For times when debt gets out of hand, Chapter 13 bankruptcy is an ideal financial option. Repaying debts is very important to some people. Unfortunately, circumstances sometimes stand in the way of this goal. Although it will be a big blemish on your credit report, Chapter 13 allows you to repay your debts through a court-appointed trustee while requiring the creditors to stop their actions to collect the debts. This is also an ideal option for homeowners who have fallen behind on mortgage payments because it allows them to catch up on payments without losing their home.
Foreclosures are the biggest reason that most people choose Chapter 13 bankruptcy rather than the more attractive Chapter 7. With Chapter 13, homeowners who face foreclosure proceedings can halt the legal actions by choosing this bankruptcy option. A court appointed bankruptcy trustee will act on the behalf of the homeowner to make provisions with the mortgage company. The homeowner is then allowed to make their monthly mortgage payments with an extra amount each month until they have caught up on their delinquent payments.
Another thing that Chapter 13 bankruptcy affords to debtors is the opportunity to repay secured debts over a period. Oftentimes, the payment plans reduce the amount of the monthly payment that the debtor was paying. While Chapter 7 is the most popular option in bankruptcy, many people choose Chapter 13 because they feel a moral obligation to repay their debts. This type of bankruptcy gives them the help that they need to negotiate with their creditors. It also provides some "wiggle room" for repaying debts with a timely schedule. Psychologically, this form of bankruptcy is less detrimental to people's self-images because they have fulfilled their financial obligations rather than simply having them completely discharged.
Chapter 13 bankruptcy is similar to entering into a debt consolidation loan, which is often an option many people exhaust before having their debts discharged by courts. Both instances involve the debtor giving the monthly payment to an appointed trustee. The trustee then relegates the payments to the creditors according to the agreement. For purposes of getting a mortgage, many companies view both of these equally. In other words, a debt consolidation loan is the same thing as filing for Chapter 13 bankruptcy in the eyes of many mortgage companies. One advantage of these options is that the debtor does not need to have direct contact with the creditors who can have a significant negative impact on a person's self-esteem.
Chapter 13 also protects third parties when a debtor files bankruptcy. This means that if a debtor acquired an auto loan, a home loan, or any other type of loan in which a co-signer was needed, the co-signer is not affected by the bankruptcy. Typically, if a debtor does not repay a loan, the creditor has the right to sue either the debtor of the co-signer on the loan. In Chapter 13 bankruptcy, however, this is not the case. The co-signer receives a type of protection from the creditors so their credit remains intact.
Bankruptcy was designed to offer consumers a fresh start after getting into a tough financial situation. Some people, however, prefer to repay their debts due to financial reasons or moral obligations. For these people, the courts offer Chapter 13 bankruptcy as a viable option. Not only does it require the creditors to stop contacting the debtor, it also protects homes from foreclosures and third parties from legal recourse. Chapter 13 has several advantages for those who are trying to honestly fulfill their obligations.
http://www.credit-wz.com/bankruptcy/What-Is-Chapter-13-Bankruptcy.html
Thursday, September 27, 2007
What Is Chapter 7 Bankruptcy
The most common form of bankruptcy is Chapter 7 bankruptcy. Because it provides debtors with a full discharge of their debts rather than a repayment plan, the majority of debtors often choose this option as their financial solution. It is an ideal choice for people who have a huge mountain of unsecured debt that is next to impossible to ever pay off. According to the new codes, though, the bankruptcy court system investigates suspicion of abuse from debtors who opt to completely discharge their debts.
Although Chapter 7 bankruptcy provides many people with bankruptcy alternatives and a new beginning concerning their finances, it is not a panacea for their problems. The courts do not just grant a complete discharge for debts without fully investigating the circumstances surrounding the debt. People who file for a discharge are obligated to undergo a "means test," which is a comparison of the person's monthly income to that of the state's median income. Due to the new law, bankruptcy petitions are subject to greater scrutiny than in previous years and they require the signature of a lawyer. Bankruptcy filings in the past year also affect the status of one's petition according to the new guidelines. This helps the courts to decide if the person is even eligible for a complete discharge.
In addition to these guidelines, the courts also look for abuse of the bankruptcy system. If a person is suspected of abuse, their entire Chapter 7 bankruptcy can be dismissed and the debtor can be forced to make repayment plans to their creditors through Chapter 13 bankruptcy or, worse yet, receive no discharge or protection at all. Among other forms of wrongdoing, abuse of the bankruptcy system normally entails a person running up a large amount of consumer debt in a short period and immediately filing bankruptcy afterwards. The courts will often see this action as an exploitation of the system and refuse your petition to discharge your debts.
Chapter 7 bankruptcy is not the only bankruptcy alternative for a debtor. Other bankruptcy options, such as Chapter 13 bankruptcy, allow the debtor to repay the debts in a 3-5 year repayment plan set up by the bankruptcy courts. The court's trustee assesses the debtor's income and debts and decides on a plan in which the money is taken directly out of the debtor's income for the purposes of paying the creditors. This option is often settled out of court with the creditors and is often used as a means for debtors to save their home from foreclosure.
As with any legal or financial matter, the best thing for a debtor to do before filing for Chapter 7 bankruptcy is to consult with a lawyer. You may be able to avoid bankruptcy or find a bankruptcy alternative. Bankruptcy can have many negative effects on a person's life, so it is vital to completely research the advantages and disadvantages of what it will do for you and your finances. For many people facing the decision, Chapter 7 bankruptcy is the best choice because they have few, if any, repayment options. For others, Chapter 13 is a better choice due to psychological and moral obligations to repay their debts. Whatever the reasoning behind the decision, behavior change is often the most important thing to prevent the predicament from happening again.
http://www.credit-wz.com/bankruptcy/What-Is-Chapter-7-Bankruptcy.html
Although Chapter 7 bankruptcy provides many people with bankruptcy alternatives and a new beginning concerning their finances, it is not a panacea for their problems. The courts do not just grant a complete discharge for debts without fully investigating the circumstances surrounding the debt. People who file for a discharge are obligated to undergo a "means test," which is a comparison of the person's monthly income to that of the state's median income. Due to the new law, bankruptcy petitions are subject to greater scrutiny than in previous years and they require the signature of a lawyer. Bankruptcy filings in the past year also affect the status of one's petition according to the new guidelines. This helps the courts to decide if the person is even eligible for a complete discharge.
In addition to these guidelines, the courts also look for abuse of the bankruptcy system. If a person is suspected of abuse, their entire Chapter 7 bankruptcy can be dismissed and the debtor can be forced to make repayment plans to their creditors through Chapter 13 bankruptcy or, worse yet, receive no discharge or protection at all. Among other forms of wrongdoing, abuse of the bankruptcy system normally entails a person running up a large amount of consumer debt in a short period and immediately filing bankruptcy afterwards. The courts will often see this action as an exploitation of the system and refuse your petition to discharge your debts.
Chapter 7 bankruptcy is not the only bankruptcy alternative for a debtor. Other bankruptcy options, such as Chapter 13 bankruptcy, allow the debtor to repay the debts in a 3-5 year repayment plan set up by the bankruptcy courts. The court's trustee assesses the debtor's income and debts and decides on a plan in which the money is taken directly out of the debtor's income for the purposes of paying the creditors. This option is often settled out of court with the creditors and is often used as a means for debtors to save their home from foreclosure.
As with any legal or financial matter, the best thing for a debtor to do before filing for Chapter 7 bankruptcy is to consult with a lawyer. You may be able to avoid bankruptcy or find a bankruptcy alternative. Bankruptcy can have many negative effects on a person's life, so it is vital to completely research the advantages and disadvantages of what it will do for you and your finances. For many people facing the decision, Chapter 7 bankruptcy is the best choice because they have few, if any, repayment options. For others, Chapter 13 is a better choice due to psychological and moral obligations to repay their debts. Whatever the reasoning behind the decision, behavior change is often the most important thing to prevent the predicament from happening again.
http://www.credit-wz.com/bankruptcy/What-Is-Chapter-7-Bankruptcy.html
Avoiding Bankruptcy - Tips For Couples
No one ever gets married thinking they will eventually get a divorce. No one ever goes into a partnership expecting to go for broke and no one ever plans on ever having the need to file for bankruptcy. However, more and more people were certainly filing bankruptcy in record numbers until the laws for filing bankruptcy changed in 2005. The reason so many people have filed bankruptcy in the past has really been contributed to the fact that many people didn't know how to manage money independently so when they faced marriage and joining their assets together as a couple, then it was even more difficult to manage financially.
Often, if young couples were just given some tips to follow to help them get started out on the right financial foot, then the idea of bankruptcy could be avoided altogether. Below are some of the tips young couples should consider.
* Did you bank separately before you came into the marriage? Of course you did! That's why you should continue to do so, regardless of what any book tells you to do. The reasons couples have a hard time balancing their checkbooks is because they have no idea what the other person is doing with their money. So, keep it simple and keep it separate!
* Never charge anything whatsoever. Don't start doing it and if you have credit cards, then pay off the balances and forget about charge and credit cards.
* Remember, cash is king so buy only what you can pay for right now with the exception of your home purchase.
* Buy a used car until you can afford, really afford a new car.
* Invest in every retirement plan you can-you will need it one day.
* The moment you have a child, you should start saving for their college education.
* UPromise and many other college saving ideas are available today. Go online and find out the best way to save for your child's college.
* Never ask a parent for a loan. It causes too many problems in families and even after you pay them back, you'll still owe them and the siblings could become jealous. It just isn't wise. Don't borrow from relatives.
* If you want something or need something really desperately, grab a second job for a while to pay for it. There's nothing like the gratification of earning your own money for the things you want and need. Even if it takes you two or three jobs to do it!
There is no reason for anyone to ever file bankruptcy if each person within the couple unit works together and sets some ground rules down about budgeting. Learn to work together financially so the finances never drive you apart.
http://www.credit-wz.com/bankruptcy/Avoiding-Bankruptcy-Tips-For-Couples.html
Often, if young couples were just given some tips to follow to help them get started out on the right financial foot, then the idea of bankruptcy could be avoided altogether. Below are some of the tips young couples should consider.
* Did you bank separately before you came into the marriage? Of course you did! That's why you should continue to do so, regardless of what any book tells you to do. The reasons couples have a hard time balancing their checkbooks is because they have no idea what the other person is doing with their money. So, keep it simple and keep it separate!
* Never charge anything whatsoever. Don't start doing it and if you have credit cards, then pay off the balances and forget about charge and credit cards.
* Remember, cash is king so buy only what you can pay for right now with the exception of your home purchase.
* Buy a used car until you can afford, really afford a new car.
* Invest in every retirement plan you can-you will need it one day.
* The moment you have a child, you should start saving for their college education.
* UPromise and many other college saving ideas are available today. Go online and find out the best way to save for your child's college.
* Never ask a parent for a loan. It causes too many problems in families and even after you pay them back, you'll still owe them and the siblings could become jealous. It just isn't wise. Don't borrow from relatives.
* If you want something or need something really desperately, grab a second job for a while to pay for it. There's nothing like the gratification of earning your own money for the things you want and need. Even if it takes you two or three jobs to do it!
There is no reason for anyone to ever file bankruptcy if each person within the couple unit works together and sets some ground rules down about budgeting. Learn to work together financially so the finances never drive you apart.
http://www.credit-wz.com/bankruptcy/Avoiding-Bankruptcy-Tips-For-Couples.html
About Recent Changes In Bankruptcy Laws
In 2005, personal bankruptcies were at an all time record high. Perhaps this, at least in part, was due to the changes in bankruptcy laws that took effect in October, 2005. However, it does clearly indicate the sad fact that far too many Americans are allowing themselves to fall into financial trouble all too frequently. In large part, the cause of these financial difficulties is the unwise use of credit to make unneeded, often impulse driven, purchases.
During 2005, 2,039,214 bankruptcy cases were filed in federal court, 30% more than the 1,563,145 filed in 2004 according to information released by the Administrative Office of the U.S. Courts and published in the USA Today. This increase was probably a result of the fact that the changes in bankruptcy law prevent many people that previously would have qualified to file bankruptcy under Chapter 7 from being able to do so. In past years, bankruptcy had been filed at a relative stable rate with no large fluctuations.
The bankruptcy law changes involve the use of Chapter 7 to wipe out debts. Today, people that have income that is above average and have $100 or more left over each month after paying their debts and expenses must declare bankruptcy under Chapter 13 which requires a repayment plan where debts will be repaid with a r-year plan filed with the bankruptcy court.
Under the new bankruptcy law, people must undergo credit counseling in order to file bankruptcy in many cases. Even those people who have developed financial problems due to events they were not in control of must undergo this required counseling. Sometimes people that lose their jobs or have huge medical expenses because of a spouse or child having a life-threatening medical problem, but this does not waive the requirement for credit counseling in order to file bankruptcy under the new laws.
In recent years, banks and credit card companies have wanted to see these changes to bankruptcy laws to stop abuses of the system used to wipe out debts. While this does place many people in a position of hardship, it does stop people that are high income from running up large debts only to have them wiped away by filing bankruptcy. There are two sides to the changes in bankruptcy laws, as with every issue. To avoid having to file bankruptcy, manage your money effectively and avoid having to learn all the details about these changes in the bankruptcy laws.
http://www.credit-wz.com/bankruptcy/About-Recent-Changes-In-Bankruptcy-Laws.html
During 2005, 2,039,214 bankruptcy cases were filed in federal court, 30% more than the 1,563,145 filed in 2004 according to information released by the Administrative Office of the U.S. Courts and published in the USA Today. This increase was probably a result of the fact that the changes in bankruptcy law prevent many people that previously would have qualified to file bankruptcy under Chapter 7 from being able to do so. In past years, bankruptcy had been filed at a relative stable rate with no large fluctuations.
The bankruptcy law changes involve the use of Chapter 7 to wipe out debts. Today, people that have income that is above average and have $100 or more left over each month after paying their debts and expenses must declare bankruptcy under Chapter 13 which requires a repayment plan where debts will be repaid with a r-year plan filed with the bankruptcy court.
Under the new bankruptcy law, people must undergo credit counseling in order to file bankruptcy in many cases. Even those people who have developed financial problems due to events they were not in control of must undergo this required counseling. Sometimes people that lose their jobs or have huge medical expenses because of a spouse or child having a life-threatening medical problem, but this does not waive the requirement for credit counseling in order to file bankruptcy under the new laws.
In recent years, banks and credit card companies have wanted to see these changes to bankruptcy laws to stop abuses of the system used to wipe out debts. While this does place many people in a position of hardship, it does stop people that are high income from running up large debts only to have them wiped away by filing bankruptcy. There are two sides to the changes in bankruptcy laws, as with every issue. To avoid having to file bankruptcy, manage your money effectively and avoid having to learn all the details about these changes in the bankruptcy laws.
http://www.credit-wz.com/bankruptcy/About-Recent-Changes-In-Bankruptcy-Laws.html
Bankruptcy Filing - Non-Dischargeable Debts
Contrary to what many people believe, not all debts are dischargeable regardless of your bankruptcy filing options. For debts like student loans and mortgages, a debtor must enter into some type of repayment agreement rather than have these debts completely discharged. In many cases, the court will appoint a trustee to liquidate your assets so the proceeds can be used to repay your creditors. The courts have established these guidelines as a way of preventing abuse and harm to society.
Bankruptcy filing does not solve all of a debtor's financial problems. Courts have deemed that debts which could be harmful or unproductive to the nature of society are non-dischargeable in a typical bankruptcy. The idea behind this is so that people cannot relinquish their obligations to pay child support, alimony, and other money that contributes to the good of society. This idea of non-dischargeable debts also spreads to student loans because of the amount of money granted by the government each year for college educations. Student loans are possibly the most difficult types of loans to get discharged through bankruptcy. Until recently, they were covered under the types of debt that were dischargeable under loan bankruptcy guidelines, but recent amendments to the code have changed this.
In terms of bankruptcy, business filings are often forced into a plan to repay the business's creditors. The bankruptcy courts often see completely discharging the debts of a business as detrimental to society because of the ramifications involved. With a Chapter 7 bankruptcy, business assets are typically liquidated and the company shuts down. This results in a loss of jobs that help to pump money into the economy. This is why businesses are often forced into a Chapter 11 bankruptcy because their debts can be reorganized and the creditors can be paid in installments while the business continues to operate.
For people who have fallen behind on car payments or home mortgage payments, bankruptcy filing can grant a temporary protection from their creditors. Chapter 13 is designed in such a way that homeowners or consumers with other types of secured debts can retain their property even if they have fallen behind in the payments. The debtor makes arrangements with their court-appointed trustee to make payments along with extra money to help them catch up on missed payments with this type of bankruptcy. Mortgage companies are willing to work with debtors because they would rather afford them some leeway rather than go through the trouble of court proceedings involved with foreclosures.
Contrary to what many people believe, it is possible to receive a mortgage after bankruptcy. Even if you have recently completed a bankruptcy filing, mortgage companies will often work with you to get you into a new home. Debtors who have filed for Chapter 13 have better loan opportunities than those who filed Chapter 7 because they made arrangements to repay their debts. Once you have decided to apply for a mortgage after bankruptcy discharge, choose a mortgage company that does manual underwriting so your particular situation can be evaluated on an individual basis.
People who decide to go through bankruptcy will undoubtedly experience a life changing event. Bankruptcy filing can affect a person's finances for several years following the discharge and oftentimes the debtor is still left with some debts that were not dischargeable. Unfortunately, once a person has gone through a bankruptcy, mortgage loans and other types of credit will have an unusually high interest rate attached to their repayment requirements.
http://www.credit-wz.com/bankruptcy/Bankruptcy-Filing-Non-Dischargeable-Debts.html
Bankruptcy filing does not solve all of a debtor's financial problems. Courts have deemed that debts which could be harmful or unproductive to the nature of society are non-dischargeable in a typical bankruptcy. The idea behind this is so that people cannot relinquish their obligations to pay child support, alimony, and other money that contributes to the good of society. This idea of non-dischargeable debts also spreads to student loans because of the amount of money granted by the government each year for college educations. Student loans are possibly the most difficult types of loans to get discharged through bankruptcy. Until recently, they were covered under the types of debt that were dischargeable under loan bankruptcy guidelines, but recent amendments to the code have changed this.
In terms of bankruptcy, business filings are often forced into a plan to repay the business's creditors. The bankruptcy courts often see completely discharging the debts of a business as detrimental to society because of the ramifications involved. With a Chapter 7 bankruptcy, business assets are typically liquidated and the company shuts down. This results in a loss of jobs that help to pump money into the economy. This is why businesses are often forced into a Chapter 11 bankruptcy because their debts can be reorganized and the creditors can be paid in installments while the business continues to operate.
For people who have fallen behind on car payments or home mortgage payments, bankruptcy filing can grant a temporary protection from their creditors. Chapter 13 is designed in such a way that homeowners or consumers with other types of secured debts can retain their property even if they have fallen behind in the payments. The debtor makes arrangements with their court-appointed trustee to make payments along with extra money to help them catch up on missed payments with this type of bankruptcy. Mortgage companies are willing to work with debtors because they would rather afford them some leeway rather than go through the trouble of court proceedings involved with foreclosures.
Contrary to what many people believe, it is possible to receive a mortgage after bankruptcy. Even if you have recently completed a bankruptcy filing, mortgage companies will often work with you to get you into a new home. Debtors who have filed for Chapter 13 have better loan opportunities than those who filed Chapter 7 because they made arrangements to repay their debts. Once you have decided to apply for a mortgage after bankruptcy discharge, choose a mortgage company that does manual underwriting so your particular situation can be evaluated on an individual basis.
People who decide to go through bankruptcy will undoubtedly experience a life changing event. Bankruptcy filing can affect a person's finances for several years following the discharge and oftentimes the debtor is still left with some debts that were not dischargeable. Unfortunately, once a person has gone through a bankruptcy, mortgage loans and other types of credit will have an unusually high interest rate attached to their repayment requirements.
http://www.credit-wz.com/bankruptcy/Bankruptcy-Filing-Non-Dischargeable-Debts.html
How To Locate A Bankruptcy Attorney
If you find you must file bankruptcy, you need to know how to locate a bankruptcy attorney. Of course, if you have an extremely simple case, you can file in federal court on your own and obtain the bankruptcy. However, if you have a more complex situation, you will need to locate a qualified, skilled lawyer to assist you. This is especially true since bankruptcy reform laws went into effect in 2005, changing the criteria for filing under certain bankruptcy chapters.
Legal counsel can provide you with assurance that all the paperwork is done correctly and that you have the best plan possible for submitting to the federal court judge. The process can often be too complex and confusing for an average person to tackle alone, especially when they are already dealing with the stresses of financial issues that have resulted in the need to seek this type of legal assistance.
If you are determining how to locate a bankruptcy attorney, start by looking in your local telephone book's yellow pages under 'attorneys'. Most yellow page sections of telephone books have a breakdown of listings for attorneys that list them by specialty. Simply turn to the section that lists bankruptcy attorneys. You will probably find that the attorneys will consult with you by telephone at no charge. This allows both the lawyer and you to learn if this is the right counsel for you. The lawyer will also be able to tell you what type of information to bring to his or her office if you both decided that an office appointment is in order.
Another way to locate a bankruptcy attorney is to search on the Internet for one in your area. Simply search using the term 'bankruptcy attorney' or 'bankruptcy lawyer' followed by the city and state in which you reside. If you live in a large city, you'll find dozens and dozens of lawyers this way. Even if you live in a small town or rural area, your search will reveal several choices for you.
If you don't find results in these ways or you need more information about how to locate a bankruptcy attorney, call your state's bar association or a lawyer referral service. Both of these options will provide you with more information than you will find in the telephone book or online. You might also consider calling a financial counseling service and asking what local attorney they recommend. If you aren't too shy about admitting the fact that you are about to file bankruptcy, you can even ask friends and relatives.
http://www.credit-wz.com/bankruptcy/How-To-Locate-A-Bankruptcy-Attorney.html
Legal counsel can provide you with assurance that all the paperwork is done correctly and that you have the best plan possible for submitting to the federal court judge. The process can often be too complex and confusing for an average person to tackle alone, especially when they are already dealing with the stresses of financial issues that have resulted in the need to seek this type of legal assistance.
If you are determining how to locate a bankruptcy attorney, start by looking in your local telephone book's yellow pages under 'attorneys'. Most yellow page sections of telephone books have a breakdown of listings for attorneys that list them by specialty. Simply turn to the section that lists bankruptcy attorneys. You will probably find that the attorneys will consult with you by telephone at no charge. This allows both the lawyer and you to learn if this is the right counsel for you. The lawyer will also be able to tell you what type of information to bring to his or her office if you both decided that an office appointment is in order.
Another way to locate a bankruptcy attorney is to search on the Internet for one in your area. Simply search using the term 'bankruptcy attorney' or 'bankruptcy lawyer' followed by the city and state in which you reside. If you live in a large city, you'll find dozens and dozens of lawyers this way. Even if you live in a small town or rural area, your search will reveal several choices for you.
If you don't find results in these ways or you need more information about how to locate a bankruptcy attorney, call your state's bar association or a lawyer referral service. Both of these options will provide you with more information than you will find in the telephone book or online. You might also consider calling a financial counseling service and asking what local attorney they recommend. If you aren't too shy about admitting the fact that you are about to file bankruptcy, you can even ask friends and relatives.
http://www.credit-wz.com/bankruptcy/How-To-Locate-A-Bankruptcy-Attorney.html
Bankruptcy Risk Score is Just the Tip of the Iceberg
Recently, there's been a lot of news coverage about the "bankruptcy risk score," a score used by many lenders in making decisions. The mere existence of a bankruptcy risk score that consumers don't know about and may not be able to see called into question some basic assumptions about managing our credit. These mysterious numbers in the hands of creditors, but unavailable to consumers, largely defeat the purpose of the credit disclosure requirements of the FCRA.
http://www.totalbankruptcy.com/bankruptcy_articles_risk_score.htm
It turns out that the situation is far worse than it initially appeared-and that it isn't a new development. The Federal Citizen Information Center has information about risk scoring on its website that was made available by Experian in 2003. And risk scoring is far more varied and complicated than the bankruptcy risk score we've been hearing so much about. Equifax offers Score PowerR to consumers with the tag line, "Know what lenders know and become a better negotiator." The truth is, though, that consumers purchasing their credit reports and FICO scores may not "know what lenders know."
A Risk Scoring Model for Everyone
Each of the three major credit bureaus offers industry-specific risk scores to businesses. Experian, for instance, offers the TEC Risk Model SM, a risk assessment program designed specifically for telecommunications, energy and cable companies. This model purports to more accurately assess the risk of a consumer as it specifically relates to this kind of service account, and claims to do so by "accurately scoring a larger number of consumers considered unscorable by traditional generic risk models." What information and criterion are used to make those determinations isn't clear.
Other specific risk scores venture even further into traditional lending areas. The Fair, Isaac Corporation-the people who give us FICO scores-have a variety of alternative products available to companies that extend credit. In addition to the Credit Bureau Bankruptcy Score, the Credit Bureau Risk Score, and the FICO Expansion Score (which generates credit scores for consumers who lack sufficient credit history to be scored traditionally), the company now offers the Next Generation Risk Score. The Next Generation Risk score-a score offered by all three major credit reporting agencies under different names-"identifies and projects the full range of credit risks-including bankruptcies, charge offs, repossessions, loan defaults and delinquencies."
TransUnion offers the automotive industry "specialized options that predict the likelihood of delinquency or even the potential for bankruptcy on an auto loan."
You Don't Know What Information Your Creditors are Considering
The bottom line is that what your prospective creditors are looking at when they make decisions might well not be the same thing you looked at when you ordered your free credit report. You can ask a potential creditor what risk model or scoring system they use, but the answer won't necessarily benefit you, since much of the information that goes into determining these auxiliary scores isn't available to consumers.
We can assume that many of the traditional factors like timely payment and not using too high a percentage of your available credit will impact these various scores, so it's important to stay focused on those factors that we already know help build credit. Still, it's just as important to be aware that, when you order and review your free credit reports, you really haven't seen the whole picture.http://www.totalbankruptcy.com/bankruptcy_articles_risk_score.htm
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