bankruptcy

Are You Moving Towards Bankruptcy?

November 2, 2013 by arizona

There are many strains on the financial side of life at the moment and it has become very difficult for many to make the money that they have coming into the home stretch. There are some very serious warning signs that could tell you that you are need of financial help before you move even closer toward bankruptcy.

Signs

Many people spend many hours searching data to see if there are signs that could warn of impending danger and they are the same in the financial markets. The Association of Independent Consumer Credit Counseling Agencies have conducted such research and have come up with areas that can warn of impending danger. They predict that those that are in similar situations are heading towards bankruptcy.

Credit Cards

These are a way that many people can find themselves in a lot of debt and the credit card companies are partly to blame with the increasing of the amount a person can borrow. Yet, if they are used correctly they can help to build a credit file but if they are miss-used they spell disaster. If you are holding credit card debt and it is more than 10% of your annual income then you are risking your financial stability and could be veering toward bankruptcy. It is a difficult situation to escape from once you have succumbed to the credit card debt. It is even more difficult to escape if you are only paying off the minimum about of the balance each month.

Savings

There are messages everywhere about the need to have some sort of savings, with some suggestions of 3 – 6 months’ worth of living expenses stashed away in case of an emergency, like losing your job. You need to have a safety-net so that you are able to continue to live until you secure future employment. The statistics suggest that if you have no savings or less than the recommended amount then you are not in the best financial position that you could be in.

Everyday Purchases

Do you run out of money before your next payday? Do you put your living expenses onto your credit card? This is an indication that you are living beyond your means and you are heading in the wrong direction. It might be the time that you think about creating a budget to get your finances back on track. You will need to work out what you spend your money on; you might need to cut back some areas so you are able to make your money last before the next pay day.

The original idea of the credit card was to give the user access to an amount that they could use to buy items that were more than they had the money for. It was like a loan, but it has developed into a commodity that is used on a regular basis and this could lead towards bankruptcy.

Minimums

It is important that if you have bills that are spread out over a period of time that you are paying more than the minimum amount of the bill, this is even more important if you are still adding to the debt. You could work out a debt repayment plan.

List all the debts that you owe
List all the interest rates of the debts
Aim to put more money into the debt with the lowest balance
Continue until you have no debts left

Your Job

What would happen for you and your family if you were to lose your job? How would you pay the mortgage or the rent? How would you feed your family?

These questions are faced everyday by people that lose their jobs, and life will be difficult for them to survive until they can find a new job. But their lives will be that much easier if they had some financial planning in place.

It is important to make sure that you are not living beyond your means. It might mean that you can’t afford the latest in gadgets or the trendiest clothes but what it will mean will be one less bill to worry about when you have got limited funds to go around.

Options

No matter what your financial position is there is some way to make it better. You might need to seek advice and work out ways to get out of debt but it can be done. There are services that you will have access to that will help you understand where you need to go, they will not judge you, but they will help you find your path back to better money management.

If you are able to find your way out of debt rather than going bankrupt it will save you a lot of problems in the future. Look at your options before you make any life changing decisions.

Tips to Rebuild Credit after Bankruptcy

October 8, 2013 by arizona

It is possible to rebuild credit after bankruptcy; it is not the end of the world. But it will take hard work and a lot of commitment for this to be able to be accomplished. It is not going to happen overnight, and any companies that tell you they can rebuild your credit score quickly you should avoid, they are not going to help you at all and they might do further damage to your credit rating.

There are some tips that you can use to help to rebuild credit after bankruptcy and they are going to get you through some of the tough times ahead. It is important to rebuild your credit rating because this will mean that you are going to be in a better position financially and as a credit rating can affect most of your life and not just credit it is a great tool to get right. Your ability to rent a home, get a job, get insurance and further credit are all effected with your credit rating.

It is not going to be easy, but neither was filling for and going through the procedures that you will have needed to face to file for bankruptcy in the first place.

First Step

You must get a copy of your credit report and check that all the information on this is correct and up to date. Any mistakes need to be rectified and this can take time to get any information changed and updated.

Your bankruptcy note will be a public record under each section of your credit report. This information can stay on your credit report for 10 years but if you are using credit wisely then it could disappear sooner. The creditors that you are using are going to be more interested how you use your credit now and this will help to rebuild credit after bankruptcy.

If when you applied for bankruptcy and you had loans or mortgages that you hadn’t defaulted on then you need to continue working on these. You need to pay you balances on the day that they are due because this will prove that you are being responsible.

One of the most important facts that you should understand about your credit report, is that the figure is based on different aspects of your ability to pay but 35% is that you pay your amount due on the correct day and that you are not late in paying.

Credit

It is important that you use credit again because this is the only way that you are going to be able to rebuild credit after bankruptcy. You will need to learn how to use money first and some of the basic steps will be learning how to budget your money and how you save money too. Only once you feel that you understand money should you consider the next step of using credit.

You must start small and if you use a credit card then you must pay off the full balance each month. This will demonstrate your responsibility and help you build trust with creditors. If you spend more on a credit card than what you can afford this might lead you to get into more trouble and end up where you where before.

If you had a credit card before the bankruptcy and you still have them use them wisely. If you don’t have a credit card then you will need to think about the options of getting one. This can be difficult for a person with low credit score, and if you apply for too many this will affect your credit score too.

Secured Credit Cards

It is possible to get a secured credit card and this means that you normally have an account with money in that can be used if you default on the credit card payments. But you can’t use the money in the account and you can’t use the money to pay off the bill each month either.

You will need to check that whatever credit you are using to rebuild credit after bankruptcy that the company is giving feedback to the credit report companies each month. This will ensure that the creditors can see that you are trying to make the right choices every month and are being responsible with the credit that you have.

How Long

It is not going to be easy to repair a credit report and it is going to take time and a lot of time. It could be 2 years before you are eligible to apply for a credit card and it will be longer for a mortgage, up to 4 years. So you will need to:

Work hard and have commitment
Use a budget and stick to it
Know that it could be 2 years before applying for credit card
Understand that a minimum of 4 years will pass before the possibility of a mortgage.

One Day at a Time: Rebuild Credit after Bankruptcy

September 22, 2013 by arizona

Ah, now you’re on your way to paying off your debt. You may actually have finished paying it all off or close to paying it all off now. But, now you have to move on to the next step: to rebuild credit after bankruptcy. It can be quite difficult to build up a credit history, and even harder to rebuild following a bankruptcy. Really, though, there are a few things you can do to help yourself rebuild your credit and get yourself to a great place once you have paid off all your debt.

What Is A Credit History And What Happens To It At Bankruptcy?

A credit report is the one major tool that banks and financial institutions use to decide whether or not to give you a loan or credit card. It is generally first created when you apply for your first credit- most likely a credit card. On applying and getting approved, there is a record maintained of your expenditures, bill paying habits and any outstanding balance (if any). This report is added on to with each credit card or loan you obtain. Most credit scores are recorded on a scale of 300-900 and you want to aim to be at the higher end of the scale in order to improve your ability to get credit. Over time, good or bad credit habits are recorded on your credit report and can help lenders decide whether or not to give you money. So, remembering to pay your bills on time, spending within your means and being discretionary with your spending can take you a long way. In short, good credit habits can help you with a good credit score while bad credit habits can get you rejected in many places.

Filing for bankruptcy can pull you credit score down dramatically. You are looking at a fall of 150 to 200 points in your credit score depending on how much you owed and who you owed it to. For those with great credit scores before bankruptcy, this fall may not be that bad, but with bad credit scores to begin with, those points you lost can be a huge dent in your credit score. How much bankruptcy will affect your credit will also depend on if you filed a Chapter 7 or Chapter 13 bankruptcy. Remember that no matter what you choose, bankruptcy will affect your credit score the most- over other credit consolidation tools like debt management or credit settlement. So, consider bankruptcy only if you have very limited resources to pay off your debt and have very little income.

How to Rebuild Credit after Bankruptcy?

Declaring bankruptcy is a huge step- conscious decision when no other path remains. This is generally a last resort just because of the long term effects of bankruptcy on your future credit. But, here are some things you can do to rebuild credit after bankruptcy:

Start paying your bills on time:

One third of your credit history is evaluated by how diligent you are with paying your bills. Start paying your bills when they are due so that at least one third of your credit score is improving slowly.

Secure Credit:

Try applying for a secure credit card. A secure credit card only allows you to spend what you put in to the card and usually has very low limits, starting around $200. Start with the lowest limit possible and gradually ask for increases to your limit as your credit improves. But, if you do not yet have control over your spending, consider sticking to low limits.

Know where you stand:

Consider getting your detailed credit reports. Know exactly where you stand after your bankruptcy so you know exactly what you need to do. Also, this gives you an opportunity to clear up anything that is incorrect on your report and get it corrected.

Budget your Life:

There is no better time than after a bankruptcy to start living on a budget. This doesn’t just mean tightening your spending belt, it means documenting your every income and every expense to determine how much you have to live on and how much you can spend or save.

Build a Cushion:

Save! Even if you are left only with $50 a month after life expenses, learn to save it. Let these savings be automatic deductions so you are not allowed to skip saving money. Getting even a 2% savings account will build your equity and help rebuild credit after bankruptcy. It also allows you to save for large expenses and for emergency bills.

To rebuild credit after bankruptcy is no small task, but your effort once can help you in the long run. Good credit habits and consistent rebuilding can work very well for you after bankruptcy. You can be then established as a stable borrower and can get you on the path to financial freedom.

Bankruptcy on Credit Cards

September 6, 2013 by arizona

Bankruptcy on credit cards is fairly common in the US. Every year, millions of Americans lose their jobs or experience unanticipated expenses, making it impossible for them to make minimum payments on previously incurred credit card debts without sacrificing the necessities of life, or borrowing additional money to pay older debts. Bankruptcy is a legal procedure designed to stop what might otherwise become an irreversible downward spiral. Making a bad credit card debt situation steadily worse.

The US Bankruptcy Code and Credit Card Debt

There are two Chapters of the US Bankruptcy Code that can provide bankruptcy on credit cards to individuals needing such protection. Chapter 7, often referred to as “total bankruptcy” requires liquidation of all of the petitioner’s nonexempt property, with proceeds distributed to creditors. Chapter 13 involves a court ordered restructuring of all debts, including credit card debts, allowing repayment over 3 to 5 year period.

Filing for Chapter 7 Bankruptcy protection may be particularly advantageous to qualifying individuals with very few or no nonexempt assets that could be liquidated. Chapter 13, the other hand, is a better option for individuals who do not qualify for Chapter 7, or who have substantial assets they would prefer to keep well paying off credit card debts over time.

Petitioning for Chapter 7 Bankruptcy Protection on Credit Card Debt

Filing a petition for Chapter 7 protection against collection actions by credit card companies is a long and somewhat detailed process. Petitioners for bankruptcy on credit cards may it necessary to employ the services of an attorney or a company specializing in the preparation of bankruptcy petitions. Steps in the filing process include:

Declaring whether the petitioner is filing as an individual, jointly with a spouse, or jointly with another party, such as a business partner. If the petitioner files as an individual, protections, which may be provided by the Court will apply only to that individual. A spouse or business partner may still be fully liable for debts they incurred with the petitioner.
Providing evidence that the petitioner has participated in an approved budget and credit counseling program within the past six months.
Paying required fees including the $245 case filing fee, $46 miscellaneous administrative fee, and $15 trustee surcharge (unless the court agrees to waive those charges based on the petitioner’s inability to pay).
Listing all creditors and the amounts of their claims, including any non-credit card creditors.
Identifying the sources, amounts, and frequency of the debtor’s income.
Providing a detailed list of all the debtor’s personal property, real estate, and other assets, including bank and investment account balances.
Declaring which of the above listed assets the petitioner considers “exempt from seizure” under State Law or Federal Law.
Providing a detailed list of the debtor’s monthly living expenses, including such items as food, clothing, transportation, shelter, medical costs, utilities, taxes, etc.

All of the above information must be provided on court supplied forms or schedules. In cases where there are multiple parties to the petition, the forms must include required information for all parties to the petition.

When all required information has been received, and presuming that the court determines that the petitioner meets eligibility requirements, including the “Means Test” requirements as set forth in Chapter 7 of the US Bankruptcy Code, the court will issue an order stopping all credit card company collection activities. That order may not apply to certain other kinds of debt owed by the petitioner.

A Bankruptcy Court Trustee will then schedule a “Creditor Meeting“, normally within 40 days of the completion of the filing. All named creditors are invited to the meeting, as are other individuals not named in the filing, who believe they have a legitimate claim against the petitioner. It is important that the petitioner clearly understand the procedures involved in the Creditor Meeting, which include:

The Court Trustee will place the petition or petitioners under oath.
The Court Trustee will ask a series of questions designed to ensure that all parties to the petition understand the potential consequences of having debts discharged under bankruptcy, including impacts on their credit history and credit score.
The trustee will also ensure that the petitioners are aware of alternatives to Chapter 7 bankruptcy.
The Court Trustee will review written information provided by the petitioner, and require the petitioner to reaffirm the accuracy of that information under oath.
Named creditors and others who believe they have legitimate claims against the debtor are given the opportunity to challenge information provided by the petitioner, and provide their own perspective surrounding the debt owed to them.

Under certain circumstances, the trustee may declare the petition “presumptively fraudulent”, and refer the petitioner to alternate sources of relief such as bankruptcy under Chapter 13 of the Bankruptcy Code. Alternatively, the trustee may summarize the findings of the Creditor Meeting, and pass them along to the bankruptcy judge presiding over the case.

Petitioners for bankruptcy on credit cards go have only credit card debt may then be granted the relief they seek, and restart their financial lives with a clean slate.

Final Thoughts

Individual seeking bankruptcy on credit cards may find the relief they need through the Chapter 7 Bankruptcy process. It should be clear, however, that the path to that relief is not an easy one, and that the path has redundant capacity to root out fraudulent petitions.

Why Debt Consolidation is Better to Avoid Bankruptcy

May 28, 2013 by arizona

Bankruptcy can bring in a whole new level of destruction into your financial history. While it is an effective and legal way of getting out of debt, it leaves behind a lot of negative effects – especially on your reputation. When someone digs up that you have declared yourself bankrupt, it immediately leads to a lot of judgments on personal responsibility and financial management skills. Your filing will be placed in public records so everyone who is interested will know that you have gone through a financial crisis and was not successful in getting out of it on your own.

Before you decide to file for bankruptcy, it is highly encouraged that you look for other options first. In fact, the bankruptcy court mandates this. They require consumers to go through credit counseling before filing so the options are made clear.

Among these options is debt consolidation. Some people think that when their debts are getting out of hand, only bankruptcy with solve it. In a lot of cases, they only needed to organize their finances to achieve debt relief. All your debts may seem like a mountain but if you put everything in perspective, you may find that all of it can be easily fixed and that you have all the capabilities to pay it off.

What debt consolidation does is to simplify your debts. Instead of dealing with more than one credit account, you will combine them into a single lower monthly payment scheme. This can either be done by getting a loan, paying off everything else and concentrating on the new one. The other option involves hiring a debt counselor who will assist you in paying off what you owe. You will both come up with a debt management plan that will be presented to creditors. Once the plan is approved, you will send your payment to your counselor and they will be in charge of disbursing your funds to the different creditors that you have.

And of course, we mentioned a lower payment scheme. Most debt consolidation programs only take 5 years at the most to complete. If you can wait this long, you don’t have to file for bankruptcy. The longer payment term makes it possible for your current debt to be stretched so the monthly contributions required to complete the payment will be lowered.

While bankruptcy usually gets you out of debt faster, the means test will not make this possible for those who have a steady income. If they are earning more than the average median salary, they can end up with a Chapter 13 bankruptcy that involves a repayment plan. This plan could take a couple of year to complete as well.

If you know that you will end up with a Chapter 13 bankruptcy, you may want to forego filing. The best part about this debt consolidation is that you will not suffer the bankruptcy taint. It hardly has an effect on your credit score. This makes it easier to recover from debt because it will not compromise your ability to get financial aid. It will not hinder you from buying your home, putting up a business or making partnerships for your company. Growing your personal wealth after debt will be easier to achieve with debt consolidation.