Category Archives: credit cards

Exploring New Jersey Debt Adjusters as an Alternative to Bankruptcy

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In New Jersey, individuals or companies that offer debt adjustment services must be licensed as Debt Adjusters by the New Jersey Department of Banking and Insurance (DOBI). Debt adjustment services typically involve negotiating with creditors on behalf of a debtor to create a debt management plan or arrange for the repayment of debt.

If you’re considering working with a debt adjuster in New Jersey, it’s essential to ensure they are properly licensed and regulated. Here’s how to verify their licensing status:

  1. Check the New Jersey Department of Banking and Insurance: You can visit the official website of the New Jersey Department of Banking and Insurance and find licensed debt adjusters. Scroll down past the mortgage-oriented ones to find the organizations that help with non-mortgage debt.
  2. Ask for the License Number: If you are in doubt as to whether a debt consolidation or debt adjuster company is licensed, ask for their New Jersey Debt Adjuster license number. This number can be used to verify their status with the DOBI.
  3. Verify Their Credentials: Contact the New Jersey Department of Banking and Insurance directly to confirm the status of the debt adjuster’s license. You can do this through the contact information provided on the department’s official website.

It’s important to work with a licensed debt adjuster in New Jersey to ensure that you are protected and that the individual or company is operating within the bounds of the law. Be cautious of any debt adjustment services that operate without the required license or that make promises that sound too good to be true. Always research and consider all your options carefully before entering into any agreement related to debt management or adjustment.

If debt adjusters tell you that you cannot afford to settle your debts, you might consider bankruptcy. Schedule a free bankruptcy consultation with Jennifer Weil, a New Jersey bankruptcy attorney, to discuss your options.

Retirement Funds vs Bankruptcy: The Better Option for Paying Off Credit Card Debt

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If you’re struggling with credit card debt, you may be considering withdrawing funds from your 401(k) account to pay it off. However, this may not be the best decision for your long-term financial stability. Bankruptcy may be a better option. Here’s why:

  1. Early withdrawal penalties and taxes – If you withdraw funds from your 401(k) account before age 59 and a half, you’ll face a 10% early withdrawal penalty, as well as taxes on the amount you withdraw. This can significantly reduce the amount of money you’ll have available to pay off your debt.
  2. Loss of future savings – When you withdraw funds from your 401(k) account, you’re reducing the amount of money you’ll have available for retirement. This can have a significant impact on your future financial stability, especially if you’re still years away from retirement.
  3. Credit card debt may be dischargeable in bankruptcy – Credit card debt is often dischargeable in bankruptcy, which means that you won’t have to pay it back. This is a significant advantage over withdrawing funds from your 401(k) account, where you’ll still be responsible for paying back the debt.
  4. Bankruptcy can stop harassing debt collectors – If you’re being hounded by debt collectors, bankruptcy can stop the harassment. This can be a major relief and can give you peace of mind as you work to get your finances back on track.
  5. Bankruptcy can help improve your credit score – While a bankruptcy will stay on your credit report for 7-10 years, it can actually help improve your credit score over time. This is because bankruptcy eliminates most of your debt, allowing you to start making positive changes to your financial situation.

In conclusion, while withdrawing funds from your 401(k) account may seem like a quick solution to your credit card debt, it can have significant long-term consequences. Bankruptcy, on the other hand, can help eliminate your debt, stop debt collector harassment, and improve your credit score over time. If you’re struggling with credit card debt, it’s important to consider all of your options, including bankruptcy, before making a decision.

Click here to schedule your own free bankruptcy phone consultation.

Should You Use Your 401(k) to Pay Off Credit Card Debt? The Truth About Retirement Savings and Debt Relief

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Are you considering using your 401(k) to pay off credit card debt? While some financial experts may suggest this as a solution, it is not always the best option. In many cases, using your retirement savings to pay off credit card debt can have negative consequences and end up depriving future you of the funds you will need for basic living expenses after retirement.

Is it a good idea to use your 401(k) to pay credit card debt?

Your 401(k) contains the money that you will need in order to live after retirement.

Instead, bankruptcy may be a better, cheaper solution for those who cannot afford to pay back their debts. In New Jersey, bankruptcy laws allow individuals to keep their 401(k) money untouched throughout the process. This means that, with the help of a bankruptcy attorney, you can achieve debt relief and protect your retirement savings at the same time.

It is important to carefully consider your financial situation and weigh the costs and benefits of each option before making a decision. Dipping into your 401(k) may seem like a quick fix, but it can have long-term consequences. Bankruptcy, on the other hand, is a solution proposed by Federal law for individuals who cannot afford to pay back their debts.

In conclusion, if you are struggling with credit card debt, it is best to consider bankruptcy as a solution before using your 401(k) to pay off your debts. With the help of a bankruptcy attorney, you can achieve debt relief, protect your retirement savings, and start fresh towards a financially stable future.

Not sure if bankruptcy is right for you? Well, it’s not right for everyone, but it’s a great solution for a lot of people. Schedule a free telephone appointment to discuss your unique debt situation with attorney Jennifer Weil at my Setmore page.

How To Rebuild Your Credit After Bankruptcy

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What’s the best way to rebuild my credit after my bankruptcy case is over? Many people are afraid to file for bankruptcy due to the perceived impact on their credit. Truth be told, a lot of people who need bankruptcy already have bad credit and a bankruptcy isn’t going to worsen their credit that much more.

The real reason that people fear credit damage through bankruptcy is that they are afraid of permanent, or semi-permanent, credit damage because a bankruptcy stays on your credit report for ten (10) years. When someone hears that a bankruptcy filing stays on their credit reports for 10 years, they think that the record of their bankruptcy filing is somehow going to outweigh anything good that could happen to their credit after the bankruptcy.

In my experience and in my clients’ experience, bankruptcy does not permanently damage credit. The is an immediate impact to a credit score – a bottoming out, if you will – but if you play your (credit) cards right, there’s nowhere for your credit to go but up after a bankruptcy. There are effective steps that you should take to deliberately improve your credit after bankruptcy.

What You Shouldn’t Do After Bankruptcy

First, you should be aware of some things to avoid after bankruptcy:

  • Don’t overuse new credit cards;
  • Don’t take out business loans you can’t pay;
  • Don’t ignore new credit card offers; and
  • Don’t pay too much in credit card fees.

Believe it or not, there are things that you can do to your credit after bankruptcy that will only make your credit reports look worse, or that will inhibit your ability to rebuild good credit after bankruptcy.

Don’t overuse new credit cards: Most of my clients are pleasantly surprised that they can qualify for new credit card accounts after their bankruptcy case has ended, since they previously believed that they would never qualify for another credit card. But be aware that you don’t want to start charging up your new credit cards to their limit. Instead, only charge a monthly amount that you can easily afford to pay back.

Don’t take out business loans you can’t pay: This is a tough one, because most people want to get on with rebuilding their financial lives as soon as possible after bankruptcy, which includes building their business back to financial health. And it can be hard to know what you might be able to afford to repay. This is where good accounting help or financial advising is invaluable. Ask around for advise from people whose financial judgment you trust; is your business really pulling down the amounts of money that will enable you to repay a business loan? Be a penny-pincher for awhile. Build the business on a shoestring. It’ll give you the opportunity to test the waters and see if your business can stay afloat.

An interesting thing about business loans, or even business credit cards, is that they don’t always report to your personal credit reports. So you might consider business loans to be a net neutral when it comes to your credit. But remember, we are talking about your overall financial health, which your credit reports reflect – if you dig in too deep with business loans that you can’t afford, it’s likely to impact your personal financial health, which is likely to negatively impact your personal credit over time.

Don’t ignore new credit card offers: If you don’t care about rebuilding your credit and you’ve decided that you don’t like banks, then go ahead and ignore the new credit card offers that come your way after bankruptcy – your credit will stagnate. But if you want better credit, you have to work for it, and that means taking out new credit cards.

Don’t pay too much in credit card fees: If you don’t need to pay fees for something, don’t. For many people, annual fees just add on to credit-card debt, making it that much harder to pay.

What You Should Do After Bankruptcy

As you may have figured out by now, the best and fastest way to rebuild a good credit record after bankruptcy is to take out new credit-card accounts. Paying off the full credit-card balance on time each and every month is the safest and most effective way to accomplish improved credit. Only charge the amount that you can easily pay off in full at the end of every month.

After you’ve done this for a few months, pull your credit report from annualcreditreport.com and make sure that this new credit card account – and your monthly payments – are being reported. This is the goal of building new credit: To have positive, in-good-standing accounts consistently reported on your credit reports. If it’s not reporting to your credit, don’t continue to use it and try again with a new account.

Remember, debit card usage will not count as a credit account for credit reporting purposes. It needs to be a credit-card account. You can try a secured card, if that’s the best kind of card account for which you can qualify. Just make sure that you keep enough in the bank account to which the card is linked to pay off the card account in full without overdrawing your bank account.

If you are careful and you pay attention to what you are doing, your credit should improve over time. As you qualify for new and better credit offers, you should take the ones that look best to you (think no, or low, annual fees and higher credit limits). Switch your charging – and your paying off the full balance every month – over to the new account to continue rebuilding your credit. Higher limit cards tend to “look better” on your credit report.

Check Your Income

Obviously, before you take out new credit, you should make sure that you are in a position to be able to afford to pay off any credit card balance in full each and every month. That means you need a source of regular income that can first pay your regular monthly bills – rent, electric, food, etc. – and leave enough money left over to pay your credit card account in full.

Do not put the cart before the horse and get all worried about rebuilding your credit before you have enough income to do so! Worry first about employment and then about credit. Most job fields do not care that you have bad credit before they hire you. There are a few fields where employers do care about bad credit, and it’s highly likely that you’ll know for sure if you are in one of those fields.

If you need to discuss issues with a bankruptcy attorney, schedule a free bankruptcy phone consultation with attorney Jennifer N. Weil through her Setmore page.

Avoid using credit cards before bankruptcy

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Using credit cards to buy holiday gifts could mean that you will have to pay back those credit charges if you file for bankruptcy. This is a possibility even if you intended to pay on the cards when you made those purchases.

The Bankruptcy Code has specific rules about the consequences of using credit to buy “luxury goods or services” during the months before a bankruptcy filing.  One rule is that if you use a credit card—or any other type of consumer credit—to buy more than $500 of consumer “luxury goods or services” through a single creditor within the 90 days before filing bankruptcy, a “presumption” is created that this debt is not dischargeable in bankruptcy.

Don’t let the word “luxury” deceive you – it is used to mean anything not “reasonably necessary” to support you or your dependents. Anything not used for survival is arguably not reasonably necessary. Even modest holiday gifts could be considered luxuries under this rule.

Another, similar rule applies to cash advances, except that the trigger dollar amount is $750 per creditor, and the period of time is within 70 days before filing bankruptcy, with the same presumption that the debt would not be dischargeable.

While it is true that such presumptions can be defeated, it is not likely in practice. This is because coming up with the evidence necessary to overcome the presumption (you’d have to prove that you intended to pay the money back at the time you borrowed it) is usually not easy. And the high cost of showing the evidence to the court during a separate proceeding normally makes trying to do so not worthwhile. The attorney fees it would cost you to fight the issue would likely be more than the original amount you’re fighting over.

The bottom line is that if  you use consumer credit exceeding these dollar limits this holiday season and then file bankruptcy within the applicable 70 and 90-day periods, you will most likely have to pay for whatever credit charges you incurred during those periods. You can avoid these presumptions by waiting to file the bankruptcy until after those time periods have passed, but that isn’t always possible due to pending wage garnishments or other types of judgment execution. And even if you do wait, the creditor can still try to show that you had a bad intention when you made these credit charges. It’s best to just avoid the problem altogether by not using your credit cards or other lines of credit when there’s even an outside chance that you might need to file for bankruptcy.

Got debt problems? Call (201) 676-0722.

I owe a debt and got sued . . . What now?!?!

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4004808621_835e1114cc_zTime is money – When you owe a debt and you get sued, a fast timer starts that you can’t afford to ignore. If you want to keep control over your own money, you need to act fast. That means you can’t afford to sit on your hands.

Here are the realities: #1: Most credit-card companies don’t sue very quickly. So if you’re being sued, it means you’re in pretty serious financial trouble. Most bad debts don’t stay with the credit-card companies, but are sold off to collection agencies at rock-bottom prices. The collection agency then hounds you to pay up. Since they paid so little for your debt, any money they squeeze out of you is pure profit to them.

Here’s how it works: Whether or not the collection agency sues you depends on its business model – Some collection agencies file lawsuits all the time and some don’t. One collection agency might try to shake you down for money, but if you don’t pay up, they’ll sell off your debt to another collection agency, which might turn around and sue you in court. Most of these debt-collection lawsuits are pretty profitable for the debt collector because most people don’t show up in court. That’s how they take your money – when you don’t show up in court, the debt collector gets a judgment against you. After the debt collector gets a judgment against you, the court will give them permission to garnish your wages or to take money straight out of your bank account.

#2: When you get sued by a collection agency, give them a run for their money. If you up the ante by making them do work instead of just getting a quick judgment, there’s a good chance that you’ll come out ahead. Collection agencies are not stupid. They know that their profit lies in doing as little work as possible for as much money as possible – your money. A collection agency that makes too many wrong bets will soon be out of business. The ones that are in business know what they’re doing. The collector counts on you to put your head in the sand and to ignore the lawsuit so that it can get a quick judgment against you. You can beat them at their game by protecting yourself BEFORE they get their judgment. Don’t let the debt collector catch you with your pants down!

#3: Once you receive a lawsuit, you don’t have much time! If you don’t respond in time, you lose. I know what you’re saying – “I owe the debt! How could I win?” Even if you end up paying something on the debt, the difference between NOT responding to the lawsuit and responding means the difference between NOT controlling your own money (if you don’t respond) and keeping control over your own money (if you do respond). Do you ant the debt collector dipping their hand into your checking account or not?  If not, give me a call!  I can help you keep control over your own money by defending the lawsuit and/or negotiating a beneficial settlement for you.

Call attorney Jennifer Weil now at (201) 676-0722.

 

 

 

Film Review of Spent: Looking For Change

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A recent documentary available on YouTube highlights the high cost of being poor.  Spent: Looking For Change, a film sponsored by American Express, explores the financial lives of people who lack access to banks or who have bad credit or no credit.  Here is a basic summary of the important topics covered:

According to the film, approximately 70 million Americans lack access to the traditional financial system.

Why don’t these people have access to banks or to credit?  For a variety of reasons – medical problems resulted in lost income, bad financial decisions were made, etc.  Then bank accounts were overdrawn and eventually closed.  Once debts have gone unpaid, credit gets ruined and it’s hard to fix, even where there is currently a good income and all monthly bills are being paid.  Where a person has large student loans relative to their income, their credit is weakened.  Or those who have never had a credit card or taken out a loan are invisible to the credit reporting agencies and have no available credit.

When people lack access to the traditional financial system, they often turn to check cashing businesses, payday loans, and title loans in order to make ends meet.  These types of financial products cost more in fees and interest than traditional products.  The film tells us that Americans spend about $89 billion a year on fees and interest.

When people don’t have a bank account or a debit card, they must physically go around and pay monthly bills, which costs a lot in terms of gas and time.  Even prepaid debit cards that are funded with cash carry large costs in fees charged for buying and using the card.

People turn to payday loans, which are designed to be paid back on the next paycheck; and title loans, which are loans that use your car for collateral.  If you don’t pay the loan, they take your car.  Many will pay the fee over time instead of paying the original loan off because they can’t afford it.  The original loan is never paid off.

My take on the film is that it is a good overview of how financial products that are designed to take advantage of poor people actually set them farther and farther back.  It’s worth watching because it’s an unbiased presentation of a lot of information in only about 40 minutes.

 

How to stop using your credit card for holiday gift-giving

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If you are thinking about filing for bankruptcy, do not accumulate any credit card debt for holiday gifts. Otherwise you may run into trouble over what debts are dischargeable in your case.  Instead, come up with thoughtful ways to express your love and appreciation for your loved ones that do not involve spending a lot of money on gifts this holiday season.

When money is tight, financial anxiety can cloud the holidays, making the temptation to use credit cards nearly irresistible. We live in a rather materialistic culture, so when we express our love and affection through gifts we tend to let price carry too much meaning, often by allowing the gifts we give to define our worth. That is particularly true with our close loved ones, whom we are reluctant to disappoint.

The feelings about expressing love through pricey gifts may be especially intense if there is tension in the marriage, or within the household, which is often the case when there are financial pressures.  But we all know that the price of a gift is not a true measure of our love and that gifts do not buy love. To help you follow your wiser impulses, here are three suggestions.

1.  Give gifts appropriate to your financial circumstances, no matter how modest they may be.  That is the only responsible way, and in fact shows your love—especially to family members—more than if you gave gifts you could not afford.

2.  Direct your energy toward coming up with a gift idea that reflects the connection between you and the intended recipient.  Make it a gift that the person will enjoy but also one that shows you really put thought into it.

3.  Communicate honestly with your loved ones about your financial circumstances.  Do this in a way that is appropriate for the relationship, which will be different for extended family, your significant other, and/or your children. This communication need not be negative.  Instead, it can be a constructive conversation about priorities, honesty, and your love for the other person.

Following these tips can be difficult, but sometimes it needs to be done.

Photo by Billy Halsey.

Do you have $50,000 to throw away?

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Well, do you? You may have already thrown it away, without even thinking of it that way. The money I’m referring to here would be what you have (or had) socked away in your IRA or 401(k) account. You might be thinking about cashing out that account in order to pay your credit card bills because you are falling behind and your minimum payments just went up, or you lost your job, or you just took a pay cut at work, or for whatever reason I haven’t mentioned here.

I know, you may not have as much as $50,000 in an IRA or a 401(k). It might be only $1200. Maybe it’s a lot more than $50,000. Or you might not even have a 401(k) or IRA account – but this post is targeted to those who do.

If you have fallen behind, or are about to fall behind, on your credit card payments and you are considering taking money from your IRA or 401(k) account to catch up those payments and to avoid bankruptcy, please reconsider. Before you touch any of that money, sit down and work out the numbers, without taking into consideration future job prospects or future money that *might* come your way at some point. Only use current income numbers – will cashing out your 401(k) or IRA savings really be a good thing? Don’t forget to add in the taxes, penalties, and/or interest that you will owe on the distribution from the 401(k) or IRA, plus the fact that if it’s a 401(k) loan, add in the money that you will owe yourself on that loan. And add in how much it will cost you to save up that much money all over again.

If you’ve worked out the numbers, did you notice how expensive it gets to take money out of these types of accounts and to use the money to pay down on your credit card debt? And how the amount probably doesn’t even cover all of your credit card debt? If the latter is the case, then I ask you: Why are you even thinking about it at all?

Regardless of whether you can pay off all of your credit card debt by cashing out a 401(k) or IRA, you would be doing yourself a disservice if you did not consider bankruptcy as an alternative. And I mean *alternative* – what I am trying to prevent by writing this post is a situation in which you cash out the 401(k) or IRA, throw the money at your credit cards, and then file for bankruptcy anyway. Because that will have been a terrible waste, and I’ll tell you why:

In Chapter 7 bankruptcies in New Jersey, most IRA and 401(k) accounts are safe from being taken and used to satisfy your debts.

That’s it, really. So if you are about to cash in that 401(k) or IRA account to pay on your credit cards, please think again and consider the huge costs you will be facing by doing so.

Photo by gmdesign1.