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Credit Cards After Bankruptcy – What You Should Know

September 22nd, 2010

Obtaining credit cards after bankruptcy may seem like a bad idea to those people who have been through the trials of a bankruptcy and need to improve their credit score.

Credit cards see to some to offer “free money”, or at least a supply of funds that don’t have to be repaid, and as such can be one of the prime reasons for insolvency.

At first the minimum payments are manageable, but as more debt is accrued and economic times start to take their effect, even this can become too much. Minimum payments are missed and one’s credit score deteriorates.

Credit cards after bankruptcy are often shunned by individuals who do not want to risk getting back into debt, which is entirely understandable – but is it really a good idea?

There is an irony here. Credit cards are one of the easiest ways to destroy your credit rating. They are also one of the best ways to repair it.

The way to restore your credit rating is not to avoid credit. It is, in fact, to show you can repay credit. By taking on a small amount of debt, maintaining the payments and paying it off is the best way to restore your credit score.

You will always be subject to a much higher interest rate on a credit card after bankruptcy if it’s unsecured.

Before going any further, a word of warning. Stay away from unscrupulous card issuers. They will charge an exhorbitant rate of interest, but may not register your card. By law, any card should be registered with the credit authorities – if it isn’t you won’t see any benefit to your credit score, as no one will know about it!

The best thing to do is to take out a secured credit card. This is where you deposit a sum of money, say $500, and the company will give you credit up to that $500. The card is “secure” as you are using funds that you have deposited with them.

You may wonder why bother to do this and not just use the $500 as cash?

The point is, using cash does not improve your credit score, nor does simply staying away from credit. This way, you are using credit which is guaranteed to be repaid (you deposited the money remember?), and your credit rating will start to improve.

Remember, repaying credit improves your credit score – living with cash only is risk free, but will not improve your rating.

This is just one of improving your credit score. credit cards after bankruptcy are one weapon in the arsenal of credit restoration. For further free information concerning this and bankruptcy in general visit www.howtoclaimbankruptcy.net This article, Credit Cards After Bankruptcy – What You Should Know has free reprint rights.


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How To Claim Bankruptcy – What You Should Think About

September 21st, 2010

Where an individual or legal entity can no longer afford to service or repay their debts, a state of bankruptcy exists. In light of the recent economic downturn many people are looking to find out how to claim bankruptcy. Here are a few of the advantages and disadvantages of filing.

However, a bankruptcy petition is sometimes not a matter of personal choice. A creditor can file a Bankruptcy Order against a debtor, and bankruptcy proceedings will continue even if the individual against whom it has been served ignores or disputes it.

The process itself is fairly straightforward, but bankruptcy should only be entered into as a very last resort, as it’s effects are far reaching and life changing.

So what should one be aware of in filing for bankruptcy?

Not all debt can be removed – alimony payments and taxes are two things that have to be repaid, but under chapter 7 bankruptcy laws an individual will usually come out free of debt, which is why chapter 7 is the most preferred option.

There are a couple of disadvantages with this however.

The first and most difficult is the fact that virtually all your worldly goods are sold and the money disbursed amongst your creditors, leaving you with very little.

The second is that although any remaining debt is cancelled, those who you have not repaid in full will likely as not, be very reluctant to engage in any financial activity with you in the future.

This may not necessarily be the case though, as the above refers to the chapter 7 bankruptcy laws.

Anyone filing for bankruptcy now has to complete a financial means test.

Should you fail the means test, (your income is deemed sufficient to be able to repay your debts over 3-5 years), and your income is found to have been above the median for a family of your size in your state over the past 6 months, you are precluded from filing chapter 7 and have to file under chapter 13.

No personal property is liquidated under chapter 13, but all debt is repaid under a 3-5 year repayment plan.

The main disadvantage of Chapter 13 bankruptcy rules is that the repayment schedule can be pretty harsh. The means test is complex and government has it’s own definitions for “allowable expenses”, “disposable income” etc, which can often serve to make your income appear higher than it is, and making a repayment plan quite difficult.

As far as an individual’s credit score is concerned, chapter 13 stays on record for 7 years and chapter 7 for 10 years.

Should you require more free inShould you requiremation on how to claim bankruptcy and the different chapters and how they work, go to www.howtoclaimbankruptcy.net Free reprint avaialable from: How To Claim Bankruptcy – What You Should Think About.


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Filing Chapter 7 Bankruptcy Will Give Relief From Creditors

September 20th, 2010

When you have overdue debts creditors can become quite a nightmare. If you get to a point where your bills are too overwhelming and there is no reprieve in sight then it may be time to consider chapter 7 bankruptcy.

Filing chapter 7 bankruptcy will settle your unpaid debts. Creditors are going to leave you alone during the process and before long you will be discharged of the old debt can start working towards a debt free future.

By filing chapter 7 bankruptcy, you are asking the court for help in settling all your debts. Once you qualify, the court will then appoint a trustee to handle your case.

You will place all your assets and properties in the control of this trustee whose job is to liquidate it or transform it into cash. The trustee will apply the money to your debts.

Your trustee will not leave you in the dark or on the street. A portion of the cash garnered from the sale of your things goes to paying your expenses. After you are all set creditors get their payments.

If you happen to be in a trade where you personally own a lot of tools and items necessary for you to make a living then there is a good chance that those items would be spared during liquidation. Since you will probably be working during the bankruptcy proceedings that income will also be untouchable and yours to keep.

Because there are a lot of details involved in this process you will want an attorney experienced in chapter 7 bankruptcy in your corner.

Your attorney is important to your quest in getting a discharge as he will guide you every step of the way in this complex legal process.

He will start by asking you to take the “means test”. This test determines whether or not your income is equal to or lesser than the average state income. The means test is a requirement before you are allowed to file your petition for bankruptcy.

Once the court grants your petition, the “automatic stay” comes into play. That means your creditors are then lawfully prevented from pursuing anymore collection activities targeting you. They will instead be pointed to the direction of your trustee.

Filing chapter 7 bankruptcy is your simplest and fastest way out of bankruptcy. You can get a discharge usually after 4-6 months.

Learn more about chapter 7 bankruptcy. Stop by David Chang’s site where you can find out all about bankruptcy attorneys and what they can do for you.


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After Bankruptcy – Who Needs Credit Cards?

September 14th, 2010

The good years were times of easy credit and a relaxed attitude to things like credit cards. Now economic times have changed and people are having to face some harsh economic realities, often finding that they have what has now become an unmanageable amount of debt, often due to irresponsible credit card spending.

Anyone coming out of bankruptcy would be fully justified in refusing to even carry a credit card again, and indeed, the offers that used to pour through the mailbox offering credit cards with high spending limits have long gone.

Whilst this is totally understandable, it is not necessarily a good view to have.

What some people sometimes do not pay attention to, is what life is like after bankruptcy. Getting any sort of credit is tough as ones credit rating goes through the floor.

Improving one’s credit rating should be a priority after bankruptcy, and the key is to show that one can manage money successfully, including debt.

One thing one should consider before even filing for bankruptcy is chapter 13. Chapter 13 does not write your debt off like chapter 7 (making chapter 7 the most popular form of bankruptcy in the US), but it does not sell all your assets either. However, the main point about chapter 13 is that it is a repayment plan, and as one makes the repayments over a 3-5 year period, so ones credit rating improves.

Another option to repair a credit score is to get a secured credit card. Here, a card is issued against a sum of money one puts down as a deposit. That way one cannot overspend or be in a position where the balance on the card cannot be paid off. The advantage is however, that ones use of the card will improve ones credit score, as long as the balance is paid every month. Sure, there is no real advantage to the card holder who may as well just use cash, but the agencies have no check on cash spending, so although they may be living within their means and spending sensibly, this will have no effect on their credit score if they are using cash.

However, it is vital that one uses a card issuer who is registered with the credit agencies, otherwise all ones spending and repaying will go unnoticed and not improve ones credit rating.

So it is possible to obtain a credit card after bankruptcy, but with much tighter controls. Remember that it is a means to an end, to get your credit score back to a respectable level.

In hard financial times our finances can can back to haunt us, especially if we have borrowed too much in the good times. We may start to consider how to claim bankruptcy. For more free information visit www.howtoclaimbankruptcy.net. Check here for free reprint licence: After Bankruptcy – Who Needs Credit Cards?.


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Are You Sure Chapter 7 Is Right For Your Business?

September 13th, 2010

Chapter 7 bankruptcy is open to individuals, sole traders, partnerships and corporations. This article will concentrate on the implications for chapter 7 bankruptcy on businesses.

By definition, business involves taking risks which is fine when economic conditions are relatively stable, but when sudden change occurs as it has in the past couple of years, even the best laid plans can fall apart.

Unfortunately certain sectors of the world economy have taken those big risks and have had big rewards, but in recent times those risks have proven unsustainable. Because of the nature of some of those businesses, some have been bailed out by the taxpayers of various countries, but others have had to look bankruptcy right in the eye, and gone out of business.

85% of individuals seeking bankruptcy file under chapter 7 making it the most popular form of bankruptcy. This involves having all their assets liquidated, but allows them to emerge debt free. It’s not always the best path for a business however.

This is because a chapter 7 filing for a business is basically an application for the liquidation of its assets. It is the same for all business, regardless of size.

The most important thing to do from the beginning is employ the services of a lawyer. They will guide you through the process, and ensure that you meet any criteria for filing. Whilst this may seem like an unnecessary expense, incorrect filing of a claim can cost you money.

What chapter 7 does, is once filed, allows what is called “automatic stay”. This means that creditors may no longer contact the owner or any employee of the company seeking debt repayment. It puts an end to harassing phone calls and letters. Everything has to be dealt with through the court appointed trustee.

The court, under chapter 7, appoints a Trustee who assumes control of the business and arranges the forced sale of its assets and the distribution of the monies thus raised.

That is the essence of chapter 7. Maximum return of creditors’ debts in exchange for loss of assets and control of any business.

This is why it may not be suitable for business. It is easy for the sole trader or directors to seek a way out, but they need to consider the fact that if they simply file under chapter 7 all is lost. Years of work building a business simply goes out of the window.

Taking professional advice may result in finding that they could in fact stay in business by filing chapter 11 for example. This involves a legally enforceable repayment plan, where the creditors have their existing financial arrangements altered slightly, effectively giving the business time to catch up. This is only allowable where the financial situation allows; in other words if the company has been through a bad patch but the order books are now full, it may be that a rearrangement of debt will allow the company to pay its debt and then continue trading into the future.

When economic situations are difficult you may suddenly find that what were easily manageable levels of debt are now not sustainable. You may start to seriously consider declaring yourself bankrupt. For more free advice visit www.declaringyourselfbankrupt.net.


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Chapter 7 Bankruptcy Now Has A Means Test

September 6th, 2010

Of all the various chapters for filing bankruptcy in the US, chapters 7 and 13 are the most popular. In fact 85% of all filings are under chapter 7, probably as this is perceived as the “best” type of bankruptcy, leaving the debtor free from any debt on discharge, unlike chapter 13 where debts have to be repaid under a repayment plan.

Even though all the individuals possessions are sold under chapter 7, the end result of freedom from debt makes chapter 7 the most popular for the debtor, but perhaps the least popular for the creditor.

This is because that although the debtor loses virtually everything, the creditor often recovers very little.

In the past, creditors lost out when sometimes they need not have done, as some people hid the true size of their wealth and used chapter 7 merely to get rid of debt that they could have afforded to repay, had their debts been restructured under a chapter 13 filing.

Therefore, 2005 saw the introduction of a compulsory means test for individuals seeking chapter 7 bankruptcy, failure of which would automatically push them into a chapter 13 filing, which is a 3-5 year repayment plan.

The means test has a number of stages, the first being a calculation of the debtor’s disposable income, based on their earnings over the previous 6 months and deducting various living expenses.

The first stage is to calculate what the applicant’s disposable income has been over the previous 6 months. In other words deducting what the court considers to be reasonable amounts for living expenses for example and seeing what’s left.

There are then two more steps. The first takes your previously calculated “disposable income” figure and compares this against the median income for a family of the same size in your state. If your income is less than this, you do not need to take part 2 of the test as you automatically qualify for chapter 7.

If you income is found to be greater than the median then you have to go through some complicated calculations. The problem an individual faces once they fail the first part of the test, is determining if your “disposable income” figure is sufficient, after paying monthly “allowed” expenses, to pay at least a proportion of your unsecured debts (credit cards for example).

The point is that you should really get professional legal advice before filing bankruptcy, so you can be properly prepared.

Bankruptcy is a drastic step, in spite of what other people may tell you. It can devastate your financial future as your credit score drops. Although chapter 7 is the most common form of bankruptcy, it may be worth looking at chapter 13 bankruptcy law. If you would like further free information and advice, visit www.chapter13bankruptcylaw.net.


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How To Restore Your Credit Score After Bankruptcy – 4 Tips

August 20th, 2010

One’s credit rating is destroyed after a bankruptcy. However, it can be easier to restore one’s rating after bankruptcy if a little thought is given to a strategy before filing bankruptcy.

Tip 1. Creditor’s Accounts.

Your credit rating is an overall figure arrived at after taking into consideration your credit score with your individual creditors. Basically your creditors submit a number to the credit bureaux which is a reflection of their understanding of your financial record with them.

It is therefore important that when you file bankruptcy, you make sure that all your accounts are included. As long as they show zero balances you can legitimately ask your creditors to stop giving the credit bureaux your details – they don’t have to report, and if you could just get one or two to stop, your credit score will lift a little.

Tip 2. Your Credit Cards.

There is something of an irony here, in that it might well have been credit cards that caused the problem, and yet they can also perform a useful role in getting your credit rating higher. A credit card after bankruptcy, if you can get one, is a means of showing that you can borrow and repay debt responsibly, which is what the credit agencies are looking for.

Tip 3. Try a Secured Credit Card.

A secured credit card is a credit card that is limited in its credit limit to an amount equal to a deposit with the card issuer. In other words, you give the issuer a deposit of say $200, and the limit on your card is $200. This may raise the question as to why not just have a $200 cash budget and no card.

Cash spending is not seen by the credit agencies. Credit card spending is, and if you pay the balance every month this will be seen as responsible spending, and your credit rating will improve. In addition, there is no danger of getting into credit card debt again as the maximum limit is covered by your deposit.

Just be certain that the card issuer is registered with the credit bureaux, otherwise the card will have no bearing on your credit score.

Tip 4. Become a Name on Someone Else’s Card.

This is not actually using someone else’s card! All you do is find a friend or relative who has a good credit rating, and get them to include you as a name on the card. This way you actually benefit from their credit score, and they are completely unaffected by yours!

Just keep in mind, however, that if the other person’s rating drops, this will affect you too.

For a lot of people however, difficult economic times have come together to make repaying their debts impossible, and has left them considering how to claim bankruptcy. If you are in that situation and need more free advice, visit www.howtoclaimbankruptcy.net.


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Why Chapter 7 Bankruptcy Is Not Always Your Best Option.

August 17th, 2010

Amongst other things in life, one can be sure that politics and business are constantly subject to change, not simply because of the relationship they have with each other, but also because of world events.

All of us like to feel secure, and look to our leaders to provide the right conditions to acheive that security, but in reality their options are limited in the modern world. in addition, much of what goes onis beyond the reach of politicians, as many of us have learnt, to our cost, in recent years.

These recent economic catastrophes have meant that more and more businesses and individuals have been forced onto bankruptcy in recent years. This has led to an increase in those seeking information about to how to go about claiming bankruptcy and which chapter to file under.

A chapter 13 bankruptcy is basically a situation where an individual or enterprise turns their affairs over to the federal court, which then reschedules their debt structure and commit them to a repayment plan, in which all outstanding debt is paid over a 3-5 year period.

Chapter 7 was abused in years past, with people hiding their income and assets and using chapter 7 simply as ameans of removing debt that they could, in fact, afford to repay. The means test now makes it very hard for people to conceal their wealth, and many are forced into chapter 13 ensuring that where debt can be paid, it is indeed paid, though the repayment terms can be pretty tough and leave very little cash left over on a monthly basis.

Chapter 13 can actually be of great benefit. For example if somone has spent years building a business and is experiencing financial difficulties, but can demonstrate as much to themselves as the court, that things are going to improve, chapter 13’s repayment plan is then effectively a way of catching up. In addition, because no assets have to be sold, the company has an opportunity to trade its way out of trouble.

Not only do assets not have to be sold, but in the case of a business, if the debtors include suppliers of equipment and they are owed money by the firm, once chapter 13 is filed the equipment cannot be repossesed. However, the advantage for the supplier is that they are likely to be paid in full, although the payments will be delayed somewhat.

Chapter 13 is therefore a far more satisfactory form of bankruptcy to both the business, (if it means it can keep trading after bankruptcy is discharged), and the creditors who may well find themselves out of pocket under the alternative chapter 7 bankruptcy.

Bankruptcy should not be entered in to lightly and can be a devastating experience. If you want further free information concerning declaring yourself bankrupt, visit this free website declaring yourself bankruptwww.declaringyourselfbankrupt.net. Also published at Why Chapter 7 Bankruptcy Is Not Always Your Best Option..


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Finances And How To Survive

August 16th, 2010

In these difficult, some may say harsh, economic times, it’s more important than ever to be careful when it comes to one’s own finances.

We all try and tighten our belts when times get harder financially. Sometimes we take on financial committments when times are good without giving considered thought to the distinct possibility that times may change for the worse, putting us under severe financial strain. If we took the time to think ahead however, there are things we can do in the good times, that help in the bad times.

It’s easy to get carried away when times are good, but the problem is that we don’t consider the possibility that our finacial situation may change for the worse. Peer pressure does not help, many of us like to give the impression to our friends that we are well off; a facade that is difficult to maintain when the icy wind of change starts to blow.

We often take debt on for the instant gratification of how we think we will feel when ever we possess such an article. However, the excitement is often in the anticipation of the purchase and after we have bought whatever it was we wanted we almost instantly take it for granted, and the feelings of excitement are replaced by the worry of keeping up the payments! Would it not have been better to not have bought it in the first place and retain the security of the cash?

There is a simple rule of thumb that states that if you have six months salary saved in the bank, this gives you enough of a “bridge” to survive should disaster strike in the form of redundancy. Also, if you have money in the bank, the bank is more likely to look favorably on you should you need to borrow money, and given that they are so tight with their lending these days, this is all the m ore reason as to why you should save this money.

Saving money is often considered by some to be boring. Not only do we not have anything to show for it, we can also feel that saving is a form of deprivation, and we end up either chipping away at it and consequently our savings do not grow, or just giving in and buying a new, expensive item, inspired, in part, by the common thought that “I’ve never had so much cash saved before, now I can afford….” whatever it was they wanted.

What is needed is a change in our internal messaging service. we need to change our attitudes towards saving, away from thoughts that it’s restrictive towards thoughts that its all about liberty – liberty to survive when things go wrong. Try and associate saving with something that makes you feel secure, in the writer’s case it’s his grandparents house at Christmas with a roaring log fire and deep, comfy sofas.

As you work on changing your ideas on saving, you will begin not only to see the benefits and actually do it, you will start to get the same satisfaction from saving as you do with spending.

Looking after your finances is so important. However, for some, things can become too much and they are forced to look at the unpleasant step of bankruptcy. If you need further free information on declaring yourself bankrupt, please visit www.declaringyourselfbankrupt.org


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Some Facts Regarding Chapter 13 Bankruptcy

July 12th, 2010

Whilst many jobs have been lost during the past year in response to the global economic crisis, many analysts now feel that the world economy is becoming more stable. However, as economies improve, the improvement in the jobs market often lags behind. It is therefore very likely that the number of people claiming bankruptcy will continue to rise.

Both businesses and private individuals file for bankruptcy, and there are a number of types of bankruptcy, called “chapters” that they can both file under. One of these is called “Chapter 13″. This is often used by a business that does not want to go into liquidation, but wants to trade its way out of its financial problems. For example, filing under a chapter 7 bankruptcy means that all the assets are sold off to pay the debtors, and any outstanding debt is then written off (there are some exceptions), allowing the business or individual a “clean slate”.

By filing under chapter 13, one’s credit rating, although severely damaged, is not as badly damaged as under a chapter 7 filing, and no personal or business assets are lost.

A business can therefore trade its way out of its financial problems, without having to sell stock or equipment.

Unlike a chapter 7 bankruptcy, chapter 13 is basically a repayment plan, worked out by the court and with the agreement of the creditors, which aims to repay outstanding debts by rescheduling them over a 3-5 year period. Conditions can seem a little harsh, but the business stays afloat and looks forward to better times after the repayment period has been completed.

As long as the repayment plan is adhered to by the individual or business, the creditors may not pester the business or individual for payment.

Anyone who applies for a chapter 7 bankruptcy has to undergo a means test. This is to make certain that they do not have sufficient income to repay their debts in full over time. If they do, then they are forced into a chapter 13 bankruptcy, in order to repay their debt over time.

Before claiming any sort of bankruptcy however, proper financial advice should be sought to try and avoid this drastic step.

Before declaring yourself bankrupt, it’s vital that you consult with professional adviser regarding your financial position. This is because declaring yourself bankrupt has serious implications for you credit score and general financial position in later years.


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