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Credit Cards and Bankruptcy: What you need to Know

Bankruptcy

For most individuals, credit cards and bankruptcy go hand in hand. As a result, there are many questions regarding the process of dealing with credit cards in bankruptcy. Here is what you need to know:

• Credit card debt can be eliminated in Chapter 7 bankruptcy, along with any other unsecured debts.
• It is important to list all debts when entering into bankruptcy, including your credit cards.
• There are times when you can keep a credit card in bankruptcy, but it requires you to sign a reaffirmation agreement that essentially re-obligates you to the debt incurred on the credit card. Otherwise, it is unlikely you will be able to continue using your credit cards once you enter into bankruptcy.
• Paying off one credit card and not another before filing bankruptcy is prohibited through bankruptcy law because it shows preferential treatment of one creditor over another. In other words, you are generally not allowed to pay off one creditor before bankruptcy so you can continue to use that credit card following bankruptcy.
• Even if you don’t have a balance on a credit card proceeding bankruptcy, and therefore do not need to include it in the bankruptcy, the credit card company will find out about your bankruptcy and likely revoke the credit card.
• Charging a lot on your credit cards before filing bankruptcy is considered fraud and will likely result in a rejection through the bankruptcy court. In fact, a creditor, if they suspect fraud, has the right to object the bankruptcy discharge and even file an objection to discharge any of your debts. In other words, don’t start spending before filing for bankruptcy.
• An authorized user on your credit card account will likely not be held accountable for your credit card debt, but a co-signer will be responsible. Unlike a co-signer, who enters into a financial obligation with the credit card company, an authorized user is simply another individual who is given the right, by the cardholder, to make purchases on the card.
• A bankruptcy will affect your ability to obtain credit; but it will also provide you with an opportunity to start fresh and build a strong credit score in the future.

The Credit Card Conversation you must have before saying ‘I Do’

Introduction

We often get so wrapped up in wedding plans that we fail to recognize the financial planning that goes into making a marriage work. So, before you meet your future spouse at the end of the aisle to say, “I do,” take the time to sit down and discuss your finances.

There are a set of questions the engaged couple should be asking one another. After all, there is nothing worse than finding out your soon-to-be-spouse is burdened by debt, bad credit, or even a bankruptcy. It’s better to get all financial issues out on the table so that there won’t be any surprises once the excitement from the wedding day has faded and reality has set in:

Q: What is your income?

Although this is, of course, a very personal question, the fact of the matter is that you both must know this information if you are going to rent or purchase a home.

Q: What is your credit score?

Again, this is a personal question, but a very important one to ask your future spouse. If your fiancé is unaware of his or her credit score, now is a great time for both of you to order a copy of your credit report from all three, credit reporting bureaus. Ordering your credit reports is also beneficial at this time because you and your fiancé can remedy any mistakes or inconsistencies long before you decide to purchase your first home or make any other type of large purchase.

Q: How much debt do you have?

In order to get an accurate picture of your future financial situation as a couple, you will need to add up your combined debt. This may include credit cards, student loans, car loans and personal loans, just to name a few.

Q: How many credit cards do you have, and do you carry balances on these cards from month to month?

It may prove to be quite advantageous to both you and your future spouse if you work together to pay off credit card debt before you are married. This will put you in a much better financial situation once you are married and looking to purchase a home, for example.

Seniors and Credit Card Debt: The Link to Bankruptcy Filings

Bankruptcy

We all know about the financial challenges facing many million Americans. However, what we may not be aware of is the fact that elderly individuals are also suffering from the effects of the credit and housing crisis.

In fact, seniors, unlike most of the younger generations, are living on fixed incomes and may rely on personal savings, Social Security payments and pensions to make ends meet. However, many seniors, in an attempt to meet their daily expenses when other sources just don’t cut it, are turning to credit cards.

The Problem with Seniors and Debt

The difference between seniors and younger individuals, however, is that they may have no means with which to pay off credit card debt, thereby leaving them with few alternatives.  It is no wonder, then, that credit card debt is the leading cause of bankruptcy among seniors, according to Forbes. In fact, Forbes reported that more than two-thirds of seniors who filed for bankruptcy claimed credit cards with high interest rates were the main cause. Conversely, just 53 percent of younger individuals reported credit cards as the reason for filing bankruptcy.

The number of individuals aged 65 and older filing for bankruptcy increased from 2.1 percent in 1991 to 7 percent in 2007. The median age of individuals seeking bankruptcy protection also increased during this time, growing from 36.5 to 43 years old, according to Forbes.

Why Seniors may Struggle with Debt

In addition to older Americans filing for bankruptcy, a report shows that this age group is also far less likely to ask for help from family and friends. Many individuals in this age group may also be experiencing financial difficulties because of high medical bills. Finally, older individuals may be less likely to negotiate their debt with creditors before seeking protection under the bankruptcy laws.

Even despite the stricter bankruptcy rules and costs, seniors are still struggling with finances and subsequently filing for bankruptcy. These statistics are undoubtedly linked to higher medical bills, smaller, fixed incomes and few options regarding repayment of their credit card debt.

Essential Tips for Rebuilding your Credit after a Bankruptcy

Credit Repair

Make no doubt about it, bankruptcy will destroy your chances of getting any type of credit for quite a few years. However, after your bankruptcy is discharged it is time to begin rebuilding and reestablishing your credit.

There are certain things you should do and certain things you shouldn’t do, however, when it comes to making the right moves regarding your credit:

• As soon as your bankruptcy is discharged, apply for at least two credit cards. It is important to understand that you will likely qualify for traditional, unsecured credit, so you may have to first start with a couple secured credit cards. Secured credit cards, while they act the same regarding the rebuilding of your credit, are different because they require a cash deposit equal to your credit limit. Just like a typical credit card, you will be expected to pay the bill each month; if you fail to do this, the credit card company can then use your cash deposit to pay the bill and close your account. Your payment history with your secured credit cards will be vital when it comes to reestablishing your credit, so take these seriously.
• After about 12 to 18 months of making regular payments on your secured credit cards you can then attempt to apply for an unsecured credit card. At this time, you will have likely established a good credit history using your secured credit cards. Avoid opening too many new credit card accounts at once, though, as this could lower your credit score.
• Avoid closing any credit card accounts, regardless of whether you spend on them or not, as a good portion of your credit score is made up of your available credit. The more credit accounts you have open, the higher your available credit.
• Make purchases on your credit cards each month, but also make a point to pay them off in full when the bill comes. Adopting this responsible habit will allow you to enjoy the benefits of good credit without becoming overwhelmed with credit card debt.

Should you Consider Credit Card Debt Settlement?

Credit Card Debt

You see the commercials all the time; companies promising to slash your credit card debt and give you affordable repayment plans for your mounting credit card debt.

You may have begun thinking about turning to a debt settlement company, but are quite leery of the promises.

If you have questions about credit card debt settlement, then consider the following factors before picking up the phone and taking the next step:

1. Don’t consider credit card debt settlement if your credit card bills are still manageable.
2. Don’t consider credit card debt settlement if your credit card bills total less than $10,000.
3. Most credit card debt settlement companies require that you prove a financial hardship. This may include the loss of a job, a great deal of medial bills or other type of unforeseen circumstances. Expect the company to ask you to provide proof of your financial hardship.
4. You may consider debt settlement if the credit card laws make it too difficult for you to file bankruptcy.
5. Although Congress has made a point of flushing out many of the unscrupulous debt settlement companies, it is still in your best interest to research the debt settlement company before agreeing to proceed.
6. Although credit card debt settlement will allow you to pay off your credit card debt in less than five years, and for a fraction of what was originally owed, understand that your credit score will be negatively impacted. For individuals who already have suffered a blow to their credit score, this won’t be too much of an issue.
7. Consider researching many debt settlement companies online through debt relief networks. The Internet is a great source of information on debt settlement companies, so use this resource to your advantage when researching debt settlement companies.
8. Consider a debt settlement company only after you have exhausted all other possibilities. Often times, debt settlement companies have much more success in negotiating better repayment terms, but it never hurts to contact the credit card company and request better terms. If you get nowhere fast, you may then choose to use the services of a debt settlement company.

Money Mistakes: Avoiding Disaster

Introduction

Many women and men alike, have big hearts, good intentions and want to continue to do well financially. Unfortunately, as human beings, we often live in the moment. This is not a bad thing, however, it is not so good when it comes to money. Just because something in your life is going well in the here and now does not mean it will be the same a few months down the line. Many people make financial decisions without putting a lot of thought into the consequences and what ifs. These little mistakes could lead to a lot of hassle and financial disaster that will take time, effort and more money to unravel.

It is a much better idea to be in the know and to consider the steps you take with your money and financial future carefully before diving in head-first. Listed below are some common mistakes people tend to make. These are some of the aspects you want to think twice about.

Thinking Bankruptcy or Debt Consolidation Will Fix it All.

Yes, bankruptcy and debt consolidation are good options to help you get out from under a mountain of debt you can not possibly afford. It can relieve the financial stress immensely. However, It won;t take care of everything. You will still have bills to pay, and not all debts will always be discharged in a bankruptcy. With consolidation, you’re still going to have to pay, just at a lower rate.

If you are experiencing financial troubles, it is time to look for other resources to ease that burden. A new job, second job… increasing income can help. Go back to school if you need to. If none of these are an option, think about state aid. There’s no shame in asking for help if you have a family to care for and just can’t do it. That’s why state aid is there. Some taxpayers might put you down, but hey, they’d be singing a different tune if they were in your shoes. Also consider getting some credit counseling to help you learn about budgeting, saving and managing the money you do have.

Pooling Financial Resources with Someone Else

When you’re married, it is acceptable to pool your financial resources. However, it’s not a good idea to do this if you are in a relationship with someone you are not sure about marrying or even with a close friend. One person’s irresponsibility could hurt the other financially and could also destroy the relationship or friendship. Don;t share bank accounts or credit cards with anyone except your spouse and only after the marriage has occurred.

Emotions and Money

Never let your emotions take the lead. Make financial decisions only when you are feeling good and never run out and start spending to try and fix your mood. It’s a temporary fix, at best, and if you think you felt bad before the spending spree, just wait until you see the bill or start struggling later because of it.

When a Relationship Ends, Financial Ties Should End Too

If you have been pooling your financial resources with another, and the relationship, friendship or marriage comes to an end, do not forget to sever all financial ties. If the other party is v8indictive, you could pay for it. If they are not being responsible, you could pay for it. Get rid of all joint accounts and debts, as quickly as possible, paying anything you already owe, of course. The relationship ended for a reason. That is enough cause to end the financial links as well.

There are lots of other money mistakes that people make, however, these are so common and lead to so much financial angst that they are worth discussing in detail.

Debt Collectors and Intimidation Tactics

Credit Repair

There is probably nothing more frustrating then being in debt and having your telephone ring off the hook with debt collectors who just don’t know when to stop. Try telling these guys about your situation and you get nowhere. They couldn’t care less. Why? They are being paid to collect on the debt you owe. They have a job to do and listening to your financial woes isn’t it. To top it off, they try to blame you for circumstances you often had nothing to do with creating and demand payment immediately “How are you going to take care of this today?” they ask. Frankly, if you had the money to pay the debt right then and there, you would not be in so much debt because you would have taken care of this long ago, right?

Debt collectors are famous for their intimidation tactics. This borders on illegal and often crosses the line. They call repeatedly. They threaten you. They promise that only one person is handling the account and you will only ever hear from them. However, lo, and behold, you get a call a few days later from the same collection company and it is, indeed, a different agent. Just because you’re in debt does not mean you have to tolerate the added stress of debt collector intimidation.

Make Them Listen

Debt collection agents like to talk, trying to tell you how much debt you have and what you have to do to solve the problem. As if you were not already in the know, right? Cut them off. Tell them where you sit financially. Tell them you will pay the debt as soon as you are able. Make them listen. Even if they act like they do not care, be stern. You have the right to tell them your side of the story. Then, kindly ask them not to harass you as much or even at all. This might not stop it, but there will typically be a recording of your having asked, and often, it does reduce or eliminate the calls. If it doesn’t, there are other steps to take.

Bankruptcy

Planning to file? Make it clear to the collectors. They know there is little they can do to collect on this debt now. It will reduce or even eliminate the calls, at least for some time. Be sure to follow through on the bankruptcy filing, as after a while, they will resume collection attempts if you have not taken any action.

Assert Your Rights

Put a stop to the calls. Write a cease and desist letter to the collection agency. You can find out how to do this on the FTC website. Let them know that you know your rights and demand that they leave you alone. Keep a copy of the letter. The collection agency can contact you one last time, through the mail, to inform you of their intent, however, after this, if their harassment persists, they can wind up in big trouble.

Don’t take debt collector harassment lying down! It’s one thing for those who are irresponsible to be in the bad way financially, but for most of us, life happened, and we can do little about it at the moment. Life comes with enough stress. Don’t let these guys add to it.

Honesty is the Best Policy: Mistakes that Could Cost You in Bankruptcy Court

Bankruptcy

If you find yourself in over your head financially and there just seems to be no other way out, bankruptcy might be the solution to your financial woes. Depending on what type of bankruptcy you file, you can get rid of all or most of your debt or at least renegotiate that debt into a more suitable payment plan. Either way, bankruptcy can rid you of a lot of financial burden. However, before you go through with a bankruptcy filing, you need to know that bankruptcy is intended for the honest creditor. If you plan to lie or try to get around something by a simple omission of the facts, it could cost you. Your case could be denied, and if you are caught committing bankruptcy fraud which happens to be a felony, punishable by some time spent in jail.

Your Assets

Don’t get rid of assets that would be protected by bankruptcy laws. Don’t try to hide assets that are not protected, and do not get rid of any for less than they are worth. You will only lose; often more ways then one. If you get rid of assets that are protected, well, you no longer have them. Period. Your loss, and you will just have to live with it. However, trying to hide an asset, especially by getting rid of it for less than it is worth, just so you do not have it at the time of bankruptcy, is not a smart move. You have to disclose your assets and the transfer thereof to the court.

Laying it on Thick

Your about to file bankruptcy, so you think, why not? One last joyride while I still have the credit to spend. Again, not a very smart move. Just because you are planning to file bankruptcy does not mean you can go out and rack up all the debt you want, under the impression that the court will relieve you of it. Increased activity or suspicious activity, followed by a bankruptcy filing will be a red flag for the credit lender. They in turn will dispute your bankruptcy claim, reporting your actions to the court. If the court finds in their favor, you might wind up in hot water with a lot of debt to pay.

Omissions

Whatever lies in your financial history, you need to first disclose it to your attorney and work out a plausible solution and then tell it to the court. No matter how shameful or dumb it might be, you have to be honest. The court requires it, if you want your attorney to help you to the best of his or her potential, you have to be open and honest. He or she can not work with you on things they do not know about.

Don’t try to fool the bankruptcy court. Odds are, they will find out one way or another. Then, you will be the one really in the hurt. You’ll still have all the debt, plus a lot to answer for, one way or another.

How Often Can I File For Bankruptcy?

Bankruptcy

Debt. The dreaded d-word. None of us like to hear it, let alone say it. However, the overwhelming feeling of being smack-dab in the middle of the creek without so much as a paddle is far worse. The good news? When all else fails, there is a way out that will finally have you breathing that longed for sigh of relief.

Bankruptcy can be your savior when facing a difficult financial crisis that you can not find your way out of. Of course, you don’t want to abuse the privilege by filing and getting in over your head again, just to keep filing for bankruptcy over and over again. After all, there is a task force whose aim is to seek out those who, even if filing within the allotted time frame, seem to be abusing the bankruptcy system with frequent filings. Still, unforeseen circumstances do happen and it is nice to know that not only is bankruptcy there for you in your time of need, but should a similar situation sneak up on you again, you can call on bankruptcy more than once to bail you out. However, since this is a legal process, there are rules and limitations.

Frequency

You can file for bankruptcy as often as you like, but if you are looking to have your debts discharged, you will only be able to file every 8 years. If the court sees that you have filed more than once in an 8-year period, you will have just wasted a lot of time and money. They won’t cancel the debt you owe.

In this case, you need to be prepared to get on your feet after filing. A plan of action is good and most bankruptcy courts require you to go through some kind of debt counseling program anyway. It’s a program you do not want to take lightly. It can make a huge difference in the court’s decision to approve your bankruptcy claim and could possibly offer resources for helping you to change your life and avoid future bankruptcy.

Different rules do apply to different types of bankruptcy. Chapter 7 will discharge your debts and can be filed every 8 years if needed, as mentioned before. The catch is that your previous case must have resulted in a discharge. If you receive a dismissal, you do have the right to refile 180 days later. Chapter 13, on the other hand, is a process of reorganization. This means you will propose a plan to the court for paying off your creditors. Under Chapter 13, some debts will have to be paid in full, some may be paid partially, and some of your debts may be discharged, depending on what you can afford to repay. Chapter 13 plans last about 4- 6 years before being discharged, however, you can file another petition as soon as you receive the Chapter 13 discharge. You can even file Chapter 13 at any time after receiving a Chapter 7 discharge.

Debts and Creditors

Certain debts can not be discharged. So think twice before you attempt to file on tax debts, child support or alimony payments.  Student loans will only be discharged if you can prove this presents an undue burden. Be prepared to prove this on all the debts you want discharged. You’ll be up against creditors who are trying to convince the court that the debt you owe them should be repaid. Should they convince the court, you will end up paying.

Fortunately, those with a successful bankruptcy case benefit from the automatic stay that prevents creditors from taking action to collect the debt. The only way they can proceed from this point is if and when the court lifts the automatic stay.

Considerations

If you own a business, you may want to consider filing Chapter 11. If you make a living as a family fisherman or farmer, go for Chapter 12, which will allow you to hang onto your property while repaying your debts. This is similar to Chapter 13, but is a bit more involved as far as including your assets and reorganization of debts. Under Chapter 11, there are really no restraints or length-of-time limits on filing. The court simply must agree that there are benefits and possibilities of reorganization when filing. Chapter 12 plans may last no more than five years and once you have received a discharge, you’re free to file again.

So, as you can see, when in debt, there are options that will relieve your financial burden. As long as you are willing to follow the courts instructions, learn the process and not abuse it, bankruptcy can be your greatest ally when times are rough.

Post Bankruptcy Tips: How to Get back on Track and Stay on Track

Bankruptcy

If you have recently filed for or been discharged from a bankruptcy, there had to have come a time when your financial life began to take a turn for the worst, slowly meeting up with its demise. While it is true that some people wind up in this boat simply because they were irresponsible or failed to heed to caution, most people who file bankruptcy got there because of life’s unforeseen circumstances and their lack of ability to control them. In those cases, bankruptcy can be a real blessing; rescuing you from the burden of a financial problem that seemed insurmountable.

The sense of relief one feels when successfully getting out from under overwhelming debt is almost indescribable. However, one thing you do not want to do is to forget how overwhelmed you felt prior to filing for bankruptcy. That way, you can avoid winding up in the same boat again, or at least take steps to avoid it as much as you can. Financial death can happen to anyone at anytime. However, financial suicide is a whole different matter. The following tips can help you to get back on track and stay on track, avoiding the post-bankruptcy blues:

Your Credit Report

Yes, you want your credit score to improve substantially. However, that’s going to take some time and effort. For now, you need to take a good look at your credit report and stay on top of it. Get copies from each of the three credit bureaus (you’re entitled to one free report from each of these every year). Look them over and make sure your bankruptcy and discharged debts are noted. If there are any discrepancies at all, call and have them fixed immediately. While this may not do much to improve your score right away, it can help some and is a step in the right direction.

Credit Counseling

If you were not required to seek credit counseling as part of your bankruptcy requirements, now might be a good time to give it a shot. You’ll learn a lot of great things about money, budgeting, savings and maintaining a healthy financial life. This counseling could truly make a difference in staying the course or falling back into bankruptcy again.

Your Debt

If you have debts leftover that were not discharged, set up a plan to pay those debts off as quickly as your income allows and get them off your back. For your current bills and any newly acquired debt, make a point to stay ahead of the game by paying the full amount due  in advance or at least on time each and every month.

A credit card is a great way to rebuild your credit. Your best option is to go with a secured card. Just make sure you pay the bill on time, the company reports your activity to a major credit bureau and that it is not reported as secured.

Loans

It is best to wait several years before amusing a loan. Smaller loans are acceptable as long as you pay them back quickly. For large loans though, give yourself some time. Get back on your feet financially. After a couple of years, if you want a car loan or a mortgage, you will be able to get a better interest rate then if you jumped right in after bankruptcy. On a car loan, minimize the term of your loan as much as possible, or you might wind up paying far more than the car is even worth! When it comes to choosing a lender, watch out for those bleeding hearts that say bad credit is ok with them. It is ok with them in the form of the highest interest rates going!

As long as you make a conscientious effort to stay on track after bankruptcy, you should be fine. Granted, life does happen and financial problems are not always avoidable. However, if you have been down bankruptcy road once, it is easier to identify the mistakes of the past and avoid them, increasing your chances of escaping the same pitfalls the next time around.