Improve Your Credit

A discharge releases individual debtors from personal liability for almost all debts and forbids the creditors owed those debts from taking any collection actions against the debtor. Because a chapter 7 discharge is subject to a good number of exceptions, debtors should confer with proficient legal counsel ahead of filing to discuss the range of the discharge. Mostly, excluding cases that are terminated or converted, individual debtors get a discharge in greater than 99 percent of chapter 7 cases. In the vast majority of cases, unless a party in interest files a complaint objecting to the discharge or a motion to extend the time to object, the bankruptcy court will issue a discharge order relatively early in the case ñ generally, 60 to 90 days following a date first set for the meeting of creditors. Fed. R. Bankr. P. 4004(c).

The causes for not accepting an individual debtor a discharge in a chapter 7 case are thin and are construedagainst the moving party. Among other causes, the court may reject the debtor a discharge if it detects that the debtor: failed to keep or produce satisfactory books or financial records; failed to explain satisfactorily any loss of assets; committed a bankruptcy criminal offense such as perjury; failed to obey a lawful order of the bankruptcy court; fraudulently moved, hid, or ruined property that would have become property of the estate; or did not complete an approved instructional course concerning financial management. 11 U.S.C. – 727; Fed. R. Bankr. P. 4005.

Secured creditors may retain some rights to seize real estate property securing an underlying debt even after a discharge is granted. Depending on actual circumstances, if a debtor would like to keep certain secured property (such as an automobile), he or she may make a decision to “reaffirm” the debt. A reaffirmation is a understanding between the debtor and the creditor that the debtor will remain liable and will pay all or a portion of the money owed, even though the debt would otherwise be discharged in the bankruptcy. In return, the creditor promises that it will not repossess or take back the automobile or other property so long as the debtor continues to pay the debt.

If the debtor determines to reaffirm a debt, he or she must do so ahead of the discharge is entered. The debtor must sign a written reaffirmation agreement and file it with the court. 11 U.S.C. – 524(c). The Bankruptcy Code requires that reaffirmation agreements carry an extensive set of disclosures described in 11 U.S.C. – 524(k). Amongst other things, the disclosures must advise the debtor of the amount of the debt being reaffirmed and how it is considered and that reaffirmation means that the debtor’s personal liability for that debt will not be discharged in the bankruptcy. The disclosures also require the debtor to sign and file a statement of his or her current income and expenses which shows that the balance of income paying expenses is sufficient to pay the reaffirmed debt. If the balance is not enough to pay the debt to be reaffirmed, there is a presumption of undue hardship, and the court may decide not to approve the reaffirmation agreement. Unless the debtor is represented by an attorney, the bankruptcy judge must approve the reaffirmation agreement.

If the debtor was represented by  an attorney in connection with the reaffirmation agreement, the attorney must certify on paper that she or he advised the debtor of the legal effect and drawbacks of the agreement, including a default under the agreement. The attorney must also certify that the debtor was fully informed and voluntarily accepted the agreement and that reaffirmation of the debt will not create an undue hardship for the debtor or the debtor’s dependents. 11 U.S.C. – 524(k). The Bankruptcy Code requires a reaffirmation hearing if the debtor has not been represented by an attorney during the negotiating of the agreement, or if the court disapproves the reaffirmation agreement. 11 U.S.C. – 524(d) and (m). The debtor may repay any debt voluntarily, however, whether or not a reaffirmation agreement exists. 11 U.S.C. – 524(f).

An individual receives a discharge for most of his or her debts in a chapter 7 bankruptcy case. A creditor may no longer start or continue on any legal or other action against the debtor to collect a discharged debt. But not all of an individual’s debts are discharged in chapter 7. Debts not discharged involve debts for alimony and child support, certain taxes, debts for certain educational benefit overpayments or loans made or guaranteed by a governmental unit, debts for willful and malicious injury by the debtor to another entity or to the property of another entity, debts for death or personal injury caused by the debtor’s operation of a vehicle while the debtor was intoxicated from alcohol or other substances, and debts for certain criminal restitution orders. 11 U.S.C. – 523(a). The debtor will still be liable for these types of debts to the extent that they are not paid in the chapter 7 case. Debts for money or property obtained by false pretenses, debts for fraud or defalcation while acting in a fiduciary capacity, and debts for willful and malicious injury by the debtor to another entity or to the property of another entity will be discharged unless a creditor timely files and prevails in an action to have such debts declared non-dischargeable. 11 U.S.C. – 523(c); Fed. R. Bankr. P. 4007(c).

For help with a Savannah GA chapter 13, contact a Savannah bankruptcy attorney. A Savannah bankruptcy law firm could give you the help you need.

You’re knee deep with debt. You’ve tried budgeting, speaking with your creditors and other self-help ways of controlling your debt, and it just hasn’t done any good. Don’t stop trying! Don’t freak out! Give credit counseling or debt management an attempt before you think about bankruptcy options.

What is Credit Counseling?

Reputable credit guidance services can do the following:

• Advise you on managing your money and debt
• Help you develop a budget
• Offer free educational materials and workshops

Credit counselors are certified and learned in the aspects of credit, money and debt management and budgeting. Counselors will discuss your whole financial situation and will allow you to build a personalized plan to solve your financial problems.

Choosing a Credit Counseling Organization

Most credit counselors offer their services through local offices, online or over the telephone. When possible, you must seek the one that offers in-person counseling. You need to develop a list of reputable consumer credit counseling organizations and ascertain that they provide you free information brochures about their services. The following organizations often offer credit counseling services:

• Colleges and universities
• Military bases
• Credit unions
• Housing authorities
• County or cooperative extension services

Your financial institution, local consumer protection agency, church, friends and family might be a good source of information and referrals. The US (Bankruptcy) Trustee Program has a list of approved credit counseling agencies in your area. Each state’s Attorney General’s office, local consumer protection agency and Better Business Bureau can give a list of any complaints filed against the agencies on your list.

Be wary! Many credit counseling organizations are nonprofitand provide their services totally free or for just a modest fee. However, you will find for-profit credit counselors that may charge an increased fee and yet others which could bill themselves as “nonprofit” and “free” but require you to make an upfront “donation” or “voluntary” contribution.

Questions to Ask

Once you have narrowed your list of credit counseling agencies, contact your final candidates and ask:

• What services do you provide? You want budget counseling and debt management classes, not debt management plans discussed below
• Will you help me avoid debt problems in the future?
• What are your fees? Are there any upfront or monthly fees? Get it in writing
• What if I can’t afford your fees?
• Will I have a formal written agreement or contract with you? Always read what you sign
• Are you licensed by the state?
• What are your counselors’ qualifications? Are they accredited or certified by an outside organization? If so, by whom? If not, how are they trained? Avoid agencies that train or certify their own counselors
• How will you keep my personal information private?
• How do you compensate your employees? Avoid any agency that pays their employees based on whether they sign you up, pay a fee or make a contribution

Debt Negotiation Programs

Stay clear of credit counseling agencies that promote debt negotiation services! They’re extremely risky and may have a negative impact on your credit report. Many claim to be nonprofit organizations and:

• Guarantee that they can reduce or remove your unsecured debt
• Require substantial monthly fees
• Demand payment of a percentage of savings
• Tell you to stop making payments or communicating with creditors
• Require you to make monthly payments to them, rather than to your creditors
• Claim creditors won’t sue you for nonpayment of unsecured debt
• Promise that using their system won’t have negative impact on your credit report
• Claim that they can remove accurate negative information from your credit report

People want to have no debt, but with high interest credit cards, car loans and other debts, it is difficult for many Americans to pay off their debts without a strategy. It is important to setup a financial plan and goals when paying off credit accounts.  Ultimately, by paying off your debts, you will have extra money per month and will also raise your credit score.  Increasing your credit score can affect your power to get approved for new loans, like home loans, and the rates attached with these accounts.

Setting Up A Strategy

To pay off your debts, you first want to setup a game plan. Debts are put into two different categories, revolving debts like credit cards and installment debts like car loans or mortgages. Revolving debts can have variable rates which can change at any time. Many credit card companies change these rates fast and sometimes without notice. It is important when setting up a plan that you know what type of debt you are trying to pay off first. Normally you want to pay off a revolving debt first.

Once you have the accounts divided into the two categories, you when want to put the accounts in an order. You can place the order of the accounts by high interest rate to low interest or from high balance to low balance or low balance to high balance. The order you place the accounts is going to be the order that you want to pay off the debt.

For example, most people like to pay off a low balance account first because this is much easier to see results immediately. You could payoff a low balance credit card in two months while a high balance credit card could take more than ten months to payoff.

Begin Action of Your Strategy

Now that you have your credit cards in order, you need to set your monthly budget. How much are you going to pay per month towards your credit card debt? Once you have that amount set, now it’s time to begin working on the credit card debt.

With your monthly budget, only pay the minimum balance on all the credit cards except one. Take the rest of your monthly budget and pay the credit card left with however much you have left. For example, if you have five credit cards and have budgeted $1000 per month towards the debt, then you first want to pay the minimum balance on 4 of the cards. If the minimum payments on these four cards are $500, then you would have $500 left to pay towards the final card. Once that credit card is paid off, you can now start paying more to the next account on your list.

You will keep this plan into effect until all revolving accounts have been paid off.

Since installment loans have a loan term, it is important to work on revolving debt first. Once the revolving debt has been paid off, then you can begin paying off the installment debt faster.

Keep in mind that the above plan works well if you do not charge any new debt onto the credit cards.

Alternative Options Like Debt Consolidation

There are alternative options to paying off debts in a timely manner like a debt consolidation loan. If you own your house, you could even qualify for a cash out home loan and consolidate all debts into one monthly payment. The more accounts that you can consolidate into one loan, the easier it is to pay off your debts.

David White is a Sr. Mortgage Consultant who specializes in assisting clients with home loan lending. David focuses in Dallas home loans and also understands how credit works. He has over 12 years experience in the mortgage and credit industry.

There is an unfortunate misconception that all credit repair companies are dishonest agencies who prey on the helpless in our society. They take delight in others’ problems, because it means higher profits for them!

Fortunately, this is mostly untrue. These companies actually offer a very valuable service to the public. Most people are unaware they are in serious financial trouble until they are refused a loan due to a bad credit score or a below par credit report.

Yes, it’s true that you can repair bad credit without any external help. It’s also a fact that you can become informed with information gathered from the Internet and that it’s possible to use it to fix your credit.

But you need to be aware that fixing one’s credit is a lot of hard work. The credit repair companies play a vital role here by doing the work for you saving you a great deal of frustration and difficulty.

Take for example driving or cooking. It’s not a matter of whether you can do these tasks; but when you hire a person to do them for you, you enjoy the convenience.

The credit repair companies are the best help you can get, and can ensure that you regain you financial balance much faster and easier than if you had attempted to do it yourself.

You can’t really compare yourself – starting on your own without prior knowledge – to an experienced credit repair company who has the expertise needed to do the job. These agencies not only help with debts, but also teach you how best to manage your finances so you will avoid future problems.

Many credit repair companies also offer debt management counseling. Everything is possible when you apply yourself to managing your debt. You can reverse a bad credit report and increase your credit score, but without proper guidance on correct financial management, you will never be totally safe from the pitfalls of irresponsible financial habits. These habits will be like hidden traps for you, ready to create trouble when you least expect it.

Americans would be much worse off without credit repair agencies.

So that explains why such business are flourishing in spite of the bad rap they normally receive. They provide a badly needed service without which, the number of bankruptcies and people with bad credit would have multiplied unchecked. It’s thanks to these credit repair agencies that people today are aware about debt management, financial counseling and legal credit report repair.

The major bank card companies have generated unprecedented earnings in recent years, mostly from fees and higher interest rates charged when customers either pay too late or go over their limits. Those record earnings are sure to enhance with the passage of recent bankruptcy laws. The average household now has nearly $10,000 in charge card debt, and with recent increases in bank card minimum payments, a lot of U.S. citizens have no idea how to get out of the vicious circle of debt that surrounds credit cards.

Of course, while it is hard to get out of bank card debt, it’s just as challenging to avoid using charge cards at all. We live in an electronic society, and fewer and fewer individuals engage in cash transactions nowadays. If you do business on the Web, it’s vital that you have a credit card. What can be done?

One option is the debit card. In appearance, the debit card looks like a charge card, and may even have a Visa or Mastercard logo on it. As far as the merchant is worried, it functions just like one, and you can either enter your personal identification number or sign your name and be on your way with your purchase. The difference between a debit card and a credit card is that the funds for the debit card come right out of your bank account. There is no bill, but you must have the cash in your bank account in order to make the purchase. Still, it is an excellent system for those who have no credit cards or do not wish to use them.

What about individuals with no bank accounts?

To use a debit card, you must at least have a bank account from which the money can be taken. Or you did before now. A new system, introduced by a Florida company called Morgan Beaumont, has introduced a debit card that uses no bank account. This is great for consumers who, for whatever reason, don’t want to have or cannot have a bank account. The funds are added to the card at one of 73,000 locations where the card can be “charged up” with a cash payment through the company’s own SIRE network. The cards have an initial fee of $10-20, and a monthly fee of $5 or so.

While these cards do not yet have a Visa or Mastercard affiliation, company officials hope to organize that soon. So far, 100,000 debit cards have been issued. For those who want the benefits of a debit card without the headaches of a bank account, Morgan Beaumont’s no-bank debit card may be the answer.