Archive for the ‘Credit’ Category
Tuesday, August 10th, 2010
As you may know, last year Congress passed a law called the Credit Card Accountability Responsibility and Disclosure Act of 2009. This law, nicknamed the CARD Act of 2009, was designed to regulate a variety of unpopular credit card tactics, such as interest rate increases without notice, inactivity fees and unfair interest calculations.
According to credit card industry analysts, the CARD Act of 2009 will eliminate over $390 million in fees for credit card issuers. Not surprisingly, the credit card companies do not intend to walk away from this fee income. For every fee and penalty eliminated by the CARD Act, credit card issuers are finding replacements. For example the annual fee for many cards has been increased, sometimes dramatically. Card issuers are also sending corporate card applications (called "professional cards") to consumers. Corporate cards are not included in the CARD Act.
The Wall Street Journal recently ran a story explaining how the credit card companies intends to recoup their lost fee income. The bottom line: the CARD Act of 2009 will eliminate some consumer-unfriendly tactics used by the credit card companies, but it will trigger an equal number of new consumer-unfriendly tactics. Caveat Emptor.
Posted in CARD Act of 2009, Congress, Consumer Protection, Credit, Disclosure, Law, a, accountability, act, act the, and, applications, called, card, corporate, credit card company tactics, credit card fees, dramatically , fees, inactivity, included, issuers, issuers , journal, notice, passed, responsibility, sending, street, tactics, the, unfair, unpopular, wall, year | Comments Off
Thursday, July 15th, 2010
Muna wa Wanjiru asked:
Going bankrupt is a nightmare that not all people might experience. While the bankruptcy code can’t be altered by any state there are different procedures for each state. For anyone who is living in Illinois, the matter of bankruptcy Illinois courts system will decide on.
You should however prepare for the court proceedings when you first start thinking about claiming bankruptcy. As bankruptcy is very complicated you might want to ask a bankruptcy lawyer to explain the bankruptcy Illinois act.
This way you will understand what the Illinois courts require from you before they can state that you are bankrupt. As the bankruptcy code has changed in 2005 you will need to go through credit counseling at an approved counseling agency at least 6 months before you file for bankruptcy.
You will also need to go through with a financial management instructional course after you have filed for bankruptcy. Before you start the process of bankruptcy filing you will need to gather all of the documents that bankruptcy Illinois courts require.
These documents will include any deeds and titles to land and vehicles that you own, loan documents, your tax returns for the last 2 years, property and assets, all debts – both secured and unsecured – with the names of the creditors listed, monthly living expenses, major financial transactions for the last 2 years. You will also need to itemize your current income sources.
Once these have been readied and you have talked with a reputed bankruptcy lawyer you can take the means test, to see if you qualify for a chapter 7 or chapter 13 bankruptcy filing.
The means test will be administered by your lawyer and you will have the right to a chapter 7 bankruptcy filing. The means test will be based on your monthly income and expenses. If your monthly income and expenses are more than the average for Illinois wage earners you can’t file for chapter 7 bankruptcy.
Instead you will be able to apply for chapter 13. In this chapter you can keep all of your assets and property and pay off your creditors. You will be using the wages that you have left from your monthly expenses.
The bankruptcy Illinois act allows the debtor to file for chapter 13 even if they qualify for chapter 7. Once you are ready for either a chapter 7 or a chapter 13 bankruptcy Illinois hearing then you have to answer all of the questions that the bankruptcy trustee and your creditors will ask from you.
While the bankruptcy Illinois act is not that hard to prepare for you should make sure that you have everything readied before you start applying for bankruptcy. Having all of the items that you need for your bankruptcy hearing ready, will help you to choose if you want a chapter 7 or 13 bankruptcy filed.
Bankruptcy Questions
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Thursday, June 17th, 2010
Elizabeth Williams asked:
Is your debt more than you can pay? Have you considered filing for bankruptcy, or talked with a financial advisor who has suggested bankruptcy filing? If you find yourself in over your head in debt, bankruptcy might appear to be the perfect solution – but only if you’ve considered all other alternatives first.
In fact, taking a close look at bankruptcy alternatives might make you think twice about filing bankruptcy. Bankruptcy should be used as a last resort as it can be extremely frustrating, and it creates long term damages on your credit. Plus- even though you are filing bankruptcy to get out of debt problems, bankruptcy is not free. You will need an attorney and they will require an upfront payment before proceeding. Depending on where you live, filing bankruptcy can cost anywhere between $500 and $1,500.
You will also need to consider whether or not your debts are the type that can be removed in a bankruptcy. Not all debts can be wiped out by filing bankruptcy. Child support, student loans, alimony and taxes are all debts that must be repaid, and can’t be removed from your responsibility through filing bankruptcy.
If you do file bankruptcy, it will stay on your credit history for ten years. Having a bankruptcy on your credit report will make it difficult if not impossible to get loans or credit cards – and any financing you are able to obtain will have extremely high interest rates because you are classified as high risk. In essence bankruptcy should be considered to be a 10 year sentence – and if you could reasonably pay off your debts within 10 years you may want to consider paying them off instead of filing and then dealing with the repercussions of it later on.
Bankruptcy AlternativesBefore filing bankruptcy, you should first try to negotiate settlements with your creditors. A debt settlement is when a creditor agrees to accept less than the total amount owed and consider the account paid in full. It is often marked as “settled” on your credit report which is not as good as “paid as agreed” but it is certainly better than filing bankruptcy. What you need is time to get back on your financial feet and that is what a settlement process will provide you.
Your final alternatives to bankruptcy involve making a detailed, strict budget in which you will have to live. It would be a new way of life, most likely, and involve reducing your expenses to the bare minimum (perhaps moving to a less expensive home, skipping cable television and all unnecessary expenses, reducing utility usage, etc). It would involve increasing your income by getting a new job or a second or even third job in order to get more money to pay off debts.
Think of it this way – you could file for bankruptcy and have financial troubles for 10 years afterwards; or you could get serious about paying off debts and build your credit score and history while repaying in half the time.
Bankruptcy Questions
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Monday, May 17th, 2010
Government groups have published numbers for various economic indicators for March and April, giving a little insight into how our nation’s economic situation is changing. Here’s a summary of a few of these telling figures.
Consumer Borrowing Up in March
Since February of 2009, consumer borrowing in the U.S. has reportedly been falling, as we collectively try to claw our finances out of the red.
But March 2010 showed a surprising increase in consumer borrowing—a $1.95 billion increase, according to sources, which far outstripped the $3.85 billion loss many experts expected.
The increase could be a fluke, but it could equally be a sign that American households are becoming more optimistic about spending money.
Retail Rises Slightly in April
Retail sales blossomed in March, thanks in part to an early Easter. April’s numbers represent smaller growth, but growth nonetheless:
- March retail sales saw a 7.9 percent increase over sales in March of 2009.
- April retail sales grew only 0.5 percent compared with those a year earlier; however, in April 2009, sales decreased 2.7 percent from the previous year.
- Combined sales in March and April increased by 4.8 percent; January and February sales increased by only 3.3 and four percent.
While the slower growth in April may seem like cause for concern, many analysts are not worried, pointing to the fact that some growth occurred and that this year’s early Easter likely shifted people’s shopping patterns.
And, as one commentator in this New York Times article notes, economic recoveries don’t always happen linearly.
Median Home Prices
NPR reported this week that median home prices are on the rise in about 60 percent (91 out of 152) of the country’s cities surveyed.
This marks significant improvement from the final quarter of 2009, when only about 40 percent of median home prices were rising. Here’s a look at some of the hard numbers:
- 36 percent of all first-quarter sales were foreclosures and other distressed properties;
- Nationally, the median price was $166,100, about 0.7 percent below the median price in the first quarter of 2009;
- Prices jumped significantly in Saginaw, MI; Akron, OH; and Cleveland, OH; and
- Prices fell significantly in Orlando, FL; Ocala, FL; and Cumberland, MD.
Posted in Bankruptcy and the Economy, Credit, Economy, borrowing, housing, retail | Comments Off
Thursday, April 15th, 2010
Earlier this month I received a call from a Chapter 7 client that I had represented several years ago. He is attempting to refinance his house and has discovered that a judgment creditor has a lien for several thousand dollars. The creditor was listed on the case, but neither he no I knew that there was any judgment.
I directed him to visit the county courthouse and pull the file for this case. He did and he reports that the return of service shows that his wife was served by a sheriff's deputy. His wife has no recollection of being served. We did list the creditor on the bankruptcy petition but because we did not know that there was a judgment, we did not file a motion to avoid the judgment lien. What can he do?
There are a number of lessons you can learn from this man's experience. First, you should always obtain copies of credit reports from all 3 credit bureaus prior to filing bankruptcy. In Georgia, you can get a free credit report from each of the 3 main credit bureaus twice a year. Online, you can go to annualcreditreport.com and download your reports. Because credit reports obviously contain sensitive information the annualcreditreport.com system will ask several questions to identify yourself. These are usually multiple choice questions – for example, the system may say "your credit report shows that you previously lived on one of the following streets: (a) Oak Street (b) Thompson Street (c) Ivers Road (d) none of the above.
If you are unable to answer these questions, the system will instruct you to mail away for your credit reports – here is a link to a page on my website with the credit report request letters.
Credit reports are helpful because they will usually show pending lawsuits as well as the names, address, account numbers and debt amounts for most of your creditors. Obviously I can't require all bankruptcy clients to bring me credit reports but it sure helps avoid "forgotten" creditors or judgments.
As far as what we can do, there are a couple of options. First I want to make sure that service of process was correct. If you are served with a lawsuit in Georgia, the sheriff's deputy (or private process server) has to complete a document called a "return of service" that states when a party was served and by whom. Section 9-11-4 of the Official Code of Georgia provides that service on an individual must be made on the defendant himself, or "by leaving copies thereof at the defendant´s dwelling house or usual place of abode with some person of suitable age and discretion then residing therein."
In this case, if the sheriff's deputy served my client's wife, then service is most likely valid.
However, I sometimes see situations where the return of service is unclear as to who was served or even situations where the return of service is blank. In these cases, a defendant can "collaterally attack" the judgment on the grounds that service was not made and he did not know about the lawsuit.
If it turns out that service is valid, my client will have little choice but to negotiate a settlement of the real estate debt. Interestingly the Chapter 7 discharge would eliminate any personal liability he might have for this debt, but the liability remains as to his real estate.
My experience has also been that judgment creditors will become more amenable to negotiation the longer a real estate lien remains unpaid. Here, my client could forego a refinance (or threaten to to forego a refi) and use the argument that the judgment creditor might have to wait for years to get paid as leverage to negotiate a reduced payoff.
Posted in Chapter 7, Chapter 7 issues, Credit, Negotiation, Post bankruptcy credit rebuilding, a, amenable, avoid, bankruptcy and judgments, client, deputy, estate, forego, judgment, lawsuit, letters credit, lien, lien , longer, my, or, post-bankruptcy, private, process, real, refinance, remains, report, reports, request, served, server, the, threaten, unlisted judgment creditors, unpaid , wife | Comments Off
Saturday, February 27th, 2010
This week saw the much-anticipated date (February 22) on which the Credit Card Accountability Responsibility and Disclosure Act (Credit CARD Act) took full effect. And, while it theoretically introduces many new consumer protections, it leaves plenty room for “creativity” from card issuers.
Center for Responsibility Lending Responds
The Center for Responsible Lending released a humorous (though cynical) animated video that highlights some of the areas not addressed by the new act—and illustrates ways in which credit card issuers have adapted their policies to maintain profit levels. These include:
- Interest rate hikes: To compensate for lost revenue, some card issuers have already raised users’ interest rates. Even users in good standing may be “forcibly eligible” for this, as the video claims.
- Over-limit fees: If you accidentally exceed your credit limit, your cardholder likely charges a fee. And, with new restrictions in place on other charges they can assess, you might see this fee jump.
- Inactivity fees: On the other hand, if you use your card too infrequently, you might see a fee for that, as well, because that means you’re less profitable for the company.
- Increased minimum payments: Another technique some card issuers are using is to up the minimum amount you can pay each month. This could be profitable for those who won’t be able to afford the increased payments and can be charged an under-payment fee.
The Regulation-Creativity Relationship
As the video illustrates with a graph, more consumer protection may seem like a good thing, but in practice, it often means that card issuers just get more “creative” with fees they charge reasons they charge them.
If you’re thinking now is a good time to get out of credit cards altogether, you’re not alone, but, before you cancel your cards, consider this:
- Your credit score: Part of your credit score is based on age of accounts (older ones are better); another part is based on diversity of credit (so eliminating one type entirely would hurt you).
- Your reentry: If, at some future time, you decide you want a credit card again, you’ll likely have to contend with uber-high interest rates (above 70 percent) because you won’t have any recent credit card history.
The video exaggerates a little (by mentioning, for example, a “legibility fee” for left-handed users), but by doing so draws attention to the more serious matter of how significantly your credit card could change.
Be sure to read all correspondence from your card issuer, even mailings that seem like junk: some of them might contain important details about the new rates and fees you may have to pay. These statements will also come in handy if mounting fees and interest force you into bankruptcy.
Additional Resources
Credit CARD Act
Posted in Credit, Credit Cards, Credit and Bankruptcy, credit CARD act | Comments Off
Tuesday, January 19th, 2010
Matthew Hick asked: If you are considering bankruptcy, you’ll need to know what to expect during each phase of the process after filing.
Here’s a basic overview of what to expect during the entire process:
First, you must decide which type of bankruptcy you want to file. Chapter 7 will free you of all of your debt, and allow you to begin rebuilding your credit after a few years. Many people do not qualify for this type of bankruptcy under new government guidelines established in 2005, however, which allow the court to determine if you indeed do qualify. Basically, the law requires you make less than the medium income in your state to file for Chapter 7 bankruptcy.
Chapter 13 bankruptcy requires you to pay back all of your debt within a specific timeframe in accordance to a schedule set by the court. While this may sound like a good solution, after all it’s allowing you to pay back everyone you owe, it can be difficult since the court decides how much of your income is used for debt payments, and how much you are able to keep to live on. Their criteria is usually stringent, and doesn’t allow for anything but necessities during the repayment period.
Once you’ve decided which type of bankruptcy to file for, it’s time to start filing out mounds of legal paperwork. If you’ll be filing yourself, be prepared to file app. 30 to 60 pages in your petition, including schedules and other papers filed at the time of your bankruptcy. You must follow all local and federal bankruptcy court rules carefully when completing these forms. It can be very tedious and confusing work. You must learn and understand a variety of bankruptcy laws and requirements specific to your state, and be able to type them in a specific manner.
About 4-6 weeks after filing for bankruptcy with the court, you will be required to attend a hearing presided over by the bankruptcy trustee called the First Meeting of Creditors. You will be required to answer detailed questions about your bankruptcy papers, assets, debts and other matters from both the trustee and your creditors.
Your creditors now have 60 days in most states to contest your bankruptcy filing. Once that deadline has passed you can expect the court t notify you of your official debt discharge in about 60 to 75 days.
Does filing bankruptcy mean the end of credit for a lifetime? Absolutely not! You can begin to reestablish your credit two years after the discharge of Bankruptcy. However, it will be recorded for 10 years and must be reported if asked. You may not file a new bankruptcy request for six years.
Bankruptcy Questions
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Monday, December 28th, 2009
mom03222007 asked: I need to file for bankruptcy and I need a lawyer that is cheap and will let me do payments because I am a single mom. I have to file and because I can’t afford to pay all the bills and it cost a lot to file. Is there a way to file and be able to make payment on it? If so . Where can I go to get this done?
Fill This Out For Free Bankruptcy Evaluation!
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Thursday, November 19th, 2009
Phillip Allen asked: People who are considering filing for bankruptcy may have already tried loans, consolidations and other methods of getting out of their debts, but failed. Filing for bankruptcy can have serious consequences for the borrower, as the bankruptcy will be recorded on their credit file for 6 years. The need for bankruptcy comes when people are not able to pay off their minimum balances on the credit cards, car payments and home payments. Debtors who are facing financial crisis and who are considering for filing for bankruptcy should definitely speak to a bankruptcy specialist.
Filing for bankruptcy can be a very complex and time-taking process and can leave and person overwhelmed. Therefore seeking the help of an experienced insolvency practitioner for doing the task has numerous advantages, including peace of mind. There are practitioners who deal only with businesses, while others deal only with individuals; therefore, it is important to choose a practitioner who best suits the individual requirements and situation of the borrowers. If you need bankruptcy explained, a professional practitioner will be able to help the debtors in familiarising them with the legal procedures of the bankruptcy filing process.
An insolvency practitioner also helps in dealing with the creditors and working with the systems of the court for coming up with a better repayment plan. He or she is the one who will deal with all the extensive paper work needed to file for bankruptcy, by filling and filing all the paper work needed for their client. Otherwise, there is such a broad requirement of paper work during the bankruptcy process that can overwhelm any normal person. In addition to that, the practitioner will also help the client in gathering and liquidating the assets so that he or she can become debt free.
Taking help of a professional insolvency practitioner will help the borrower in getting out with the best possible deal. Although in some cases, legal proceedings can be done without an insolvency practitioner, it is still advisable to have a one so that the borrowers can get the laws of the bankruptcy explained for them, unless the borrowers have extensive knowledge about the legal procedures of bankruptcy.
Bankruptcy Questions
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Thursday, November 19th, 2009
Muna wa Wanjiru asked: From time to time someone may become bankrupt. As there are different forms of bankruptcy the person will need to decide what type of action to take. For the person who is unsure about the type of bankruptcy filing action to take they need to discuss with their lawyer all of the different courses and options that can help. One type of bankruptcy that is well known is that of the chapter 7 bankruptcy.
This bankruptcy claim deals with consumer bankruptcy. In consumer bankruptcy you don’t have enough money to pay off your creditors. To give you some time to recover from this problem and to help appease your creditors you can file for a chapter 7 bankruptcy claim.
In this claim all of your property that is not exempt from credit payment will need to be turned over to the bankruptcy trustee. This person will proceed to convert this property into cash. Once all of your property has been liquidated into cash it will be distributed among your creditors.
There are certain people who can file for a chapter 7 bankruptcy claim. These people are those who live or have a residence in the US. People who work, own property in the US or a municipality of the US.
You can also file for chapter 7 bankruptcy if you have not filed for a chapter 13 plan or you have not had a chapter 7 bankruptcy filed during the last 6 years. On the other hand if you have had a bankruptcy claim dismissed with a reasonable reason and cause then you will need to wait for 180 days before you can file for chapter 7 bankruptcy.
When you decide to declare that you are bankrupt this fact must be verified by your lawyer. A means test will be used to prove that you are in fact in financial trouble which can only be solved by a chapter 7 bankruptcy declaration.
The means test that you will have to undergo will see if your monthly earnings are more than what is the norm for your state. Your cost of food, rent, mortgages and other living expenses are deducted from your monthly income.
If the IRS finds that your monthly salary is $100 less than your state’s median wages then you have the right to claim chapter 7 bankruptcy.
With chapter 7 bankruptcy almost all of your debts will be erased and you have the chance to start your life and business matters up again. You will however need to rebuild your credit reputation.
As chapter 7 bankruptcy can remain on your public record for more than 10 years you might want to think about using this bankruptcy filing only as a last resort.
Bankruptcy Questions
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