Secrets For Repairing Credit After Bankruptcy

Secrets For Repairing Credit After Bankruptcy

A Few Quick Tips for Rebuilding Credit Post BK Despite how overwhelming bankruptcy may be on your credit, there are a few lesser known secrets that can help you rebuild and quickly repair your credit score.  There is not an exact order in which these steps should be followed; however every single one of these actions will help improve your credit score.  Over time, with good borrowing and spending habits, it is possible to 100% recover from a bankruptcy filing regardless if it is chapter 7 or 13.   Open a Bank Account – Make Timely Payments This may seem very obvious; however you would be surprised how many individuals post-bankruptcy move to a “cash only” system.  While there is absolutely nothing wrong with this philosophy, if the goal is to rebuild credit, using cash only to make payments will not help the process. Regardless if it is a checking or savings account, opening a bank account and using it to pay bills will keep your payment history visible to creditors and lenders.  This is a good thing from a credit score standpoint.  Remember from What Makes Up a FICO Credit Score that payment history is the largest factor at 35% of the credit score.   Open Credit Cards (3 is Magic #) The ideal situation is to open credit cards right before or during bankruptcy because prior to the BK showing up on your credit report it will be easier to get approved for unsecured lines of credit.  However based on amount owed, this may not be possible.  Post-bankruptcy if you cannot get approved for any unsecured credit card, go with a secured credit card, a opposed to cash.  This is the type of card that requires you to deposit funds in an account to establish spending limits.  It may seem somewhat futile; however this goes a long way to helping show credit worthiness. Additionally it is better to have small balances on credit cards instead of having them maxed out or zero.  Also be careful when applying for multiple cards in a short period, as this will generate inquires which will actually negatively affect your credit. Become an Authorized User on a “Good Credit” Account This does not give you access to the funds on the account, however it does allow you to borrow the good credit of the account holder.  This is an easy one to do as long as you...

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Bankruptcy Overview

Bankruptcy Overview

Two Most Popular Forms of BK Explained Bankruptcy is a federal court proceeding that will help eliminate or payback debt. It is a legally declared or recognized condition of insolvency. Bankruptcy can be utilized by individuals, married couples or businesses that are unable to pay their debts. Bankruptcy is for people that have absolutely no other method of paying back monies owed, and to prove this must pass a means test. Bankruptcy is the solution and legal method designed to forgive debt.   Bankruptcy Filing Requirements…   Undergoing a “means” test. Receiving debt counseling from an approved organization. Submitting a repayment plan. Attending a meeting with creditors.   There are 4 forms of bankruptcy but the two most commonly used forms are Chapter 7 and Chapter 13.   Chapter 7 Chapter 7 bankruptcy is designed to payback the creditors with what you currently have and give you a new start. This will stop the harassment of creditor’s calls and put you on the track to a new financial future. To qualify for Chapter 7 a person must make less than the median income for their area of residence. If they make more than this they can still qualify but they will have to take the means test. The means test is to assess if you are able to pay back the creditors in five years or less. Chapter 7 allows the client the ability to keep some possessions called “Exempt Items.” An exempt item is an item that is not accounted for in the bankruptcy proceedings. While exempt items vary from state to state, generally in Chapter 7 exempt items are the same regardless of the residing state. These items typically include: the primary residence, one vehicle, personal items, retirement savings in pension funds, 401Ks and IRAs. Individuals will only be allowed to keep their home and vehicle if they can afford those payments after bankruptcy.   Chapter 13 Chapter 13 is commonly for “high” income earners with “less” debt and is called the wage-earners bankruptcy. For Chapter 13, you will repay what you owe the creditors, although generally not the full amount. The repayment amount will be carefully calculated. You will be responsible for gathering documents and collecting financial information for all your bills and debts. This information will determine how much you can afford to pay to the creditors without going back into debt. The plan payments...

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5 Simple Ways To Reduce Debt Payments

5 Simple Ways To Reduce Debt Payments

How You Can Reduce Your Monthly Debt Payments An Advanced Strategy In Debt Reduction: These 5 simple steps to reduce debt are designed for those who are truly struggling with their unsecured debt. There are basic debt reduction steps you can take that are outlined here. The methods listed below are more of a last Hoorah! Before a complete debt settlement or bankruptcy decision is made. Please feel free to contact us if you’d like a free debt diagnosis to find out where you might stand and what your next move should be. Reducing monthly debt payments isn’t rocket science. All it takes is a little organization and determination on your part. If you find yourself struggling to make the minimum payments, and you’re continually watching your balance climb due to high interest rates, give at least one of these options a try. In most cases 2-3 of them will take a substantial load of your back and free you of the stress your unsecured debt has so kindly placed on you.   1. Transfer Credit Card Balances: This option may not be available for everyone, but if your credit is still in good shape there are plenty of offers out there for you. Most of the time you can get a balance transfer credit card at a rate much lower than your present credit card interest rate.  If you do your homework, you can find credit cards offering extremely low introductory APR’s on all credit card balance transfers. There are a few credit card programs left that even offer 0% introductory APR’s on balance transfers; utilizing this period to make interest free payments is extremely beneficial.   2. Negotiate Debts With Creditors: Again, this may or may not work depending on if you’re still current on your payments, and who your creditor is. Unfortunately most creditors are unwilling to negotiate if you’re still making your monthly payments on time. If you are current, and don’t want to “settle” your debt, call and talk to each individual creditor and let them know you’ve run into some sort of hardship. Make sure you’ve got all your facts and figures straight before making the call, this way you know exactly what you’re able to pay to them each month and what your current balances are. In some cases they may even reduce your APR in attempt to assist you. On the...

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Debt Settlement Information

Debt Settlement Information

Debt Settlement Programs That Work: Why Trusted Debt Settlement Programs Can Be Exactly What You Need In Your Life! Debt Settlement, also known as Debt Consolidation, is the process of paying less than is owed on credit cards and other unsecured debts, by negotiating with your creditors. Secured debts such as student loans, auto loans, and home mortgages unfortunately do not qualify for such programs. You will need to be in default on your current loans to utilize any debt settlement program and be able to gain the leverage needed to negotiate with your creditors. Typically, debts can be reduced by 40-70%.   Debt Settlement FAQ’s:   Does Debt Settlement Work?:   Yes! However, debt settlement isn’t for everyone. Debt settlement is designed for those who can no longer make their payments, already behind on their payments, or even considering bankruptcy. Debt settlement, when done properly, is a very safe alternative to bankruptcy. Debt settlement may not be an ideal option for those with very little debt. On average, a debt settlement client has $30,000 of unsecured debt.   Does Debt Settlement Hurt Your Credit?:   Debt Settlement is listed on your credit report, so yes, it will definitely impact your score. Debt settlement only works once you’ve been in default on your loans, because if you’re still current, creditors are unlikely to want to work and negotiate with you. Even though debt settlement can adversely affect your credit score, when compared to filing bankruptcy, debt settlement is far less detrimental to your score.   Is Debt Settlement Better Than Bankruptcy?:   Like we’ve discussed Bankruptcy, comparing debt settlement to bankruptcy, should be on a case by case basis. They both have their pro’s, and they both have their con’s. Bankruptcy will offer you legal protection under the court so that you don’t have to worry about being sued or harassed by creditors during the bankruptcy process. Debt settlement does not provide the guaranteed legal protection that bankruptcy does, however most reputable debt settlement companies will work to assist you in minimizing creditor calls and harassment where they’re able to.   Obviously there’s much to consider when deciding which route to take between bankruptcy and debt settlement. Our recommendation is to speak directly to a bankruptcy attorney to make sure you understand all the ins and outs of the process. This will help you make a more informed decision and...

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How To Qualify For A Short Sale

How To Qualify For A Short Sale

What is a Short Sale? A short sale can potentially occur when a homeowner finds themselves in a situation of being upside down in their mortgage. What this means is, the current market value of the property is much less than the present mortgage value on the home.  The Lender then agrees to accept less than the mortgage amount by the current homeowner from the sale of the property.   How Do I know if I Qualify for a Short Sale? Qualifying for a short sale today is no easy task unfortunately. There are many variables going into the short sale process. Before getting into all of those, there are 4 vital questions and qualifications one must ask themselves before moving forward with a short sale.   1. Has your home value depreciated since it was purchased? If you’re unsure about this, the easiest way is to contact your local realtor and have him/her pull up comparable SOLD homes in your neighborhood or surrounding area for a precise market evaluation. If you don’t know a trusted or certified short sale agent, we work with the top producing agents nationwide. Simply fill out the form to the right and one of our agents will provide you with a fair market value analysis of your home.   2. Your mortgage must be in or near default There have been cases in the past when the bank will accept a short sale if the loan is not in default, however times have changed and it’s become a rarity that they will do such a thing. Nowadays in the majority of cases, you must have missed mortgage payments, and received a Notice of Default from your lender.   3. Have You Fallen on Hard Times? This step can be the trickiest of all. A hardship letter must be written up and submitted to the bank proving you have fallen on rough times financially. This letter must address why you will no longer be able to continue to make payments. The hardship letter must include detailed financial information in regards to your inability to pay the difference as well.   Some Examples of Hardships May Include: Divorce Unemployment Medical Emergency Bankruptcy Death   4. You Must Have No Assets Having no assets that can be used to pay off the remaining balance is the last big step that needs to be addressed in the...

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