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admin — Thu, 17 Jun 2010 09:01:55 +0000

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How does bankruptcy affect your credit report?

admin — Thu, 17 Jun 2010 08:54:45 +0000

There are more and more people that are in financial freefalls or so deep in debt that they feel that their only choice to get out from under the mountain of debts is to file for Chapter 7 Bankruptcy to be able to get a fresh start with a clean financial slate. What they do not know though is that there are some serious financial complications that are going to follow them for many, many years to come. This is one of the negative sides of filing for bankruptcy.

The very first thing that you need to remember and be aware of is that you will have a bankruptcy on your credit report for at least ten (10) years after you file the paperwork and the legal proceedings start to clear out your debts. If you owe unpaid property taxes, student loans or child support, you need to remember that you will not be able to erase these debts by filing for bankruptcy. They will simply be paid from the proceeds of the court-ordered sale that goes along with a bankruptcy process. You are likely to lose all property except that which is exempted by state law in your state of residence.

If you have successfully gotten through the entire bankruptcy process, you are going to find that you are going to have a very difficult time getting credit for anything that you may need after the bankruptcy procedure is completed. You may not be able to get a new or newer car that requires financing. You also might not be able to get approved for a mortgage on a home, or even be able to take out a life insurance policy that will ensure that your family will be taken care of if your are crippled or killed.

You might also find that many employers are not going to be willing to hire you if you have a recent bankruptcy on your credit report. Believe it or not, potential employers do check your credit report! This is especially true if you are applying for a job in the financial sector (bank teller, loan officer, stock broker or the like). Those employers will want and need to see how you handle your own money and debts before they can allow you to handle hundreds, thousands and potentially millions in curreny that belongs to other people. If you have a recent bankruptcy on your credit report, you are very likely to br turned down for that position.

If you think that this is not that big of a deal, you really need to talk to those who have already gone through the bankruptcy process and ask them specifically what effects it had and has on their credit. You want to ask what they got turned down for because of the bankruptcy that is standing out on their credit report. Chances are that they will tell you some things that will leave you seriously shaken and seriously thinking twice before you file those bankruptcy papers.

Credit reports – How long is your history maintained?

admin — Thu, 17 Jun 2010 08:52:08 +0000

You are probably not aware that certain information is kept on the records for many, many years after you think that it is no longer relevant. This is why so many people are caught off guard when the see information about a bank account that has been closed for the past 5 or 6 years is still listed on the credit report under the Banking Information section. This is what has led many people to start asking the title question… exactly how long is your credit history maintained or held by the three credit reporting bureaus?

The first thing that we will cover is Your Personal Credit History. You need to know that everything that is a part of your personal credit history is kept on record by the credit bureaus for ten (10) years. This includes all of the names that you are known by, all of the residential addresses and employer’s information that is reported to them about you.

The next thing here is any Inactive and Closed Accounts that you have ever had. The information on these is kept in the records by the bureaus for ten (10) years after the last reported activity on those accounts. There is nothing to be concerned about if you have closed any account because you have fully repaid the loan or no longer need or want the account; the trouble comes in if any account was closed due to being inactive or delinquent too often.

If you have late payments that are on your credit report or collections accounts, these show up as Derogatory Accounts on your credit report. The credit bureaus are required to keep information about them in your records for seven (7) years from the date that the account went into default status.

If you are ordered to pay damages in a lawsuit that has a bearing on your credit standing these Public Records are kept up for seven (7) years from the date that you made the required payment. If you have any unpaid tax liens in your name, those records stay open as long as the tax lien remains unpaid.

The last thing that you need to remember about is a Chapter 7 Bankruptcy. This is the very last thing to think about here. The credit bureaus are required by federal law to keep these records for ten (10) years from the exact date that you filed for bankruptcy.

All of this is what many people are not really that aware of. Most think that a Charge-off or a closed account will be dropped off of their credit reports after 3 or 5 years; yet this really is not the case. The credit reporting bureaus are required by Federal Law to keep a;; of this things in their records for between 5 and 10 years after everything has been settled. This really has many people scared that they are going to get denied a car loan or a credit card because they went bankrupt and worked through that process.

How am I going to get out of the debt mess?

admin — Thu, 17 Jun 2010 08:48:17 +0000

This is a very common question that those who have more bills than money coming in to pay them. They also have no blessed idea how they are going to get themselves out of the financial mess that they are in. This is when many of these people will start thinking about filing for bankruptcy, debt consolidation or possibly debt settlement to start to get their finances back under control and in some semblance of order so that you can start to breathe again. The problem that comes in here is deciding which of these routes that you are going to take.

Many people think that bankruptcy will be the answer to all of their debt problems; but this is far from the case. While bankruptcy may clear you from having to pay off the creditors that need to be paid, it does not solve the problem entirely. You will have to deal with the bankruptcy ruling being on your credit reports for the next seven (7) years after the case has been finalized; and this does not pay off the creditors at all! This is part of why creditors would rather work with you to pay down those debts rather than see you file for bankruptcy and never get paid the money that is owed them.

If you are considering working with a debt settlement company, there are many different things that you really need to know before you even start the process. One of these things that you need to know is that you cannot legally work with a debt settlement company if you are a resident of Arizona, Hawaii, Georgia, Mississippi, Maine, New York, New Jersey, Louisiana, New Mexico, North Dakota, Wyoming, Maine or West Virginia. The debt settlement companies/agencies have been outlawed in these states due to their unfair and often illegal business practices.

There is something else that you really need to think about when it comes to this matter; and that is how this will affect your credit. If you are behind on your payments by one or two payments, you are not going to be able to work this matter out using a debt settlement process. That usually will not work until you are more than six months behind on your bills; by which time your credit has already been damaged (sometimes beyond repair by that point).

Think about this as well if you will; when you sign the service contract to work with any debt settlement companies, your debts are not getting paid. You will need to start saving up the money to pay the service fees that the debt settlement company is asking of you to pay first. Yes, you heard that correctly. You have to pay the debt settlement company’s service fees first, before your debt amount ever gets paid down. This, along with the service fees that these debt settlement companies charge, is a good part of what got them outlawed in the twelve states spoken of two paragraphs up.

Debt settlement may not even be worth it for you

admin — Thu, 17 Jun 2010 08:46:35 +0000

The one question that is constantly being debated when it comes to debt settlement has been is debt settlement even worth the effort for you? This is the proverbial sixty-four thousand or even million dollar question that you will definitely need to know the answer to before you even consider signing that service agreement with any debt settlement company. There are a few things that you need to consider that will be discussed here in this order: the state that you live in, the amount of debt that you owe, how far behind are you in your payments, and what caused this to begin with?

The first thing that you need to think about is the state that you live in. There may be a couple of things that you are not aware of when it comes to how these debt settlement companies do business. Are you aware that they have been out and out banned and outlawed from doing business in twelve (12) states in the U.S. for the way that they conduct their business? Those twelve states are Arizona, New Mexico, New Jersey, New York, North Dakota, Mississippi, Louisiana, Wyoming, Hawaii, Georgia, Maine and West Virginia.

The second thing that you need to be thinking about before starting or even considering debt settlement is how much you really do owe to which creditor. If you do not owe that much then you might be better off choosing another route (such as debt consolidation) to alleviate this burden and allow you to get some financial order back in your life.

The third thing to consider beforehand is how far behind on/in/ your payments you actually are. This is where things are going to get a bit sticky for you if you are considering debt settlement; you need to be at least 3 months behind on your payments before you would even be considered acceptable by any of the debt settlement companies in business. This is what also leave you in a bit of a sticky situation if you are that far behind and either have not done anything before then or just plain have not been able to get anything done about it.

The very last thing that you need to take into account is what got you into debt in the first place. Are you in debt because of out of control spending and buying things that you do not really need and/or can afford to buy? Or are you in this situation because you have lost your job or your primary source of income is gone completely and you have no savings to live off of until the situation gets better? In either case you are not alone at all. If you are dealing with a mountain of debts due to over spending, you would be wiser to learn how to curb that over-spending and deal with a credit counselor and debt consolidation first. If you are in debt due to a job loss, how are you going to pay the debt settlement company?

Beware of Debt Settlement

admin — Thu, 17 Jun 2010 08:40:03 +0000

You may be looking at debt settlement and wondering how this works and should you go ahead with it. Did you know in at least 12 states, debt settlement is illegal? If you live in the following states: Arizona, Georgia, Hawaii, Louisiana, Maine, Mississippi, New Jersey, New Mexico, New York, North Dakota, West Virginia and Wyoming be aware that debt settlement companies are banned from doing business in these states due to breaking state laws. Not every debt settlement company is above board and operates within the laws of both the state and Federal laws.

You need to be very careful with whom you deal with if you are looking for a debt settlement company in any state. Some are just flying by night that take your money and don’t negotiate with the companies that you owe debts to. This leaves you with a much bigger financial mess than you started out with. In principle, a debt settlement company is one that negotiates with your debtors and gets your payments down to where you can afford them. They negotiate for you to owe less and when the debt is paid off, then you will no longer owe the company and your credit report can be cleared.

In reality however, there are many companies out there that just take your money and the debtors never see it. So how can you avoid falling into this type of trap? Doing your homework when it comes to these companies will keep you out of the red zone. If you have a company in mind, you first need to check them out through the BBB in your state. You also need to check the company’s record and verify a physical address and telephone number. Get references from the company and check them out before even signing a contract with them.

If they will not give you references or say that this is a limited time offer, walk out the door without signing anything. A legitimate company will not pressure you into signing a contract. They will also gladly give you references that you can fully check. Never leave any paperwork at an office. If you leave, make sure to take the paperwork with you. This will also help you to avoid identity theft and fraud. Check business licenses as well. This sounds like a lot of work, but believe me, the results could save you money.

Did you also know that you can do debt settlement yourself? Bet you didn’t know that. You call up your debtors and make arrangements through them to lower the debt. You really do not need a debt settlement company to make those arrangements. Your best bet is to beware the debt settlement companies and do it on your own. Too many are known fraud factories, and if you are not careful, you could be their next victim. There are several factors that can decide whether or not you use a debt settlement company and that is your particular choices on how to deal with the problem at hand.

A quick guide to what debt settlement is about

admin — Thu, 17 Jun 2010 08:35:03 +0000

There are a few quick points that you need to know about when it comes to the debt settlement process. There are many people that think that debt settlement is going to be the best possible solution to their debt problem due to the fact that the debt settlement company is telling you that they can negotiate with your creditors to have your original debts reduced a good amount into a lump sum that will satisfy the creditor’s needs and also get your debt reduced at the same time. However, there are a few things that you need to remember when you are doing this.

The first thing to remember is that a settled debt is not the same as a debt that is paid in full. It simply means that the creditor chose to allow the lower settlement so that they will be getting some of the original amount of money that you owe them. This will also go against your credit because you have to be more than three months behind on paying your bills to even think about going through this process. Something else that you many not realize is that going through debt settlement is not the same as going through the debt consolidation and credit counseling process in the fact that you are not going to stop the collections calls from coming all the time.

Once you sign the agreement to work with a debt settlement company you will start to send a check for the new lower monthly payment to them so that they can them turn around and pay the creditors the monthly amount that has been agreed to. The thing that you will need to know about here is that you are not going to be paying off those debts right away. The reason for this is that the debt settlement company will take their fees right off the top first, and this must be satisfied before your debts ever get paid down. This is not being said to discourage anyone from using debt settlement as an avenue to pay down their debts, just to let everyone know what is ahead for them in this process.

If you can succeed in getting the fees (both upfront and monthly fees) paid and are actually able to start seeing those balances on your monthly statements go down, it is going to take a good bit of time to get the settlement amount paid off. There are many people for whom this route has actually worked in the past and even currently; however, there are more people who actually end up in a much worse financial situation than they were in before they started the debt settlement process. You really need to read up on everything that you possibly can read and research this very carefully so that you have all of the information at hand that you can possibly get to be able to decide for yourself if this really is the right avenue for you to be taking.

Dealing with collection agencies

admin — Thu, 17 Jun 2010 08:33:09 +0000

Many debtors who default on their payments look for efficient ways to deal with collection agencies. Unlike debt settlement agencies, you cannot expect a smooth relationship with most of the collection agencies because the agencies work for the creditors. The creditors approach the collection agencies to collect debts from those debtors who never showed any interest in repaying debts. Your financial condition is worse when you are chased by collection agencies. The easiest way to avoid problem is to inform the creditors about your problem when you are unable to pay the debts. You can negotiate with them to reduce the debts. However, if collection of debts goes to the hands of collection agencies, there are almost no chances of a healthy negotiation.

Even if you are in a worse condition with collection agencies following you, you don’t have to be frightened as you are not alone. Several debtors have the same problem and many of them are safe because they know how to deal with collection agencies. Educating yourself about your rights is the best way to deal with such agencies. The fair debt collection practices act (FDCPA) states all the policies that have to be followed by the debt collection agencies. You have to know about these to identify those agencies that use unethical ways to collect debts from you.

You must be bold enough to report about the collection agency if they try to humiliate you. No one can tell you that you have committed a crime by not paying our debts. It is not a crime at all. Many debtors worry much about the collection agencies because most of these companies threaten to sue you. While it is possible to file a legal suit against you, it cannot be done without proper notice. Moreover, when the case goes to the court, it will result in lot of time wastage for both the sides. The creditors approach collection agencies to bypass these court trials and get the money. So, don’t get worried when you are threatened by the collection agencies by saying that you will have to face the trail in the court.

When you have a collection agency telling you the debt you owe, it is your responsibility to verify if the amount is correct. You can file a dispute about the amount of debts, but at any time, you cannot refuse to pay the debts. When you get calls from collection agencies, you should not shout at the agent. The agent is doing his job and he has the responsibility to collect all your debts. If you don’t like the conversation, you can say that to the agent and then call the supervisor to inform that you are not happy with the agent. You can get a decent approach from the collection agencies if you show them that you are actually interested in paying your debts. If you explain your present financial condition and ask them for a fair replacement policy, they will be ready to do that for you. However, if you try to cheat the agent, you will be at high risk and you may be sued.

Debt Consolidation – Options for Reducing Your Debt

admin — Thu, 17 Jun 2010 08:26:43 +0000

It has been seen recently that Americans are saving less than they have been ever before. It has also been seen that they have larger debts than before. It is possible for one home loan, car loan and few credit card bills to spiral out of hand. There are many people who are struggling under debt and have made for themselves more debt than they can bear. To worsen things further, new bankruptcy laws are making it harder for persons who are unable to pay their bills to even file for bankruptcy.

There are many remedies available that let people reduce the rate of interest on their debt, their monthly payment or both:

(1) If you have the history of making timely payments and have no history of making fewer payments, then you can negotiate with your credit card company to lower the interest rates. You can call up your credit card company. It is not a foolproof plan and sometimes may not work. However, nowadays the market for credit cards is very competitive. Therefore the lender may lower the interest rate than loose a valuable client.

(2) If the credit card company is unwilling to lower the interest rate, then you get a new credit card that offers you a better interest rate. You don’t have to pay 20% extra. Interest on credit cards is not tax deductible. Therefore, if you get a credit card with lower interest rate and you move your balance to the newly purchased credit card, it can help you to save something.

(3) You can take for yourself a traditional bank loan that has collateral. You can put cash or investments as collateral against such bank loan. Unlike credit cards, interest is not subject to tax but the rate of interest may be better than the interest offered by credit cards. Also, if you consolidate together many payments as one with a bank loan, your monthly payment will be lowered.

(4) You can take also take a home equity loan or home equity line of credit. If you have equity at home, you can borrow 80% of your equity in a lump sum of credit or a revolving line of credit. As interest rates are low on home loans you can consolidate your debt this way easily. Further, the interest is not tax deductible. One negative point here is that there is a fee and/or closing costs to the application.

You can use one of the ideas mentioned above to reduce your debt. If none of the options above is applicable to you, you need to speak to a credit counselor. The credit counselor may give other options that work for you. The credit-counseling agencies mostly do not work for profit; therefore, it is easier to take their help.