In April 2005, Congress passed legislation comprising the most sweeping changes in U.S. bankruptcy law in more than a quarter of a century. The law, known as the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, was intended to prevent consumers with problem debt from being able to easily have their debts eliminated in court.
Under the old law, those with problem debt could file under Chapter 7 of the Federal Bankruptcy code; new filers will probably have to file under the more strenuous Chapter 13, which requires a repayment plan. Another provision of the new law requires anyone considering filing for bankruptcy to first submit to credit counseling prior to filing for bankruptcy.
On the surface, this isn’t really a bad idea. After all, the purpose of credit counseling is to help people who have trouble managing money learn how to do so wisely. Clearly, anyone who is filing for bankruptcy has a money management problem, so credit counseling is probably a good idea. A competent credit counselor will assist their client with establishing a repayment schedule, learning to budget their expenses, and learning to avoid problem debt in the future.
The problem with mandatory credit counseling may be with the counselors themselves. With passage of the new law, the counseling industry is expected to be burdened with an additional one and a half million customers per year. This boom in demand will probably inspire a lot of people to become credit counselors who do not have their customers’ best interests in mind.
A number or lawsuits have been filed in several states recently that accuse some credit counseling firms that are ostensibly nonprofit agencies of fronting for for-profit debt consolidation firms. These “friendly” nonprofit agencies will strongly urge their clients to do business with their for-profit partners. The result is often an expensive debt consolidation loan for the customer that may or may not be helping them eliminate their debt.
How can someone who is genuinely interested in credit counseling seek a reputable counselor?
•A counselor should listen to your problems. If the counselor starts offering “solutions” to your problem within a few minutes of your arrival, you should be suspicious. A good counselor needs a lot of information about a client in order to help them, and that takes time.
•Be wary of firms that ask for a lot of money up front, especially nonprofit firms that tell you that they cannot help you unless you pay first.
•Be cautious of firms that ask for a large fee to obtain a copy of your credit report. Any legitimate agency should be able to obtain your credit report for free.
•Bankruptcy is sometimes unavoidable. Watch out for agencies that tell you that bankruptcy is never necessary. They probably want to steer you towards a high-profit consolidation loan that may not help.
•Watch out for offers of a quick fix. You didn’t obtain debt problems overnight, and you won’t get out of trouble overnight. Real problems take time to solve.
•Ask the local Better Business Bureau if they have had any complaints about a particular counseling agency.
The careful consumer can avoid making a bad situation worse by choosing their counselor carefully. Take your time and talk to several agencies before making a decision. It could save you a lot of money.
About the Author
Talbert Williams offers debt consolidation, debt reduction, credit card debt referrals and advice. For more information, articles, news, tools and valuable resources on debt solutions, visit this site: http://www.1debtfreedom.com
Saturday, April 7, 2007
Debt problems can be reduced or eliminated by following a few basic steps
The average American household carries almost $10,000 in credit card debt. When this is added to the mortgage and auto loan found in the typical home, the debt can become overwhelming. The prospects of managing financial obligations have just gotten worse, as Congress has passed legislation that will make bankruptcy filings more difficult than ever.
In addition, the major credit card companies, at the urging of the Federal government, have recently doubled their minimum monthly payment to about 4% of the outstanding balance. For the average family, that means an additional $200 per month that must be paid for credit card debt and many families simply cannot afford that extra money. If you are in such a predicament, what can you do? Here are four tips that may help.
•Stop spending on things that aren’t absolutely necessary. Each individual will have to define what “necessary” means, but it may mean taking a sack lunch to work, bringing your own coffee instead of stopping at Starbucks, and canceling that subscription to HBO. These things may seem small, and certainly that mocha from the coffee shop isn’t going to pay your credit card bill, but these things add up. In total, they could amount to several hundred dollars each and every month, and that could help reduce your credit card bills. Every penny counts!
•Consider consolidating your debt, if possible. That means moving debts from one account or more accounts with high interest to an account with low interest. Many credit card companies offer promotional, low interest rate deals if you transfer a balance from another account. By moving balances from an account with 20% interest to one with 10% interest, you could save hundreds or even thousands of dollars per year. If possible, you might consider a home equity loan or line of credit, which allows you to borrow against the value of your home. The bonus for doing this is that your interest is tax deductible. Be careful, however. If you don’t stop wasteful spending and fail to pay the equity loan, you could be risking losing your home!
•Find a reputable credit counselor. Soon to be required for anyone filing for bankruptcy, credit counseling is business that helps people become financially responsible. Credit counselors will help you learn to manage money and can help you repay your debts by working with your creditors to establish an affordable repayment plan for you. The service isn’t free, but the fees are usually tailored to your ability to pay.
•File for bankruptcy - This should be the last resort, as a bankruptcy filing will appear on your credit report for ten years and can hurt you in your future attempts to buy a home or a car. Nevertheless, the law does allow you, as a last resort, to petition the courts to have your debts waived so that you can obtain a fresh start. Be aware that new laws taking effect soon will make it more difficult and expensive to have debts wiped out through a bankruptcy filing. If you think this is the option you should use, call an attorney now.
These four things should help most people get a rough idea of how to manage their debt.
Talbert Williams offers debt consolidation referrals and advice. For more information, articles, news,
tools and valuable resources on debt solutions, visit this site: http://www.1debtfreedom.com
About the Author
Talbert Williams offers debt consolidation referrals and advice. For more information, articles, news, tools and valuable resources on debt solutions, visit this site: http://www.1debtfreedom.com
In addition, the major credit card companies, at the urging of the Federal government, have recently doubled their minimum monthly payment to about 4% of the outstanding balance. For the average family, that means an additional $200 per month that must be paid for credit card debt and many families simply cannot afford that extra money. If you are in such a predicament, what can you do? Here are four tips that may help.
•Stop spending on things that aren’t absolutely necessary. Each individual will have to define what “necessary” means, but it may mean taking a sack lunch to work, bringing your own coffee instead of stopping at Starbucks, and canceling that subscription to HBO. These things may seem small, and certainly that mocha from the coffee shop isn’t going to pay your credit card bill, but these things add up. In total, they could amount to several hundred dollars each and every month, and that could help reduce your credit card bills. Every penny counts!
•Consider consolidating your debt, if possible. That means moving debts from one account or more accounts with high interest to an account with low interest. Many credit card companies offer promotional, low interest rate deals if you transfer a balance from another account. By moving balances from an account with 20% interest to one with 10% interest, you could save hundreds or even thousands of dollars per year. If possible, you might consider a home equity loan or line of credit, which allows you to borrow against the value of your home. The bonus for doing this is that your interest is tax deductible. Be careful, however. If you don’t stop wasteful spending and fail to pay the equity loan, you could be risking losing your home!
•Find a reputable credit counselor. Soon to be required for anyone filing for bankruptcy, credit counseling is business that helps people become financially responsible. Credit counselors will help you learn to manage money and can help you repay your debts by working with your creditors to establish an affordable repayment plan for you. The service isn’t free, but the fees are usually tailored to your ability to pay.
•File for bankruptcy - This should be the last resort, as a bankruptcy filing will appear on your credit report for ten years and can hurt you in your future attempts to buy a home or a car. Nevertheless, the law does allow you, as a last resort, to petition the courts to have your debts waived so that you can obtain a fresh start. Be aware that new laws taking effect soon will make it more difficult and expensive to have debts wiped out through a bankruptcy filing. If you think this is the option you should use, call an attorney now.
These four things should help most people get a rough idea of how to manage their debt.
Talbert Williams offers debt consolidation referrals and advice. For more information, articles, news,
tools and valuable resources on debt solutions, visit this site: http://www.1debtfreedom.com
About the Author
Talbert Williams offers debt consolidation referrals and advice. For more information, articles, news, tools and valuable resources on debt solutions, visit this site: http://www.1debtfreedom.com
Debt problems can be reduced or eliminated by following a few basic steps
The average American household carries almost $10,000 in credit card debt. When this is added to the mortgage and auto loan found in the typical home, the debt can become overwhelming. The prospects of managing financial obligations have just gotten worse, as Congress has passed legislation that will make bankruptcy filings more difficult than ever.
In addition, the major credit card companies, at the urging of the Federal government, have recently doubled their minimum monthly payment to about 4% of the outstanding balance. For the average family, that means an additional $200 per month that must be paid for credit card debt and many families simply cannot afford that extra money. If you are in such a predicament, what can you do? Here are four tips that may help.
•Stop spending on things that aren’t absolutely necessary. Each individual will have to define what “necessary” means, but it may mean taking a sack lunch to work, bringing your own coffee instead of stopping at Starbucks, and canceling that subscription to HBO. These things may seem small, and certainly that mocha from the coffee shop isn’t going to pay your credit card bill, but these things add up. In total, they could amount to several hundred dollars each and every month, and that could help reduce your credit card bills. Every penny counts!
•Consider consolidating your debt, if possible. That means moving debts from one account or more accounts with high interest to an account with low interest. Many credit card companies offer promotional, low interest rate deals if you transfer a balance from another account. By moving balances from an account with 20% interest to one with 10% interest, you could save hundreds or even thousands of dollars per year. If possible, you might consider a home equity loan or line of credit, which allows you to borrow against the value of your home. The bonus for doing this is that your interest is tax deductible. Be careful, however. If you don’t stop wasteful spending and fail to pay the equity loan, you could be risking losing your home!
•Find a reputable credit counselor. Soon to be required for anyone filing for bankruptcy, credit counseling is business that helps people become financially responsible. Credit counselors will help you learn to manage money and can help you repay your debts by working with your creditors to establish an affordable repayment plan for you. The service isn’t free, but the fees are usually tailored to your ability to pay.
•File for bankruptcy - This should be the last resort, as a bankruptcy filing will appear on your credit report for ten years and can hurt you in your future attempts to buy a home or a car. Nevertheless, the law does allow you, as a last resort, to petition the courts to have your debts waived so that you can obtain a fresh start. Be aware that new laws taking effect soon will make it more difficult and expensive to have debts wiped out through a bankruptcy filing. If you think this is the option you should use, call an attorney now.
These four things should help most people get a rough idea of how to manage their debt.
Talbert Williams offers debt consolidation referrals and advice. For more information, articles, news,
tools and valuable resources on debt solutions, visit this site: http://www.1debtfreedom.com
About the Author
Talbert Williams offers debt consolidation referrals and advice. For more information, articles, news, tools and valuable resources on debt solutions, visit this site: http://www.1debtfreedom.com
In addition, the major credit card companies, at the urging of the Federal government, have recently doubled their minimum monthly payment to about 4% of the outstanding balance. For the average family, that means an additional $200 per month that must be paid for credit card debt and many families simply cannot afford that extra money. If you are in such a predicament, what can you do? Here are four tips that may help.
•Stop spending on things that aren’t absolutely necessary. Each individual will have to define what “necessary” means, but it may mean taking a sack lunch to work, bringing your own coffee instead of stopping at Starbucks, and canceling that subscription to HBO. These things may seem small, and certainly that mocha from the coffee shop isn’t going to pay your credit card bill, but these things add up. In total, they could amount to several hundred dollars each and every month, and that could help reduce your credit card bills. Every penny counts!
•Consider consolidating your debt, if possible. That means moving debts from one account or more accounts with high interest to an account with low interest. Many credit card companies offer promotional, low interest rate deals if you transfer a balance from another account. By moving balances from an account with 20% interest to one with 10% interest, you could save hundreds or even thousands of dollars per year. If possible, you might consider a home equity loan or line of credit, which allows you to borrow against the value of your home. The bonus for doing this is that your interest is tax deductible. Be careful, however. If you don’t stop wasteful spending and fail to pay the equity loan, you could be risking losing your home!
•Find a reputable credit counselor. Soon to be required for anyone filing for bankruptcy, credit counseling is business that helps people become financially responsible. Credit counselors will help you learn to manage money and can help you repay your debts by working with your creditors to establish an affordable repayment plan for you. The service isn’t free, but the fees are usually tailored to your ability to pay.
•File for bankruptcy - This should be the last resort, as a bankruptcy filing will appear on your credit report for ten years and can hurt you in your future attempts to buy a home or a car. Nevertheless, the law does allow you, as a last resort, to petition the courts to have your debts waived so that you can obtain a fresh start. Be aware that new laws taking effect soon will make it more difficult and expensive to have debts wiped out through a bankruptcy filing. If you think this is the option you should use, call an attorney now.
These four things should help most people get a rough idea of how to manage their debt.
Talbert Williams offers debt consolidation referrals and advice. For more information, articles, news,
tools and valuable resources on debt solutions, visit this site: http://www.1debtfreedom.com
About the Author
Talbert Williams offers debt consolidation referrals and advice. For more information, articles, news, tools and valuable resources on debt solutions, visit this site: http://www.1debtfreedom.com
How To Get Loans Approved After Bankruptcy
After one has been forced to declare bankruptcy for whatever reason, it is a common belief that life in this world almost comes to an end in terms of finances or any future hope of getting credit again. But in reality, by faithfully following some simple steps and following the correct procedure, getting loans and new credit approved even after you have filed for bankruptcy can be done without too many more steps than anyone would have to go through.
It is particularly important to “get your ducks lined up” with the advice offered here, because it will put you in a much better position. Your goal should not simply be to get credit approved, but to get credit approved that is not at an exorbitant interest rate. The difference in just a couple of percentage points on a car loan can still mean hundreds of dollars, and on a mortgage loan, can mean tens of thousands of dollars that you don’t need to pay if you get your homework done first.
Your first step is to get a copy of your credit report. And be sure to get a copy of it from each of the “big three” credit bureaus, which are Equifax, Trans Union and Experian. The reason for this is because some creditors may report to all three of them, while others may only report to one or two of them. You can pretty much rest assured that if you are trying to get credit approved for any type of sizeable purchase, the credit grantor is going to check with more than one of the credit bureaus, and very likely all three of them.
The other reason for getting a copy of your credit reports is because, believe it or not, the majority of credit reports contain errors. These errors do not get fixed automatically, but it is up to the consumer to “notice” the error and insist that it be corrected. Having inaccurate information on your credit report can also cause you to have a lower overall credit score, and perhaps prevent you from getting the best loan deal possible.
Getting your credit report cleaned up as much as possible is going to take time, so if possible, be sure you allow time to get inaccurate information removed. The laws today state that credit bureaus have up to 30 days to either verify that they information they have on file is correct, or to remove it, and that 30 day clock does not start ticking until AFTER you have notified them of an error or inaccuracy.
For a sizeable purchase like a mortgage or a car, consider using a loan broker. Loan brokers deal with hundreds of different lending institutions, and they should be very familiar with which ones are strict and which are more lenient. Your goal is to have the broker understand your situation of having declared bankruptcy, and find the right lender who can accept that situation under the right circumstances and still not charge sky-high interest rates.
One of the most important things you can demonstrate is a good financial track record after your bankruptcy. That means paying all your bills on time with more than the minimum payment due, even your electric bill and your phone bill. A demonstrated track record of being “financially squeaky clean” in your post-bankruptcy days will go a long way towards a lender being willing to give you a second chance.
About the Author
Jon is a computer engineer who maintains web sites on a variety of topics based on his knowledge and experience. You can read more about credit reports and improving your credit score at his web site at http://www.credit-help-center.com/
It is particularly important to “get your ducks lined up” with the advice offered here, because it will put you in a much better position. Your goal should not simply be to get credit approved, but to get credit approved that is not at an exorbitant interest rate. The difference in just a couple of percentage points on a car loan can still mean hundreds of dollars, and on a mortgage loan, can mean tens of thousands of dollars that you don’t need to pay if you get your homework done first.
Your first step is to get a copy of your credit report. And be sure to get a copy of it from each of the “big three” credit bureaus, which are Equifax, Trans Union and Experian. The reason for this is because some creditors may report to all three of them, while others may only report to one or two of them. You can pretty much rest assured that if you are trying to get credit approved for any type of sizeable purchase, the credit grantor is going to check with more than one of the credit bureaus, and very likely all three of them.
The other reason for getting a copy of your credit reports is because, believe it or not, the majority of credit reports contain errors. These errors do not get fixed automatically, but it is up to the consumer to “notice” the error and insist that it be corrected. Having inaccurate information on your credit report can also cause you to have a lower overall credit score, and perhaps prevent you from getting the best loan deal possible.
Getting your credit report cleaned up as much as possible is going to take time, so if possible, be sure you allow time to get inaccurate information removed. The laws today state that credit bureaus have up to 30 days to either verify that they information they have on file is correct, or to remove it, and that 30 day clock does not start ticking until AFTER you have notified them of an error or inaccuracy.
For a sizeable purchase like a mortgage or a car, consider using a loan broker. Loan brokers deal with hundreds of different lending institutions, and they should be very familiar with which ones are strict and which are more lenient. Your goal is to have the broker understand your situation of having declared bankruptcy, and find the right lender who can accept that situation under the right circumstances and still not charge sky-high interest rates.
One of the most important things you can demonstrate is a good financial track record after your bankruptcy. That means paying all your bills on time with more than the minimum payment due, even your electric bill and your phone bill. A demonstrated track record of being “financially squeaky clean” in your post-bankruptcy days will go a long way towards a lender being willing to give you a second chance.
About the Author
Jon is a computer engineer who maintains web sites on a variety of topics based on his knowledge and experience. You can read more about credit reports and improving your credit score at his web site at http://www.credit-help-center.com/
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