immensely rewarding and can be the motivation you need to continue making progress.

Your next step is to determine how you will manage and pay off your existing debt. There are many different strategies, tactics and approaches that can help you chip away at your total debt amount before you even formulate a repayment plan. For example: if you currently pay monthly or quarterly utility bills, contact your provider(s) and negotiate a more manageable payment plan. If you show that you are being proactive, they will be more inclined to work with you.

Another way to make your debt more manageable right off the bat is via loan modification. If you can get the monthly payment reduced on one or more of your largest debts, your jumping off point will be much more advantageous. Additionally, you may want to explore settling a debt through a lump-sum payment.

As you create your debt resolution plan, you should employ (at the very minimum), the four following strategies:

1. Prioritize the debts that need to be paid off first.

Primarily, you want to consider the interest rate. Eliminating debts with a higher interest rate first will reduce your overall amount of debt faster. If the interest rates on all of your debts are all similar, you could choose to pay off the debt with the smallest balance first to give yourself a goal that is achievable.

2. Pay your bills on time each month.

By doing this, you’ll not only boost your credit score and keep your account in good standing, but also sidestep the possibility of having to make late payments, which will increase the amount of money you have to pay out.

3. Pay something, even if you can’t make the minimum payment.

Sometimes it’s a reality that you may not be able to pay the full bill on time or even the minimum payment. If this is a temporary situation, call your creditor and tell them how much you can pay that month. Paying even the smallest amount is putting forth a good faith effort that many creditors will look upon favorably. This doesn’t actually decrease your amount of debt, but it can sometimes buy you a month without late fees as long as you reach out to the creditor and explain your situation.

4. Create a monthly payment calendar.

This will give you a better idea of how and where to allot each paycheck. If your paychecks fall on the same day each month, for example the 1st and 15th, you can keep the same calendar from month to month. If payday varies for you, we suggest making a new calendar every month until your debt is under control – and even beyond.

If this all seems like more than you can manage, consider working with a professional. Many people balk at the idea of a debt-relief attorney because they don’t want to be “coerced” into filing for bankruptcy. However, in the same way that physicians don’t treat every patient with a one-size-fits-all remedy, attorneys don’t nurture financial health with a blanket answer.

Our goal at Veitengruber Law is not to see how many people we can get to file for NJ bankruptcy! Rather, we take the time to formulate an individualized plan for each and every client, particularly when they’re seeking advice for running a household or business. With this goal in mind, we will strive to restore your financial health to its optimum function. We have significant experience in dealing with creditors to negotiate debt resolutions other than bankruptcy. We will, however, give you our honest opinion if filing for bankruptcy truly is your best option. Call, email or FB message us today – let us know where you are in your debt struggle, and we’ll get started formulating a plan post-haste.

5 Mistakes to Avoid After NJ Bankruptcy

NJ bankruptcy

After your NJ bankruptcy, a common concern is how to re-establish your credit score. The real challenge is creating new financial habits so you don’t find yourself back in the same hole all over again. At Veitengruber Law, our holistic approach to financial health means our job doesn’t end after the bankruptcy is closed. We work with you to repair your credit and create healthier financial habits.

 

Top Mistakes to Avoid After a Bankruptcy Discharge:

 

1 – Ignoring your credit report

When rebuilding your credit subsequent to a bankruptcy discharge or reorganization, you will want to be very attentive to your credit report. Your creditors are supposed to report any discharged debts included in the bankruptcy to the credit bureaus. These reports should show a zero balance and include a note indicating the debt has been discharged. It is crucial to follow-up on this and ensure that all creditors are reporting to credit bureaus correctly. If discharged debt is being wrongly reported—as either a charge-off or an open account—late or missed payments can continue to show up on your credit. This can further damage your score and make it more difficult for you to get new credit.

2 – Applying for multiple new credit lines

It can be tempting after bankruptcy to rush out and apply for a gaggle of credit cards or loans in an attempt to quickly repair credit. However, it is important to give your credit score time to rebound before applying for new credit. The impact of a bankruptcy is strongest in the first year after filing, although it can stay on (and affect) your credit report for up to ten years. Instead of rushing into opening several credit lines at once, be patient and take the time to research your best options.

3 – Failing to read the fine print

When you do start applying for credit cards, it is important to remember that not all credit cards are created equally. Some credit cards will be more helpful to those rebuilding post-bankruptcy. A secured card, for instance, allows you to deposit cash as collateral up front to create a line of credit. That way, you are not able to charge more than your initial deposit. With any card you choose, it is important to read the fine print of your terms to make sure the card will work in your favor.

4 – Falling for credit repair scams

Many unethical “credit repair companies” make big promises about performing miracles to improve credit scores, but they rarely ever deliver the results promised. These companies rely on misinformation to scam those that don’t know much about how credit works. Some of their tactics may even be illegal. Keep in mind that if something seems too good to be true, it probably is.

5 – Making things too complicated

Ultimately, when it comes to rebuilding your credit after bankruptcy, you need to go back to the basics. What bad habits caused you to file for bankruptcy in the first place? An unflinching assessment of your spending habits will help you determine which factors led to the bankruptcy and determine where you need to make changes. Figure out what your credit-bingeing triggers are and work toward setting spending limits for yourself. Simple things like making on time payments, keeping debt to a minimum, and sticking to a healthy budget are excellent foundations of any financial strategy and will get you on the road to financial health quickly.

You’ve been through the hard-fought financial battle of bankruptcy and come out victorious on the other side. Now is the time to think positively about your financial future. Rebuilding your credit after bankruptcy takes time and patience, but you can use the knowledge and financial savvy you’ve learned along the way to move forward to a brighter future. Veitengruber Law is here to help. We are skilled in advising clients and creating easy-to-follow strategies to rebuild credit. Call for your free consultation today.

Bankruptcy Balderdash Basics: Know the Lingo

bankruptcyNew Jersey is a great place to live. We have mountains and beaches and lakes, great sports teams, attraction such as Six Flags and Atlantic City, and we are conveniently close to Manhattan and Philadelphia. That being said, we also have one of the highest costs of living in the nation. That amounts to our residents having more debt than most of the country. Average credit card debt is the second highest in the US, and don’t forget student loan debt, higher property taxes and longer commutes. All of these factors contributed to nearly 27,000 NJ residents filing for bankruptcy between October 2017 and September 2018.

 


Just the word BANKRUPTCY can loom large. It’s without a doubt a very overwhelming concept to contemplate.


 

Ultimately, though, the process can provide help on many fronts such as relief from hounding creditors, stress, and uncertainty. Bankruptcy is a complicated process, and you should avoid trying to navigate it without a consummate professional by your side.

 

Going into your first consultation with a debt management attorney can feel almost as daunting as the bankruptcy process itself. Chapter 7, Chapter 13, Chapter what?! Trustees, claim forms …. before you know it, you’re swimming in jargon. Veitengruber Law wants you to feel at ease from the very beginning. Alleviate some of that apprehension by understanding the bankruptcy balderdash and get to know the lingo.

 

Chapter 7 Bankruptcy – Also known as a straight bankruptcy, it provides protection from creditors to individuals (or companies) who legally file for bankruptcy, providing for sale of certain assets to pay debts. Only certain possessions, up to specific dollar limits, can be kept when you file for Chapter 7. It’s an option for people with limited income. Chapter 7 is basically a liquidation of most of your assets – the proceeds of which are divided up among your creditors. Then, any remaining debt is “forgiven,” and you financially start anew with a clean slate. Keep in mind that you will be debt free at the end of the process, but the bankruptcy will remain on your credit report, making you a high credit risk for the next 10 years. That may be a more desirable outcome than drowning in debt, but you have to consult with legal counsel to have your personal circumstance evaluated.

 

Chapter 11 Bankruptcy – a reorganization bankruptcy, similar to Chapter 13, but used primarily by businesses and corporations.

 

Chapter 13 Bankruptcy – This option allows you to keep key assets such as your primary residence and your vehicle. Under this plan, the court gives you a repayment plan to satisfy your debts.  You’ll have between 3 and 5 years to pay off that debt by sticking to the plan. You are expected to keep to the repayment plan and be current with all of your debts through the end of the plan. A Chapter 13 bankruptcy stays on your credit report for 7 years.

 

Exemption rules – New Jersey has its own set of exemptions that you may use when filing for Chapter 7 or Chapter 13 bankruptcy. Exemptions determine what property (such as a residence, vehicle, retirement accounts, etc.) you may keep in a Chapter 7 bankruptcy, and how much you must pay to certain creditors in a Chapter 13 bankruptcy. You may use either the NJ state exemptions or the federal bankruptcy exemptions. You are not allowed to mix and match from both lists. If you choose to use the New Jersey state exemptions, you may also use any applicable amounts in the federal non-bankruptcy exemptions. Unless noted otherwise, if a couple is married and filing jointly in New Jersey, each spouse may claim the full amount of each exemption. The lingo for that is “doubling.” (You can see how it gets complicated quickly, and why it is vital to have expert counsel to guide you.)

 

Examples of New Jersey exemptions: burial plots, household goods up to $1,000, stocks valued up to $1,000, pensions, certain life insurance proceeds, some disability and health benefits.

 

Examples of Federal exemptions: homestead, jewelry up to $1,600, health aids, lost earnings payments, public benefits, alimony and child support.

 


This is by no means an exhaustive list, and each exemption has caveats, so be sure to discuss the best option for you with your legal counsel.


 

Proof of Claim – a form that creditors file with the court to prove that they have a valid claim against the bankruptcy estate. Before a creditor can get paid through your bankruptcy, they must file a proof of claim. When you file for bankruptcy, all creditors listed in your schedules receive notice of your case as well as a deadline to file their proof of claim. If a creditor doesn’t file a proof of claim, they can’t get paid through your bankruptcy. The debtor can also file a proof of claim on behalf of a creditor who has not done so on their own. This usually happens if the debtor specifically wants to pay that creditor through the bankruptcy. (Proof of claims must contain certain requirements, and are not always required in certain types of Chapter 7, so if you are in doubt, consult with an expert.)

 

Repayment Plan (Chapter 13 only) – a plan which lasts from three to five years, whereby you pay off some debts in full; other types of debts are paid in full or part depending on how much disposable income you have. Putting together a plan that the court will confirm, with the assistance of counsel, is key to your Chapter 13 bankruptcy’s success.

 

Trustee – a person appointed by the court to administer and oversee your case. The trustee reviews your bankruptcy paperwork (and supporting documents) to gauge accuracy in your petition. In a Chapter 7 bankruptcy filing, the trustee’s primary responsibility is to find and sell your nonexempt property to pay back your creditors. In a Chapter 13, the trustee does not sell your assets but reviews your repayment plan to make sure it is both realistic for you and fair to your creditors. After approval by both the trustee and the court, you make one monthly payment to the trustee, and he or she distributes your monthly payments to your creditors pursuant to your plan. Depending on your situation and the type of bankruptcy you file, you may also be required to attend certain hearings, in which your trustee will preside, before your case is completed. These can include: Confirmation Hearing, Meeting of Creditors, Reaffirmation Hearing, Hearing on Creditor’s Motion, and others.

 

Automatic Stay – the simple request for bankruptcy protection automatically halts most lawsuits, repossessions, foreclosures, evictions, garnishments, attachments, utility shut-offs, and debt collection activity, by way of injunction. There are numerous provisions and exceptions to the automatic stay.

 

Credit Counseling – required before a debtor may obtain bankruptcy relief under either Chapter 7 or Chapter 13. It involves education in personal financial management, and an overall assessment of your financial situation to see if bankruptcy is your only option. The process is used to help individual debtors with debt settlement through education, budgeting and the use of a variety of tools with the goal to reduce and ultimately eliminate debt, rather than discharge it through the court.

 

As you can see, there are a lot of choices to be made, and even more questions to answer. Don’t risk a misstep that could affect your entire financial future.  Call Veitengruber Law today for your free consultation.

 

The Ins and Outs of Chapter 7 Bankruptcy in New Jersey

chapter 7 bankruptcy in new jersey

Chapter 7 bankruptcy in New Jersey is designed to allow a debtor to liquidate their debts if they are unable to repay their debts. If you are overwhelmed by personal debt and have not filed for Chapter 7 bankruptcy within the past eight years, read on to find out if Chapter 7 bankruptcy might be the first step toward regaining financial health and freedom.

Who qualifies for Chapter 7 bankruptcy?

You must meet the following criteria to be eligible to file Ch. 7:

  • Your income must be lower than the median income in New Jersey. This is called the means test.
  • Your debts, excepting those that are non-dischargeable under any conditions (examples include income tax debt, unpaid child support, student loans, and alimony), can all be erased under Chapter 7. If the majority of your debt is dischargeable, Chapter 7 may be right for you.
  • You must undergo credit counseling. This counseling cannot be obtained more than 180 days prior to filing your petition.

Do I need an attorney’s help filing?

It is extremely important that your filing paperwork be entirely truthful and accurate. Unfortunately, debtors often make mistakes on their Schedule I form.

Schedule I is the form that you’ll fill out listing all of your income, including your spouse’s income and income from any and all other sources. Making a single significant error on this form will result in the immediate dismissal of your case.

It should go without saying that falsifying your bankruptcy paperwork intentionally carries penalties up to and including time in prison. Working openly and honestly with a qualified attorney will guarantee that your Schedule I paperwork is correct and truthful. Under no circumstances should you attempt to hide a source of income from your bankruptcy attorney.

How will filing Chapter 7 help me?

While any of the aforementioned non-dischargeable debts will remain your responsibility, the majority of debts will be erased. You will not owe creditors anything further.

What will happen to my major assets?

If your spouse owns your home jointly, or if you have kept current on your mortgage payments despite your financial situation, you may qualify to keep your home. Unless you can definitively prove you need your car or truck for your job, your vehicle may be repossessed to contribute to the repayment of your debts.

Once you’ve obtained credit counseling, you can file a petition for bankruptcy with the court. A trustee will then be appointed to you. You will be required to surrender all of your nonexempt assets and divide the proceeds amongst your creditors.

What are my options if filing Chapter 7 doesn’t provide me enough debt relief?

Sometimes even after a Ch. 7 discharge of debts is granted, you may still have a burdensome level of non-dischargeable debt remaining. While bankruptcy law has filing limits intended to prevent debtors from abusing the system and persisting in irresponsible financial habits, you ARE permitted to file for Chapter 13 if you are doing so in order to make your remaining debt manageable. While the result will not be a significant reduction in the amount of money you owe, your attorney will negotiate favorable repayment terms so that you will not be crushed by your debts.

Additionally, filing for Chapter 13 after you’ve filed for Chapter 7 will prevent your creditors and lenders from garnishing your wages, foreclosing your home, or repossessing your vehicle. Consult with your NJ bankruptcy attorney if you have been attempting to pay your debts for at least one month after your Chapter 7 has been granted and you are still struggling to make ends meet.

Planning a Wedding After You’ve Declared Bankruptcy

bankruptcy

Planning a wedding is a time of excitement and joy, but it can also be a time of significant stress. With the average wedding costing upwards of $25,000.00 in 2017, planning and paying for a wedding can be overwhelming for even the most financially stable couple. For couples going through bankruptcy, affording a wedding can seem nearly impossible. It is important to understand how bankruptcy will affect your ability to pay for a wedding, but also how it will affect the overall financial health of you and your future spouse. Fortunately, with the right planning you can still have the wedding of your dreams, even after declaring bankruptcy.

Financial stress is the leading cause of divorce, so it is important to get a handle on your finances before you decide to tie the knot. In declaring bankruptcy, you’ve taken the first step towards managing your debt to ensure a brighter financial future for you and your spouse. Keep in mind that bankruptcy exemptions are very specific and none of them cover expenses associated with a wedding. Because of this, and the potential stress and uncertainly that comes with bankruptcy proceedings, it is advisable to wait to plan a wedding until after a bankruptcy claim has been fully closed. That way, you can start married life with a clean financial slate.

Open communication and honesty about your financial history is very important as you plan your wedding. Whether you have liquidated your assets to eliminate your debt (Chapter 7) or reorganized your payments to creditors (Chapter 13), after declaring bankruptcy you will be able to get a good understanding of your new financial situation. Sit down with your future spouse and create a detailed budget including your income, expenses, and your expected payments to creditors if you have a Chapter 13 bankruptcy repayment plan. Figure out how much you plan on spending on your wedding and create a detailed wedding budget. Keep in mind that post-bankruptcy, it may be harder to obtain a loan to finance wedding purchases. Cut costs where you can so you can focus your financial resources on the aspects of your special day you couldn’t imagine going without.

It is also important to understand how a bankruptcy can affect your new spouse after you say I do. Contrary to popular belief, your credit—even if you have declared bankruptcy—will not directly affect the credit of a future spouse. Every person has their own credit score and these scores are not combined after marriage. However, bankruptcy may affect your future spouse in indirect ways. The only time a declaration of bankruptcy will affect a future spouse is when you apply for credit as joint account holders (like applying for a mortgage) OR when adding a spouse to an existing line of credit. It may become more difficult for you and your spouse to acquire joint loans, or you may have to pay higher interest rates on those joint loans.

Filing for bankruptcy can be a difficult and complicated process, but it doesn’t have to be. Don’t let bankruptcy get in the way of your happily-ever-after. Contact the qualified legal team at Veitengruber Law help you plan your debt free future.

How Does Inheritance Income Affect NJ Bankruptcy Rulings?

NJ bankruptcy

When preparing to file for NJ bankruptcy, it is very important to take a full and detailed account of all of your assets. This does not just include current assets, but future assets as well, e.g. any potential inheritances. Knowing how your inheritance income affects bankruptcy filings in New Jersey is important to understanding your rights while filing for bankruptcy.

You may have advanced notice of an inheritance if you are aware of your inclusion as a beneficiary in a will. Otherwise, an inheritance could come as a surprise. You could be included in a will without your prior knowledge or you could receive the inheritance through normal operation of law in the event that there was no will at the time of death. Regardless of how you came to receive the inheritance, it is important to understand if the inheritance income is part of your bankruptcy estate or not so you can make sound financial decisions.

Typically, after bankruptcy is declared, all assets and liabilities become part of the bankruptcy estate. The bankruptcy estate is then administered by a bankruptcy trustee. There are four ways to file for bankruptcy in NJ, but most bankruptcy claims fall under Chapter 7 or Chapter 13. Under Chapter 7, the trustee is responsible for determining which assets the debtor can liquidate (sell) to pay their creditors. Under Chapter 13, the debtor is not required to give up personal property in order to pay off debts. Instead, the debtor will be required to make monthly payments that will be split between all of their creditors. How much a debtor pays under the Chapter 13 payment plan will depend on the amount of non-exempt interest in real and personal property.

That being said, there are certain exemptions when it comes to whether or not an inheritance will be included in the bankruptcy estate. Debtors are entitled by law to exempt a certain amount of property from their bankruptcy filing. Under Chapter 7, a debtor is entitled to keep some specified property from being liquidated to pay creditors. Under Chapter 13, a certain amount of the debtors’ assets can be exempt from inclusion in determining a payment plan. There are different exemption amounts depending on the type of asset in question. Congress periodically makes changes to these amounts to account for changes in inflation so it is important to keep up with these changes. While there is no separate exemption for inheritances, debtors can include any inheritance income under their designated “wildcard exemption” (11 U.S.C. §522(d)(5)).

Is your inheritance eligible to be included in your bankruptcy estate?

All assets owned at the time of filing are part of the bankruptcy estate. Pursuant to NJ bankruptcy laws, property of the estate includes “all legal or equitable interests of the debtor in property as of the commencement of the case.” The timing of when an inheritance becomes part of a bankruptcy estate is crucial to understand and varies depending on what kind of bankruptcy the debtor is filing.

Under Chapter 7 bankruptcy, an inheritance is considered part of the bankruptcy estate if the debtor becomes entitled to the asset within 180 days of the date bankruptcy was filed. This is to include property which the debtor becomes entitled to acquire by inheritance. The 180 days starts the day bankruptcy is filed and ends with the date of death. The time frame in which the debtor receives the inheritance does not matter. The date of death is legally considered the date on which the inheritance enters into the debtor’s possession and therefore enters into the bankruptcy estate. This is to deter preemptive bankruptcy filings where the debtor intends to rush a bankruptcy claim in order to avoid having the inheritance affected.

Under Chapter 13 bankruptcy, any inheritance received after the bankruptcy filing date but before the case is closed or dismissed is considered property of the bankruptcy estate, regardless of the time it takes to close a case. Under Chapter 13, there are specific legal statutes designed to expand what is considered bankruptcy estate property in order to include inheritance that is acquired beyond the 180-day limitation observed under Chapter 7. Any inheritance acquired during the entirety of the bankruptcy case will be subject to the terms of the repayment plan.

It is essential in any bankruptcy case to determine which assets are protected and to acquire adequate pre-filing planning and analysis for your specific bankruptcy case. Whether you need to eliminate your debt in its entirety under Chapter 7 or you need to reorganize your payments to creditors under Chapter 13, the qualified and experienced attorneys at Veitengruber Law are here to help. If you are unsure of your rights, please call us for a consultation.

Top 5 New Jersey Bankruptcy Myths, Busted

New Jersey bankruptcy

Do you find yourself questioning the truth of the latest snippets of gossip you hear on the news? You’re not the only one, especially since many bits of information we hear travel through a variety of sources before reaching us. There’s no doubt that you hear and read financial updates or facts on the news, radio, newspaper, online, etc. How do you know what to believe?

The news media is always informing the public about foreclosure, bankruptcy, real estate matters, and many other points that can be relevant to the average person. The word “bankrupt” is becoming more common in our vocabulary today, but the bottom line is that there are numerous myths about bankruptcy. Whether or not you have faced bankruptcy in your personal life or you know someone that has, debunking these myths could be useful for you; you never know when they might come in handy.

Myth #1: Every possession will be taken away from you.

Fact: Good news: every state has laws to protect you, though they do vary from state to state. The laws that we’re talking about are called exemptions, which protect your home, family heirlooms, car, and retirement savings. It’s possible to file for Chapter 13 bankruptcy, which involves a repayment plan, in the case that you have more equity in your home than what is protected by the exemptions. Because of these laws, the debtor is entitled to retain most of his property, furniture, a decent amount of jewelry, and some money. You won’t lose all of your possessions if you file for bankruptcy.

Myth #2: Filing for bankruptcy will damage your credit for at least 10 years.

Fact: This is completely false. It’s important to distinguish that having bankruptcy on your credit report for 10 years doesn’t necessarily mean that it will have a totally negative effect. Not all things reported on your credit report are considered bad. Interestingly enough, our clients’ credit scores usually increase after filing for bankruptcy. Normally, a person will be able to re-establish their credit score within two to four years after filing. If this is not happening for you, you may be working with the wrong debt resolution specialist!

Myth #3: You can decide to list only the debt you want to eliminate when filing for bankruptcy.

Fact: Actually all debts must be included. It’s not your choice to dismiss a creditor just because you plan on continuing to pay their bill. You are able to make voluntary payments to family or medical service providers if you choose. Once your case has been dismissed, you can continue to pay off your debts.

Myth #4: Everyone will know that you filed for bankruptcy.

Fact: Yes, bankruptcy is a public record, and anyone could search your history, but the amount of filings each month is so large. Most likely, no one is going to find out that you’ve filed for bankruptcy. Obviously, celebrity bankruptcy filings are big news; we always see them in the media. Let’s think back, though: when is the last time you researched who filed for bankruptcy in your neighborhood?

Myth #5: Being married means both you and your spouse will have to file.

Fact: If both the husband and wife are in debt, then yes, it would be smart for both of them to file. There is no legal mandate that both spouses have to file. If you don’t have any joint debt, then there is no need for your spouse to file either. On the other hand, if both spouses need to file, they should do it jointly to avoid paying two fees.

If you have questions that haven’t been answered herein, please call us so we can help you further understand the NJ bankruptcy process.