Divorce is one of the most stressful events in any person’s life. In terms of emotional trauma it ranks a close second to the death of a loved one. The stress resulting from a divorce can lead to mental health issues, and other health problems. That’s why it’s in the best interests of both parties to resolve their legal dispute, and complete their divorce, in the most expedient manner possible. This is exactly what an uncontested divorce can offer.
A contested divorce is where neither party can agree on the divorce or the terms of the divorce. The courts will then have to work with the married couple to divide their assets and liabilities appropriately.
An uncontested divorce is where both parties agree fully on the terms of the divorce and do not require the courts to divide their assets or liabilities. It’s also known as a “simple” divorce.
In the case of an uncontested divorce your attorneys will have prepared what’s called a “Settlement Agreement”. This document is a legally binding contract between you and your spouse, specifying that you’ve come to a mutual agreement in how your assets and liabilities are to be distributed. It will only become legally binding once it’s been reviewed by the court and then signed by both parties.
In as much as married couples work to divide their assets fairly during a divorce settlement, even more effort is put into an equitable distribution of the debts incurred during the marriage. Even if you’re not currently considering a divorce, it’s still critical that you understand what your legal and financial obligations are in this situation.
New Jersey is what’s referred to as an “equitable distribution” state, which means that when a married couple file for divorce that both their assets and liabilities are divided in a fair manner. Now, it’s important to understand that equitable is not the same as equal, in that you can’t expect your debts to divided 50/50. It would be preferable for couples to reach this decision amicably, but it normally falls to the courts to decide how the debts should be split up. In New Jersey marriage is considered an economic partnership so any assets or liabilities acquired during the marriage are subject to equitable division regardless of who feels they hold the title to a particular asset, or debt.
When it comes to the division of debt in a NJ divorce, you must first separate the debts into marital and non-marital. A non-marital debt is one you incurred before you were married. This debt will continue to be yours after the divorce, with student loans being a perfect example of this type of debt.
Marital debt is any debt which was incurred during the marriage, and from which both parties benefited. This can include real estate, vehicles, credit cards, personal loans, stocks, retirement funds, and other investments.
Americans currently owe an average of $16,000 per household in credit card debt. Or, if you look at it on a national scale that equates to US$1 trillion in debt. This enormous figure represents 20% of the total national debt, a situation which has worsened dramatically since the financial crisis of 2008.
Credit card debt is often the primary cause of bankruptcy cases, overshadowed only by mortgage debt. Secured credit cards can be used to rebuild your credit score, which is especially useful if you’ve just come out of the bankruptcy process.
What is a secured credit card?
These are credit cards with a fixed spending limit which is backed up by a set amount of cash you’ve deposited with your bank. So, if you’re given a secured credit card with a $250 spending limit you’ll be expected to deposit $250 in your bank account. You can never spend more than the $250 limit, which helps eliminate uncontrolled spending habits, and you also can’t use the deposited $250 to repay your credit card spending. Why? Because it protects the lender if you prove yourself incapable of managing your new credit card.
So, how do you actually use a secured credit card to rebuild your FICO score?
Does It Count?
Not every secured credit card company will report back to credit bureaus such as Equifax or Experian. The card you choose must provide these credit bureaus with information on your spending, or you have no hope of improving your credit score. Basically you need to shop around and find a card that suits your purpose, and not just the first company that signs you up.
You might not be familiar with the term “foreclosure complaint” this happens when you’ve fallen into arrears on your mortgage, and your lender is taking their first steps towards repossessing your home.
There are an unfortunate number of myths circulating both online and offline about how to deal with a foreclosure complaint, many of which could result in even more damage to your finances. Let’s take a look at the most common ones.
#1 Just Ignore It
This is probably what got you into financial hot water in the first place, and we can assure you that ignoring a foreclosure complaint is the worst possible way to deal with it. You’re given 35 days to respond to this legal document, but failing that your lender is within their rights to proceed with the foreclosure process.
#2 Representing Yourself
Some people decide that they’ll represent themselves on the day of their foreclosure hearing, play to the judge’s sympathies with a sob story, and then walk away with a reprieve for several months. This is a bad idea because no matter where you live in the United States any court you attend will have heard every sob story imaginable. If you’ve already chosen to ignore the foreclosure complaint, in the hope that you can throw yourself at the mercy of the court, then you’re in for a rude awakening.
Being in debt is a source of almost constant stress for people who feel they have no means of dealing with it. If you then add in the prospect of having to file for bankruptcy, it’s simply too much for the average individual to deal with. It’s difficult to understand what it feels like to be staring at a mountain of unmanageable debt unless you’ve experienced it. In most cases people become paralyzed by fear instead of taking action to resolve the problem they’re facing.
In addition to this, being in serious debt has a certain stigma attached to it, and most people would rather face homelessness than admit they’re not in control of their own finances. The odd thing is that more affluent people are more likely to bury their heads in the sand about their debt than people who have been living on the breadline their entire lives.
The good news is that there’s a lot of professional help available to you, from financial counseling all the way through to bankruptcy attorneys like me. A bankruptcy attorney can help ensure you get the best possible deal from the court system.
Why then do a surprising number of people avoid speaking to a bankruptcy attorney?
#1 Ruined Credit Score
One of the most commonly believed myths is that filing for bankruptcy will destroy their credit score. This isn’t true because if you’re considering filing for bankruptcy then your FICO score has already bottomed out. It’s also worth mentioning that engaging the services of a bankruptcy attorney won’t extend the duration of the damage to your credit history – this is decided by the courts and is always within fixed limits.
A loan modification is the permanent restructuring of a specific debt, typically a personal loan or mortgage. The process is the exact same regardless of what type of loan you’re having modified, but we’ll only refer to mortgages for the purpose of clarity and brevity.
So, why would anyone need a loan modified? The primary reason people ask for this is because they can’t afford their current repayment schedule, and the mortgage is now running the risk of becoming delinquent, and then entering the foreclosure process.
In terms of what your lender can do to offer you a loan modification, this can take the form of a reduced interest rate on your mortgage, converting it from a variable rate mortgage to a fixed rate, or even extend the term of the loan, which results in lower monthly repayments but a higher overall amount repaid. Another option is to have your mortgage arrears added to the capital of the loan itself, with new repayment terms set, often marginally higher than your previous monthly payment.
How do you go about being granted a loan modification by your lender? You need to prove that you’re currently experiencing provable financial hardship, to the extent that you’re unable to meet your current mortgage repayments, or maintain a reasonable standard of living. Your lender will not take your word for this, so expect to be asked to furnish them with documents such as:
It might come as a surprise to some, but errors on credit reports are remarkably common. In fact, it’s estimated that at least 10% of all credit reports contain errors of one kind or another, with the potential side effect of having a demonstrable impact on your financial standing through your FICO score.
Here are some of the more typical problems you might find on your credit report
If you have a common name (e.g. Jim Brown), you might find your name has been misspelled. Your telephone number, address or social security number might also be incorrect. More troubling are errors where you might be named as the sole owner of a particular account/debt, when you’re actually just an authorized user or co-signer of that debt. These are all errors you need to remedy as soon as possible.
Other People’s Debts
Identity theft is a growing problem in the United States and elsewhere in the world. It involves somebody stealing some of your personal information to create a fake identity with. They then use this alternate identity to run up debt in your name, often to the tune of tens of thousands of dollars. Resolving this type of error will require the help of law enforcement, and the credit reporting bureaus too.
Because we live in a society where being burdened with debt is considered to be the norm, it’s quite possible that you have a debt listed on your credit report in the name of an ex-spouse or partner. You might have co-signed for this debt in the past, but you need to make sure your ex is still paying their part of it, otherwise your FICO score will suffer.
A Preferred Creditor lawsuit is the very last thing most businesses want, but they’re also not something you can predict. They’re bad news for a couple of reasons, but the main one being that one of your debtors has just filed for bankruptcy, which means you’ll need to find a way to offset that bad debt.
Preference claims are a legal way of ensuring that no one creditor is given preferred treatment over another during any bankruptcy filing. There is the potential for all payments made to your business by a specific debtor to be reimbursed to them, becoming part of their bankruptcy estate in the process.
There are two timeframes to consider here. If a debtor paid money to what is termed an insider (family, friend or associates), payments over the period of the 12 months prior to them filing for bankruptcy can be recalled into the bankruptcy estate. An outside (business the debtor purchased from) must adhere to a preference period of 90 days before their debtor became insolvent.
The court-appointed trustee can, and will, request that money paid to your business is returned to the debtor. The logic behind this is that this money can then be used to pay all creditors an equal amount of money, instead of one single creditor having their entire bill paid, hence the term ‘Preference Claims’.
Defense Against Such Claims
You have a number of defense options, thanks to the Bankruptcy Abuse Prevention and Consumer Protection Act, 2005, to defend your business revenue from a lawsuit of this type.