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Rebuild Credit

November 6th, 2007 by Shenron

If you are just coming out of a financial difficulty, you know how important it is to rebuild credit. Making payments on time is one way for you to be able to rebuild credit quickly and easily. It may not seem like much but on time payments are one of the foundations of a credit report and counts for a significant portion of the overall percentage, which makes up a credit score. This is why it is one of the best places to start when it comes to rebuilding your credit and getting back into financial stability.

There are a number of ways that you can rebuild credit by making payments on time. In order to make payments on time you must first be aware of when your payments are due and your billing cycle. If you know, you cannot make a full payment in a lump sum consider making multiple payments over the month with the final payment being made on time. One of the ways to make sure your payments are received on time is to submit your payments using your credit card website or the website of the company to which you own money. Most companies, like the power company, phone company, even department or store companies have online options for paying your bill. These usually post right a way or within a day, so that you can be sure your bill is on time.

Another option is to pay over the phone. This usually comes with a fee but also is usually credited to your account as soon as you call it in so it might be worth the fee for rush or an emergency to make sure your payment gets in on time. Something else to consider is using an automatic bill pay this will automatically debit your account each month on a date you specify and the amount you specify.
This can help ensure your payment is always made on time and thereby helping you to rebuild credit. Automatic bill pay is easy to sign up for through most of the major credit card companies and a lot of utility companies, as well. You won’t have to worry about writing down a bunch of dates and remembering to make payments on those days.

Finally you can mail your payment in but it should be mailed in at least seven to fourteen business days in order to make sure it arrives on time and is credited to your account when it’s suppose to and you end up with on time payments even if the post office is a little late. It is also a good idea to contact customer service as soon as you send the payments so they can make a note of when you mailed it out. This can help if for some reason your payment does not arrive on time. Different credit card companies have different rules for when a payment is late. Some will credit your account if the payment is received in the afternoon, while others will charge you a late fee. It is important to find all of this information out in order to make informed decisions regarding when to mail the check.

It is not difficult to rebuild credit if you make payments on time and in the proper amounts. Following this method, you can easily raise your credit rating a little very month to every six months depending on when the companies report to the credit agencies. While it may take time and just a little effort, it is well worth it in the end as more and more opportunities and doors open for you.

Posted in Bankruptcy, Credit Score | | 0 Comments

Chapter 7 Bankruptcy - Overview

July 22nd, 2007 by Shenron

When you file for Chapter 7 bankruptcy, you are basically handing over your debts and your properties to the bankruptcy court. While your debts may be cancelled, the court will order the liquidation of some of your property in order to pay off your debts. You can’t sell or give away any of your property without permission from the court although in some cases, the court may give you limited freedom to handle properties and income you acquired after you filed for bankruptcy.

The court will assign a bankruptcy trustee to your case. The responsibilities of this person include determining which of your properties are exempt (that which the court allows you to keep) and nonexempt (those that will be taken to pay your creditors). You are required to surrender nonexempt properties to the trustee or you may provide its equivalent value in cash. The trustee may decide that a property is not worth selling so you get to keep it even though it is nonexempt. In most Chapter 7 cases, the properties are either exempt or are basically worthless in terms of raising money for the creditors. If the trustee has determined that all properties are exempt, a no distribution report will be submitted to the bankruptcy court. If there are nonexempt properties, the trustee will collect and sell these and give the proceeds to your creditors. The trustee should also ensure that you have properly reported all your assets. If your creditors think that you have not been truthful in declaring your financial status, it is the duty of the trustee, as the representative of your creditors, to ask the judge to deny your discharge.

Not everybody however can file for Chapter 7 bankruptcy. In the new bankruptcy law, you will be required to take the “means test” before filing. This is to determine if you have enough disposable income (income after expenses for the basic necessities and other debt repayments has been deducted) to repay your creditors. If the court has determined that you have a stable and adequate income to pay your creditors, you will be forced to use Chapter 13 bankruptcy if you insist on filing. You also will not be allowed to file if you have been granted a discharge from your debts within the last eight years if the bankruptcy was filed under Chapter 7 and within the last six years if it was filed under Chapter 13.

When the court has recovered evidence that you tried to defraud your creditors or that you have not been truthful in reporting all your assets, it may dismiss your case and the creditors may continue the process of collection before you filed for bankruptcy. Worse, you may be charged and prosecuted for fraud.

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What you need to know about chapter 13 Bankruptcies

July 22nd, 2007 by Shenron

Chapter 13 Wage Earner Bankruptcy lets you repay your debts without the need to turn over any property as is usually the case with Chapter 7 Bankruptcy. Under this chapter, you are allowed to use any income you may obtain in the future in order to pay off your creditors. The court approves a payment plan which may last from three to five years, depending on your income.

Eligibility

Since Chapter 13 requires you to pay off your creditors using your income, the most important criteria for filing bankruptcy under this chapter is to have a stable income and an adequate disposable income. If you don’t have a regular income or if it’s too low, you may not be allowed to file for Chapter 13. Likewise, if your debts are too large, you are ineligible. Your secured and unsecured debts must not exceed certain amounts which are adjusted regularly based on the consumer price index.

How Does It Work?

You will be allowed to keep all of your property but upon declaring bankruptcy you have to include a plan to pay your creditors over three to five years. Such plan is distributed to creditors who have the right to make objections if they think it is unjust. When the court approves the plan, you will have to commence monthly payment to your creditors. A bankruptcy trustee appointed by the court to collect your payment and distributes these to your creditors, may or may not be involved in a Chapter 13 bankruptcy although it is a must for Chapter 7. Either way, creditors are prohibited to collect any claim from you if it is not according to the plan. If you are able to complete the plan as is ordered by the court, you will be discharged from all your debts. If not, the plan may be modified depending on your reasons for non – completion. If your reasons are unjustifiable, your creditors may request the court to have the Chapter 13 proceeding terminated. If this is approved, your assets may be collected as before you filed for bankruptcy.

Advantages

Those who apply for Chapter 13 bankruptcy gets to keep all of their properties. If you think that you have a lot of property to lose but you have enough monthly income to pay off your debts, then Chapter 13 is a better option than Chapter 7. Furthermore, as long as you follow the payment plan ordered by the court, you will be given a full plan discharge. Another advantage of filing under this chapter is that the payment plan may be approved and enforced by the court even if your creditors object to it. But of course, the court also allows them to file any objections, if they have any.

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The Bankruptcy Process

July 22nd, 2007 by Shenron

Filing for bankruptcy can be disheartening because in a way you will be admitting to failure and whatever you have worked hard for, for many years might be lost. However, what needs to be done should be done. You may have fallen at this time but it doesn’t mean you can’t rise up again. Here are a few tips on how to proceed with bankruptcy declaration:

Make sure that you have gone over all the other alternatives. Bankruptcy should not be taken as an immediate solution but as a last resort. If all the other options proved unsatisfactory to you, then proceed. Besides, if your credit is in a really bad shape, bankruptcy is a way for you to start afresh.
You may file for bankruptcy without the aid of a lawyer but it is a wise decision to obtain the services of one. Ask family members, friends and colleagues if they know a trustworthy lawyer who has an extensive experience on bankruptcy proceedings. If you choose a large law firm to represent you, most probably you’ll be dealing with a paralegal rather than a lawyer. It is always preferable if you can have direct contact with a lawyer.
Meet with your lawyer and present to him all your bills, bank statements, copies of mortgages and loans, and tax payments. This will help you both determine if you’re going to file a Chapter 7 or a Chapter 13 bankruptcy. Don’t hesitate to ask questions from your lawyer. All your legal inquires must be answered before you make your final decision. Even questions about the cost of his services should be addressed as early as possible. It is also important that you trust your lawyer and you feel comfortable discussing your financial issues with him. Remember that you’ll be working with each other for some time.
Once bankruptcy has been filed, automatic stay goes into effect and you should refer all your creditors to your lawyer. He will answer all inquiries from them. Remember that when creditors still contact you even after automatic stay has been enforced, you should inform your lawyer as damages could be assessed against them.
When you filed a Chapter 7 bankruptcy, a trustee is assigned to your case. This person represents the interests of the U.S. Bankruptcy Court and they should ensure that your bankruptcy petition has been answered truthfully and that you fully understood what you have signed. The trustees are also responsible to collect and sell your assets (that which the court allows) and distributes the proceeds to your creditors.
After your lawyer has submitted the petition, you will be scheduled to attend a meeting of creditors. When your hearing goes smoothly and you are able to accomplish the tasks set by the court, you will receive a discharge from the bankruptcy court.

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The Pros and Cons of Bankruptcy

July 22nd, 2007 by Shenron

The decision whether to file for bankruptcy can be difficult and distressing. While you will be relieved of the stress of dealing with so many creditors and you will be given a fresh start, your credit file will be marred by the bankruptcy record. So if you’re thinking about declaring bankruptcy, take time to reflect and use your good judgment when deciding. Meanwhile, here are the list of advantages and disadvantages of bankruptcy to aid you in making the correct choice:

ADVANTAGES

You will be able to start anew financially as you will be discharged from most of your unsecured debts (especially when you filed a Chapter 7 bankruptcy). Secured debts have personal properties attached to the debt, such that when you’re not able to pay, the creditor may repossess the property. Common secured debts are home mortgage and car loan. Most consumer debts are unsecured and can be cancelled.
You will be freed from the stress of dealing with so many creditors – some of them may harass you if your payment is long overdue. Once bankruptcy is filed, there is a law called automatic stay which prohibits creditors from filing lawsuits, repossessing your property, and foreclosing your home. Furthermore, if you have filed with an attorney, all inquiries from creditors will be channeled to him.
You will be able to keep most of the essentials such as your home and car, so you will have a roof over your head and you will still be able to get around.
You can keep your job as filing of bankruptcy cannot be a ground for dismissal.

DISADVANTAGES

A record of being bankrupt is a blemish on your credit file – such a record stays on the files for 10 years. As a consequence, mortgages will be very difficult to obtain, so are bank accounts and credit cards. The loss of credit cards may be a good thing though because they are a common cause of being buried in debts. If you do obtain a credit, it may still reflect the record of bankruptcy as it will most probably carry a higher rate than before you filed for bankruptcy.
Not all debts can be written off. Domestic (child) support obligations, debts acquired through fraud, fines, and secured debts still need to be paid even after filing of bankruptcy. The rights of secured creditors are not affected by bankruptcy.
If you own a business, it will most probably be sold off and the employees dismissed.
The names of those who become bankrupt are in the court records and in the newspapers.
Bankruptcy is an admission of failure and can be a source of disgrace.

Posted in Bankruptcy | | 0 Comments

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Recent Articles

Rebuild Credit

Chapter 7 Bankruptcy - Overview

What you need to know about chapter 13 Bankruptcies

The Bankruptcy Process

The Pros and Cons of Bankruptcy

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