February 7, 2012

You are here: Home / Archives for credit

Report: Credit Scores During the Recession

October 4, 2011 By

The Fair Isaac Corporation (FICO), which develops the primary formula used to calculate credit scores, released data this week on changes to credit scores during the economic turmoil of the last several years. The report shows credit score distribution from 2005 through 2011 and indicates that, on average, our credit scores have not changed significantly since the collapse of the housing market in 2007.

If that sounds fishy to you, don’t worry: the term “average” here is meant mathematically. Individual credit scores fluctuated in various ways:

  • More people in the highest group: In 2005, when the stock and housing markets were still going strong, 16.9 percent of Americans had a credit score in the highest range (800 to 850). In 2011, though, the highest-scoring group has swelled to 18.1 percent.
  • More people in the lowest group: In 2005, people with credit scores between 350 and 599 stood at 23.6 percent of the population. This year, the number has risen to 24.9 percent. Early in the recession, people with the lowest scores (350 to 499) jumped, too, though that percentage has leveled out in the last two years.
  • Fewer people in the middle: Those with credit scores between 600 and 799, usually considered to be in the middle of the credit scoring pack, saw their numbers decrease between 2005 (59.5 percent) and 2011 (56.5 percent).

Making Sense of the Numbers

While the findings at first may seem confusing or counterintuitive, there is a satisfying explanation behind the shift toward the extremes of the credit-scoring spectrum during a downturn.

  • The strong shore up: People who already have fairly strong credit scores tend to be more financially secure than those with lower scores. When the economy sours, these people tend to pay down debt more quickly than they might have otherwise, save more money, and avoid new sources of credit. These actions not only prepare them for potential financial road bumps (such as unemployment) but also improve their credit scores.
  • The weak struggle: People already overextended on credit tend to be less financially secure and may be hurt especially hard by tough economic times. Job loss, reliance on new lines of credit and unexpected expenses could cause this group even more financial distress, thus lowering their scores further.

Individuals close to either end of the spectrum may move further toward that end in tough times, thus lowering the total percentage of folks in the middle.

Individual Habits Most Important

Another important factor in determining credit scores is a person’s individual spending and saving habits. Because these tend not to change much regardless of external forces, recessionary times might not affect credit scores as much as they affect other economic indicators such as home prices and interest rates.

Filed Under: Medical Bankruptcy, News Tagged With: , , , , , , , , , , , ,

Understanding the Changed U.S. Debt Outlook Rating

April 25, 2011 By

The credit rating agency Standard & Poor’s made waves last week when it announced that it had downgraded the outlook on U.S. debt from “stable” to “negative,” leaving many ordinary Americans wondering what the change means for the economy and how debt rating works in the first place.

Here’s a look at what our country’s debt rating might mean in future months and how that rating is like an individual credit score.

Rating the U.S. Debt

Currently, the United States has a credit rating of AAA, which is the highest rating possible. This rating indicates that the U.S. is a stable country and is likely to repay any loans it takes out. But there’s more to the story.

  • Outlook on U.S. debt: While the other two major credit rating agencies (Moody’s and Fitch Ratings) have not announced any changes to their ratings on the outlook for U.S. debt, Standard & Poor’s downgraded that rating last week, citing as one reason the continued inability of Congress to make a decision regarding the long-term future of spending policies.
  • A warning move: While the change in the outlook rating does not officially alter the country’s credit rating, it serves as a warning and reminder to legislators and others in positions of power that the country’s financial stability and credibility on the world stage are at stake.
  • Potential for positive impact: Some commentators have mentioned that the changed credit rating could actually prove beneficial to the country, as it may push Congress to act swiftly (and without unnecessary political posturing) in taking steps toward changing financial policy.

The Parallel with Individual Credit Ratings

As anyone who has ever file for bankruptcy, applied for a mortgage or thought about borrowing money for a car knows, individuals have credit ratings too. And, as with the credit rating for the United States, credit ratings for individuals are used to help lenders and investors determine whether or not to lend money to a person and on what terms.

If Standard & Poor’s actually downgraded the country’s credit rating, it would have a similar effect on the nation as seeing a drop in a credit score would for an individual. In other words, the U.S. would have more difficulty borrowing money and could suffer a variety of financial consequences.

So how can a country (or an individual) keep its credit rating as strong as possible?

  • Pay bills on time.
  • Pay down as much debt as possible.
  • Try to keep credit usage low (that is, stay well below the limit).
  • Keep old accounts active (but not maxed out).
  • Contact creditors before bill due dates if there is ever reason to expect inability to make timely payments.
Filed Under: Medical Bankruptcy, News Tagged With: , , , , , , , , , , , , ,

After Bankruptcy Credit Repair

April 21, 2011 By Leave a Comment

By Guy Ray -

One may be tempted to sit back and do nothing about an after bankruptcy credit repair because the argument is that the bankruptcy stays on one’s file anyway for ten years. What’s the point then of carrying out an after bankruptcy credit repair?

That kind of nonchalant or indifferent attitude may even get you in deeper trouble. Usually, someone who is proactive and cares about his financial rating is going to do something to his advantage right on day 1.

Why?

To re-establish credibility of course. To mend whatever is broken, and to maintain good relations with your bankers, creditors and anyone who is in the most subtle position to influence how your financial picture will look like from now on. An after bankruptcy credit repair is therefore intelligent planning on your part. And the sooner you do it, the better it is for your credit score. It may be a slow, excruciating process, but with time, people will realize you mean business and are doing everything to get back on your feet. After all bankruptcy is no longer the rare disease it once was. Your next door neighbor could have filed for bankruptcy and your gym coach may have done the same thing.

After bankruptcy credit repair: something beyond your capability?

Since bankruptcy is considered somewhat of a drastic move in the money scheme of things, and a bit of a complicated issue involving a set of dynamics different from a straightforward credit repair matter, you may consider a lawyer-assisted credit repair. He may be able to guide you on what steps you can take when the bankruptcy is put on your record and resides there for the next 7-10 years. Or his partner may know of a credit lead repair that many people still do not know about.

Before you rush over to your lawyer’s office, however, you may wish to make a pit stop at the credit bureau and see if you could obtain a copy of your latest credit report. You are allowed one free credit report per year – that’s the law – and if you note some discrepancies, you may want to discuss these with your lawyer.

After bankruptcy credit repair is like waking up the next morning after a hideous nightmare. But the idea is to keep moving, facing front, not back. Start by making timely payments on all debt, temper your credit card use, and consolidate all debt. Speak to your creditors – yes – even after you’ve filed for bankruptcy. Who knows, once they see that you’re diligently doing after bankruptcy credit repair, they might be more predisposed to removing negative information from your file.

The above are just a few of the ways that prove you’re making an effort for after bankruptcy credit repair.

Guy Ray is an established author with more tan 200 articles to his credit.. If you’d like additional information about after bankruptcy credit repair visit his website at [http://www.all-credit-repair-tips.com].

Article Source: http://EzineArticles.com/?expert=Guy_Ray
http://EzineArticles.com/?After-Bankruptcy-Credit-Repair&id=241735

Filed Under: Court, Credit Repair Tagged With: , , , ,

Tiny, Hidden Credit Report Errors Can Lead to Bankruptcy

December 12, 2010 By

Credit reporting mistakesThe Wall Street Journal recently published a new story entitled Hidden Medical Debt Trips Up Homeowners. The report documented several cases in which small medical bills that had been turned over to collection resulted in a more than 50 point drop in a homeowner's credit score.

In one situation, a homeowner attempted to refinance his mortgage, only to discover that two unpaid medical bills totaling less than $50 had caused his credit score to drop.  As a result of the lowered credit score the refinancing bank demanded over $4,000 in closing costs.

In another situation, less than $500 of medical debt reported to a collection agency disqualified a homeowner from a favorable interest rate, which would have resulted in tens of thousands of extra interest charges.

In many of these situations, the consumer never knew about the unpaid medical debt – the provider simply turned the claim over to a collection agency which immediately reported it to the credit reporting agencies as delinquent debt.

According to the Journal, "otherwise well-qualified borrowers with good loan-to-value ratios and steady employment are increasingly finding it difficult to refinance because of medical billing mistakes marring their credit."

If you or a loved one has been in the hospital, you probably know that a single visit can result in five, ten or even more bills from separate vendors – the hospital, the hospital pharmacist, the anesthesiologist, the ambulance service, etc.  I do not find it surprising at all that a patient would not know about one or more bills.

I think that an important point here has to do with the cascading effect of negative credit.   Even a small late payment on an account can result in a dramatic lowering of your credit score.  Other creditors will receive electronic notice about your lowered credit score and when permitted, they will increase your interest rate, lower your credit limit and increase penalties and fees.

Lenders Often Cause Delinquencies by Changing Terms Unexpectedly

On more than one occasion I have met with a potential bankruptcy client who was forced into Chapter 7 or Chapter 13 because of changed terms, not because of any delinquency.   These changed terms can arise from a tiny delinquency – like the unknown, unpaid medical bill issue discussed in the WSJ story, or for other reasons.  Recently I met with a small business owner who was completely current on his personally guaranteed revolving line of business credit.  His bank was taken over by another bank which conducted an audit and, without warning, the business loan was "called in."

One minute, my client was operating a viable, functioning small business that was current on its obligations – and literally within a matter of days, that business was shut down by a bank for no apparent reason.

The point here: examine your credit reports regularly and challenge even tiny delinquency reports as the damage to your credit will arise from the existence of the delinquency as opposed to the amount of the late payment.  Even small downgrades to your credit score can result in a negative debt snowball.

Filed Under: Avoiding Bankruptcy, News Tagged With: , , , , , , , ,

Is a Foreclosure Better Than a Bankruptcy?

October 27, 2010 By Leave a Comment

By Oswin Grant -

Want to know if foreclosure is better than a bankruptcy? You might not be so surprised with the answer. These 2 options are often viewed at some of the worst options available to homeowners; and there is a lot a truth in that statement. Bankruptcy carries a certain stigma with it, and so does foreclosure. There are times when choosing a bankruptcy might not be the worst of the 2 options depending on a homeowners needs, but generally speaking a bankruptcy is scraping the bottom of the barrel.

Choosing between these two can be an easy decision depending on your personal situation. If you are someone who is not into holding on to your property and you area able to part with it, then the foreclosure option may look a bit more attractive to you. However, if you are not willing to part with the property under any circumstances, then filing for bankruptcy would work out better for you. Regardless, doing either one of these options will negatively affect your credit for up to 10 yrs. You will not be able to get approved for anything when it comes to you running your credit for approval on any type of purchase with in the next 7 to 10 yrs. You could work primarily with cash, or use secure credit cards to rebuild your credit. Established individuals do better when filing for bankruptcy, or having a foreclosure on their credit report. Even jobs are requiring their applicants to have good credit these days in order to be eligible for employment, because they believe it reflects on the type of person an individual is, and their character is reflected on their ability to pay back their obligations. However, I understand if not every one agrees with that idea. If you are someone who has made all, or most of your necessary larger purchases already such as: a vehicle, your wardrobe, large appliances, among other necessary items and do not need to make any large purchases in the near future, then you are more likely to survive this period of extreme credit decline.

I would strongly advise against filing for bankruptcy, it is worse than a foreclosure on your credit report. It should be an absolute last resort. As I said earlier, it should be done only if you just are not able to part with the property, and you want to keep the home for whatever personal reasons. A foreclosure would be my personal 1st choice of the two. Plus, foreclosure is a bit quicker when it comes to the time it take to recover from a foreclosure rather than bankruptcy. With that being said, both options should be avoided at all cost if possible.

Mortgage Loan modification the easy way http://www.mortgagecrisistips.com

Article Source: http://EzineArticles.com/?expert=Oswin_Grant
http://EzineArticles.com/?Is-a-Foreclosure-Better-Than-a-Bankruptcy?&id=5257956

Filed Under: Bankruptcy Attorney, Court Tagged With: , , , , , ,

Inside the Mind of a Bankruptcy Lawyer – Should I File and if so, Why Should I Choose Your Firm?

September 14, 2010 By

There are dozens of lawyers out there who offer to prepare and file bankruptcy cases.  Some work in high volume "bankruptcy mill" firms that compete on price while others compete on experience, knowledge and service.  Usually the cost differential is a few hundred dollars, but when you are considering bankruptcy, every dollar counts – so why would you want a lawyer like me as opposed to a firm that would offer to represent you for a lower price?

I could offer a glib answer like "if you needed brain surgery, would you look for the cheapest surgeon on the one with the most experience and industry recognition" but that does not really answer the question.  Perhaps it would be helpful if you could look over my shoulder as I analyze a real life situation that came before me recently.

Earlier this month an email arrived from a couple who wanted information about bankruptcy.  The wife wrote that she was a stay at home mom raising 2 children and that her husband lost his job about a year ago, and recently started back to work at a lower paying job.  Their current household income is just under $50,000.  They own a house that is now worth less than what they paid for it – the house is worth about $200,000 – the first mortgage is $210,000 and the second mortgage is $35,000.  They own one older car outright and are financing a mini-van.  They have also incurred around $25,000 of credit card debt – most of which was used trying to keep the mortgage current.

Earlier this year they fell behind on both the first and second mortgage.  The first mortgage lender started foreclosure proceedings, but suspended foreclosure and offered to consider my potential clients for a mortgage modification.  They have been making modified payments for several months but when they called the lender to ask if they had been approved for a permanent modification, the account rep told them that their modification paperwork had not been approved but that their application had been sent to another department for a reconsideration.  News of this decision had not been provided to my prospective clients – the only reason they found out was from their call.  No one from the mysterious reconsideration division was available and their multiple calls have not been returned for over 2 weeks.

They decided to contact me because they are getting the sense that the mortgage company is unlikely to approve their modification and they want to be prepared for a possible foreclosure.  What are their options? Here is what I advised them through my conversation with the wife:

First, I asked what was their desire regarding the house – was keeping the house a priority?  The wife responded that they would like to keep their house but they were not sure they could afford it given the husband's reduced salary.

I explained that Chapter 13 is the type of bankruptcy that can stop a foreclosure but that Chapter 13 would not allow us to change the amount of the monthly payments, nor would it change the total balance due on the mortgage.  Chapter 13 would allow them to "cure" their arrearage by paying that arrearage (the past due payments) over a five year period of time, along with other debts that would also be included in the Chapter 13 payment plan. However, if they were not able to afford the regular monthly payments Chapter 13 probably did not make much sense.

The only possible justification for a Chapter 13 would arise from the possibility that they could use Chapter 13 to "strip" the second mortgage and make that unsecured.  Under Chapter 13 law, a second mortgage that is wholly unsecured, meaning that the balance due the first mortgage exceeds the fair market value of the home.  If the second mortgage is wholly unsecured, we can file a motion to strip the lien, thereby making the second mortgage debt an unsecured claim in the Chapter 13.  If our Chapter 13 plan called for paying unsecured debt at 5 cents on the dollar, then Chapter 13 might be something to consider.

In this case, the wife advised me that the monthly payment due the first lender was more than what they could afford, plus she did not seem enthusiastic about signing on for a five year payment plan, so we decided to remove Chapter 13 from consideration.

We then proceeded to discuss Chapter 7.

I pointed out that Chapter 7 would allow the couple to discharge their credit card debt as well as any potential liability arising from the surrender of their home.  I felt that the real danger came from the second mortgage lender as it has been my experience that first lenders rarely pursue deficiency claims because  of the Georgia law that requires them to go to court to certify the deficiency before a judge within 30 days of the foreclosure.  Second mortgage holders, by contrast, need only file suit on the promissory note associated with their loans.  I see far more deficiency balance claims from second mortgage lenders than from first mortgage lenders.

I also noted that since the foreclosure process could take several months, one strategy here would be to remain in the house and pay nothing – nothing to either mortgage lender and nothing to the credit card lenders.  This strategy would allow my prospective clients to reduce their budget outflow dramatically for several months while they built up a small cash reserve, and then file bankruptcy in four to six months when creditors were starting to take action.  I noted that this strategy was based on economics, and that they would have to be comfortable with the moral implications of this course of action.  I also noted that this "wait until the last minute" strategy would cause significant damage to their credit in addition to the bankruptcy.  By contrast, filing a Chapter 7 when there were few or no 120 day late references would make recovery from bankruptcy a little easier.  Credit reports document payment histories and while a bankruptcy discharge will put the balances at zero, it does not delete the negative payment histories.

On the other hand, I advised the wife that if she and her husband waited to file and the husband secured a better, higher paying job, their household income might leave them with disposable income in their budget, or it might cause their household income to exceed the median income for a family of four, thereby making Chapter 7 much more difficult or impossible.  It has been my experience that when household income exceeds the median (in Georgia the current median income for a family of 4 is $68,258) by $10,000 or more, it can be very difficult to qualify for Chapter 7 under the means test.  Thus, if the husband was actively looking for employment and his target income was $80,000 or more, waiting to file Chapter 7 might not be the best idea.

The wife then asked me about the credit report issue – how long would it take for she and her husband to rebuild their credit.  I responded by saying that it my experience, a Chapter 7 debtor can expect his credit score to remain depressed for eight months to a year following the Chapter 7 discharge.  However, Chapter 7 has the positive effect of eliminating all debt and thereby causing an improvement to the debt to income ratio.  Further, individuals can only file Chapter 7 once every eight years – so from a lender's perspective a recently discharged debtor has no debt and cannot file bankruptcy for at least 8 years.

I assured the wife that I made it my practice to follow up with my clients who had received a discharge to review their credit reports three to five months after discharge.  I have found that at least half of the time, there are errors on the credit reports that artificially depress post bankruptcy credit scores and sometimes, the errors are actionable, meaning that we can collect damages from creditors for Fair Debt Collection Practices Act violations.  In a few cases I have been able to collect enough in damages to cover the attorney's fees and filing fees associated with the original bankruptcy filing!

I ended by conversation with the wife by thanking her for contacting me.  I then followed up our conversation with a brief email summarizing what we had spoken about and providing her with the "get started" link to one of my web sites.

I hope you can see that even a "simple" fact pattern can give rise to a variety of options and pratical considerations.  Consumer bankruptcy is not a "one size fits all" practice and I am able to raise all of the points that I did because I have seen a lot of different issues over the past 23 years.  If you have any questions about what have written here or if you want to discuss your personal situation, I encourage you to contact attorney Susan Blum or me by phone at 770-393-4985 or send us an email.

Filed Under: Avoiding Bankruptcy, Foreclosure, News Tagged With: , , , , , , , , ,

Two Tips On How To Avoid Bankruptcy

September 9, 2010 By Leave a Comment

By Cleo Gib

Bankruptcy is the last thing that anybody wants to go through. It tears your credit apart, cause’s public humiliation, and it generally means you have to start over financially. If there was any possible way of avoiding bankruptcy many people would take it in a heartbeat. The good news is that there are many ways of avoiding bankruptcy it just depends on what stage of financial ruin you are in.

The most important thing you can do if you are facing any type of financial crisis is to start a budget. A budget is an organized process of determining where your money is going. To start this budget, list your financial spending patterns and obligations. You begin to track exactly where your money is going in an organized way so that you can see the consistency in your spending habits. Once you have control over your financial spending habits you can than begin to save or pay off your debt. If you are in an extremely dire financial situation begin to use that extra discretionary income for paying off debts.

The second tip is you paying down your debts. Start a budget and begin to pay your debts down starting with the smallest debt first. If you have two debts that you owe the same amount of money, than go off of which one has the highest interest rate. It does not matter what the interest rates are on your different debts, the smallest must be your first priority in terms of paying it off.

Conventional wisdom might at first glance be, that you should pay down the debt with the highest interest rate first, but if you pay down the smallest debt first you can then use that old minimum payment and apply it to your next debt, this is what Dave Ramsey calls the “Debt Snowball.” You get compounding payments which helps you build momentum and pay off the rest of your debts. This strategy gives you the confidence that you need to be successful against such a daunting task.

Einstein said “The definition of insanity is doing the same thing over and over again expecting a different result.” If you go back to the old patterns of spending and managing your money you will end up right back where you started. Getting out of a financial coma takes a long time but if you set goals and establish good habits you too can become debt free.

SAMCALVERT.COM http://SAMCALVERT.COM/ is a Minnesota bankruptcy attorney. for more info visit samcalvert.com.

Article Source: http://EzineArticles.com/?expert=Cleo_Gib

http://EzineArticles.com/?Two-Tips-On-How-To-Avoid-Bankruptcy&id=4954218


Filed Under: Avoiding Bankruptcy, Bankruptcy Attorney Tagged With: , , ,

How to Avoid Bankruptcy

August 6, 2010 By Leave a Comment

By Jakob T. Truss -

Bankruptcy happens when a person or a business is unable to repay their existing debts. The process starts once the debtor or creditor filed a petition. In other times, bankruptcy allows a person or a business to start fresh. The company will offer creditors a chance to obtain a measure of repayment options based on what type of resources are available.

With that said, here are the five common tips to stay away from bankruptcy:

1) Sell your Assets- Once you notice you’re behind on your payments, take immediate action. Sell any item you have at home (books, old cds, bags, computer etc.) and use your earnings to pay off your debts. These days, there are several ways to sell stuffs: You can direct sell it and you can sell it online (Amazon, eBay, etc.)

2) Find Ways to Increase Income- Your hobbies and skills can absolutely help you earn some extra money to stop bankruptcy. If you can, you can choose to work overtime or apply for part-time jobs. Try browsing the web and apply for any virtual assistant tasks (link building, content writing, computer programming, etc.).

3) Ask for Help- Don’t be afraid to speak what’s inside your mind. Kindly inform your creditors about your current situation. These creditors are also human beings and they understand. But at the end of the day, you need to give your willingness on how you can pay your debts. If possible, ask them if they can ease your burden of lowering your interest rates and monthly fees.

4) Borrow Money- To me, borrowing money from family and friends is absolutely a bad idea. They have a life of their own and they also have their own way of escaping financial crisis. But in the real life, there’s always an exception to every rule. Before borrowing money, take a hard look at what you can contribute. Create a plan on how and when you can repay them. After doing all that, it’s time for you to talk with friends and family. If you talk with the right people, they can help you for sure. If your family and friends can help you, hire a lawyer.

5) Settle- Debt settlement is one of those things that must be avoided under any normal circumstances. Anyone who’s in the brink of bankruptcy is not normal. If you need to choose between settling a number of debts and filing bankruptcy, you must go with settling the debts but never rely on Debt Settlement Company. Too much time and extra money are wasted if you choose to deal with these companies. You also don’t settle any current debt instead focus your attention to those that have been charged off or sent to collection. Lastly, pay as soon as the agreement is made.

Jakob Truss is the owner of the Bankruptcy In Pennsylvania blog, a blog that contains articles related to Bankruptcy In Pennsylvania.

Article Source: http://EzineArticles.com/?expert=Jakob_T._Truss
http://EzineArticles.com/?How-to-Avoid-Bankruptcy&id=4736404

Filed Under: Avoiding Bankruptcy Tagged With: , , , ,

After Bankruptcy Credit Repair

August 2, 2010 By Leave a Comment

By Guy Ray -

One may be tempted to sit back and do nothing about an after bankruptcy credit repair because the argument is that the bankruptcy stays on one’s file anyway for ten years. What’s the point then of carrying out an after bankruptcy credit repair?

That kind of nonchalant or indifferent attitude may even get you in deeper trouble. Usually, someone who is proactive and cares about his financial rating is going to do something to his advantage right on day 1.

Why?

To re-establish credibility of course. To mend whatever is broken, and to maintain good relations with your bankers, creditors and anyone who is in the most subtle position to influence how your financial picture will look like from now on. An after bankruptcy credit repair is therefore intelligent planning on your part. And the sooner you do it, the better it is for your credit score. It may be a slow, excruciating process, but with time, people will realize you mean business and are doing everything to get back on your feet. After all bankruptcy is no longer the rare disease it once was. Your next door neighbor could have filed for bankruptcy and your gym coach may have done the same thing.

After bankruptcy credit repair: something beyond your capability?

Since bankruptcy is considered somewhat of a drastic move in the money scheme of things, and a bit of a complicated issue involving a set of dynamics different from a straightforward credit repair matter, you may consider a lawyer-assisted credit repair. He may be able to guide you on what steps you can take when the bankruptcy is put on your record and resides there for the next 7-10 years. Or his partner may know of a credit lead repair that many people still do not know about.

Before you rush over to your lawyer’s office, however, you may wish to make a pit stop at the credit bureau and see if you could obtain a copy of your latest credit report. You are allowed one free credit report per year – that’s the law – and if you note some discrepancies, you may want to discuss these with your lawyer.

After bankruptcy credit repair is like waking up the next morning after a hideous nightmare. But the idea is to keep moving, facing front, not back. Start by making timely payments on all debt, temper your credit card use, and consolidate all debt. Speak to your creditors – yes – even after you’ve filed for bankruptcy. Who knows, once they see that you’re diligently doing after bankruptcy credit repair, they might be more predisposed to removing negative information from your file.

The above are just a few of the ways that prove you’re making an effort for after bankruptcy credit repair.

Guy Ray is an established author with more tan 200 articles to his credit.. If you’d like additional information about after bankruptcy credit repair visit his website at [http://www.all-credit-repair-tips.com].

Article Source: http://EzineArticles.com/?expert=Guy_Ray
http://EzineArticles.com/?After-Bankruptcy-Credit-Repair&id=241735

Filed Under: Avoiding Bankruptcy, Recovering from Bankruptcy Tagged With: , , , ,

Your 18 Bankruptcy Questions Answered

July 23, 2010 By Leave a Comment

By John M. Crane -

1. What is Bankruptcy?

Bankruptcy is a means for good people in bad situations to legally get a fresh start. There are certain requirements, but generally, anyone meeting those requirements has a legal right to file. As soon as a petition is filed, all creditors are prohibited from attempting to collect on all debts listed in the petition until the Court either discharges you from these debts or determines that you are not entitled to such relief.

2. What is the process for filing?

First, any qualified bankruptcy attorney will probably require you to fill out a questionnaire for them to review to determine whether or not bankruptcy is right for you. If it is determined to be your best option, the attorney will have to decide under which Chapter you will file. You will likely meet with the attorney on more than one occasion to answer questions, provide documents and for the attorney to answer any questions you might have. After the bankruptcy petition (legal papers filed with the bankruptcy court that commences your bankruptcy proceeding) is filed, you will be required to appear in court on at least one occasion, the Meeting of Creditors, for a Chapter 7 filing, and probably more than one appearance if your bankruptcy petition is a Chapter 13 filing (Meeting of Creditors and Confirmation Hearing).

3. What is Chapter 7?

Chapter 7 is a liquidation proceeding under the United States Bankruptcy Code. In a Chapter 7 proceeding, a trustee appointed by the bankruptcy court will take custody of and sell off any of your non-exempt assets. The money received from this sale will be used to pay your creditors. Your debts are then discharged. This means that creditors are forever prohibited to try and collect on these discharged debts in the future.

Certain debts, like taxes, alimony, child support, student loans, and debts that have not been listed in the Chapter 7 petition (as well as debts which have been incurred as a result of either an intentional tort or the defrauding or misleading of a creditor) are not dischargeable. This means that after the discharge, you will continue to be liable for these debts.

4. What is a Chapter 13?

A Chapter 13 is designed primarily for residential homeowners, and allows a person or married couple to pay off all, or a portion, of their debts under the supervision and the protection of the U.S. Bankruptcy Court while remaining in their home. A Chapter 13 Plan is primarily used to repay mortgage arrears, while also addressing all other debts you owe to any other creditors. Payment of your mortgage other debts are generally spread out over a 3-5 year period. Chapter 13 is also used as an alternative to credit counseling. Individuals are permitted to repay their credit card debt over a 3-5 year period without any additional interest charges. A Chapter 13 filing is designed for those individuals who are currently employed and have steady incomes, yet are still overwhelmed with bills, judgments, lawsuits or other financial obligations.

5. What types of property are exempt?

Certain types of personal property is classified as exempt under the Bankruptcy Code. This means that you get to keep this property even after your debts are discharged. In New York, State Law provides for specific exemptions including, among others:(A) cash, checking or savings accounts, U.S. Savings Bond, stocks, and other marketable securities, and tax refunds up to a maximum total of $2,500.00; (B) equity in a motor vehicle up to $2,400.00; (C) basic wearing apparel; (D) $50,000.00 of the equity in your home, co-op or condo; (E) social security benefits; (F) household furnishing and certain appliances; (G) IRA, 401K and other qualified retirement accounts.

6. Will I lose all my credit cards after bankruptcy?

You are required to list all outstanding debts that you owe as of the date of the filing of a bankruptcy petition. Any accounts that have a zero balance do not have to be listed. For those credits cards that have balances, if you agree with the creditor to repay all or any portion of the card’s balance at the time of filing, you may be able to execute a document known as Reaffirmation Agreement that documents your willingness to continue to be responsible for this debt after the bankruptcy is discharged. In most cases, the Bankruptcy Court must approve of the Reaffirmation Agreement before it becomes effective.

7. How long will it take?

A typical Chapter 7 case takes normally 4-6 months. A Chapter 13 case may take anywhere to 3-5 years to complete.

8. What is a Meeting of Creditors?

Section 341 of the United States Bankruptcy Code affords creditors the right to meet with the debtor to determine if a discharge or a reorganization of debt is appropriate based upon the facts and circumstances presented by a debtor in their bankruptcy petition. While creditors do technically have the right to attend these proceedings and to question the debtor, creditors rarely appear at these proceedings.

In Chapter 7 proceeding, the Meeting of Creditors serves two important purposes. First, the Court, through examination by the Court appointed Trustee, verifies that all of the representations contained in your bankruptcy petition are true and correct to your best of your belief and knowledge. Second, the Bankruptcy Court Trustee also utilizes this meeting to verify on behalf of the Court that there are no assets that may be considered non-exempt, which could be sold by the Trustee to repay part, or all, of your debt. A typical meeting of creditors in a Chapter 7 proceeding takes approximately 5-10 minutes to complete.

In Chapter 13 proceeding, a debtor is also required to appear before the Chapter 13 trustee. In a Chapter 13 case, the meeting of creditors serves a slightly different purpose. In addition to verifying that all of the representations made by a debtor are true and correct, the Chapter 13 trustee will also verify that the debtor has calculated the means test properly, and that the debtor has the financial ability with which to make the payments proposed in the proposed Chapter 13 plan. Verification of a debtors ability to make payments in a Chapter 13 case is based upon both the debtor testimony at the meeting and various documentation, usually tax returns and/or pay statements, that must be presented to the Chapter 13 trustee to verify the representations made in your Chapter 13 petition. As in a Chapter 7 case, a typical meeting of creditors in Chapter 13 case takes between 5-10 minutes to complete.

9. How will filing affect my credit?

Under the Fair Credit Reporting Act, a Chapter 7 may remain on your credit report for 10 years. A Chapter 13 filing is legally permitted to be reported for 7 years. The filing of any bankruptcy petition will seriously impact your credit score in the near future. By beginning to slowly build up your credit after your bankruptcy is discharged, you tell future lenders that your problems with credit are now behind you. One way is to obtain a “secured” credit card from a bank as soon as you are able. With a secured card, a debtor puts up a certain amount of money, as little as $200.00, in an account at the bank to guarantee payment. This limit is usually increased as the debtor proves his or her ability to pay the debt.

Two years after your bankruptcy is discharged, you will be eligible for a mortgage loan on similar terms to individuals with similar financial profiles that have not filed bankruptcy. It is then that the amount of your down payment and your employment and income stability become more important to a bank than your past bankruptcy filing.

10. What if I filed before?

For an individual, you may only file for relief under Chapter 7 once every eight years. This date runs from the date bankruptcy is actually discharged. Please note however that the 8-year period does not run from the date of the filing of the first petition, but rather from the date the court issues the bankruptcy discharge.

11. Will I be able to get out of repaying my student loans?

With two exceptions, student loans are not dischargeable in a bankruptcy proceeding. However, the student loan may be discharged if it is neither insured or guaranteed by a governmental unit, nor made under any program funded in whole or in part by a governmental unit or non-profit institution. Finally, the student loan maybe discharged if paying the loan will “impose an undue hardship on the debtor and debtor’s dependents.” 11 U.S.C. Section 523(a)(8)

12. Will I lose my home?

A Chapter 13 proceeding is designed to help residential homeowners keep their home while helping them to reclaim their lives and start anew. Chapter 13 filing is permitted for persons that owe less than $250,000.00 in unsecured debt and less than $750,000.00 in secured debt. Thus, it is possible to file bankruptcy and keep your home.

13. Will I lose my car?

In New York, there is an exemption for a motor vehicle valued at $2,400 or less. If you have a $20,000 car and owe $10,000 on this vehicle, it is likely that the bankruptcy trustee will liquidate such an automobile in a Chapter 7 proceeding.

14. Does my spouse have to file?

New York is a common law state. Unlike community property states, your spouse will not be affected by your bankruptcy if they are not responsible for any of your debt. If they have a supplemental credit card they are probably responsible for that debt, but unless they also signed the agreement, they are probably not responsible in NY. Community property states are: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.

15. What happens if I don’t list all my property?

Failing to list all property is a crime. Many assets are protected from being seized by the bankruptcy court, but only if they are listed. Bankruptcy crimes are punishable by imprisonment for up to five years. Criminal conduct includes: filing a bankruptcy petition to defraud your creditors; concealing property from the court or bankruptcy trustee; knowingly and fraudulently make a false oath or account; an intentional transfer or concealment of property to defraud creditors; and concealing, altering, destroying, or falsifying records or documents.

16. Will my employer find out?

Technically, Chapter 7 filings are public records and it is possible for anyone to find out. However, unless your employer searches bankruptcy filings, it is unlikely they will find out. The Credit Bureaus will record your filing and it will remain on your credit record for 7-10 years.

17. Can I lose my job?

No. Employers are prohibited from discriminating against you because you filed bankruptcy pursuant to U.S.C. Sec. 525.

18. Is my pension/retirement accounts safe?

Employee contributions to ERISA qualified retirement plans, deferred compensation plans, tax-deferred annuities, and health insurance plans are exempt assets. Also, Section 522 of the Bankruptcy Code states that an individual can now exempt up to one million dollars in an IRA account. Interestingly enough, Section 522 specifically excludes SEP IRA’s from such exemption, although this type of IRA may possibly fall under an ERISA plan (anyone self-employed should consult with their attorney and ensure that their SEP IRA is actually exempt before filing).

I am a New York Licensed Attorney at Law providing Wealth Building and Debt Elimination services through an innovative Life Planning practice where clients can literally transform their lives by designing a road map for their future!

Article Source: http://EzineArticles.com/?expert=John_M._Crane
http://EzineArticles.com/?Your-18-Bankruptcy-Questions-Answered&id=3255989

Filed Under: Avoiding Bankruptcy, Court Tagged With: , , , , , , , ,