Connect with us

News

Debunking bankruptcy myths: But won’t bankruptcy ruin my credit for seven years? | On Your Debt

Published

on

This question, or some form of it, is asked by virtually every person that comes to see us to discuss their financial problems. The answer is usually simple. By the time they have come in to see us, their credit is already in bad shape! This does not necessarily mean that they have a bad credit score. Some folks manage to keep making minimum payments each month. Unfortunately, this is often done by taking cash advances against another card and or borrowing money from a payday loan store. But even in these cases, the poor individual is hopelessly over extended and living with a great deal of stress.

The old myth about bankruptcy ruining a person’s credit for seven years seems to come from a belief that a bankruptcy filing can be listed on a person’s credit report for seven years. This belief is incorrect. A Chapter 7 bankruptcy filing can, in fact, be listed on a filer’s credit report for ten years from the date of filing. This does not mean, however, that a person has bad credit for ten years. In fact, a bankruptcy discharge can often make it EASIER to obtain credit.

Does not make sense? Well, think about it from a practical perspective. Say you go to a banker to borrow money today. You have NEVER filed bankruptcy. You have, however, been a week or two late on your mortgage or car payment a couple of times. You have about $25,000 in credit card debt and have only been making minimum payments for a while now. You may even have a payday loan or two. In other words, you are barely getting by. If the banker lends you money today, he will be competing with all your other creditors to be paid on his loan. You barely have enough money to pay them. How are you going to pay this new debt? In addition to this, the banker will have to consider the fact that you could file bankruptcy on the other creditors and him after he lends you the money. The likelihood of receiving your loan is next to none.

Now fast forward a few months. You filed a Chapter 7 bankruptcy and received Discharge of all your unsecured debt and now only have your car and house payments. Since that time, you have made your house and car payments on time every month. You have no other creditors. If the banker lends you money now, he will not be competing with other creditors. Furthermore, he will not need to worry about you filing another chapter 7 bankruptcy. You cannot file again for eight years after the first bankruptcy was filed. From this perspective, you are less of a risk now than you were before filing your bankruptcy and now your likelihood of receiving the loan is looking pretty good!

If you question this logic, call the finance manager at your local car dealership. You will likely learn that you can qualify for an automobile loan the day after you receive your bankruptcy discharge. Call a real estate agent. You will also learn that many people qualify for a mortgage within a few short years after a bankruptcy discharge.

Now this does not mean that bankruptcy is the best option for you. Bankruptcy should never be your first choice. If, however, you are struggling with debt, you should sit down with an experienced consumer bankruptcy attorney and fully explore how a bankruptcy will affect your credit.

Bond & Botes Helps People Struggling with Debt

At Bond & Botes, collectively our offices throughout Alabama and Mississippi have helped over 100,000 individuals and married couples recover from debt over our 30 years of doing business.

We are local and offer a free confidential face to face consultation. We also offer free consultations from the comfort and safety of your own home or office by phone and/or video with an experienced attorney. Let us solve your financial problems. There is no obligation, and that means no downside to gathering the information you need to make good decisions about how to break the cycle of debt stress and move forward. We can answer all your questions regarding Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, stopping a foreclosure or wage garnishment, avoiding liens, stopping lawsuits, discharging medical debt, personal loans, payday loans, credit card debt, etc. We can alleviate your stress! We want to help and we can help you!


Bond, Botes, Sykstus, Tanner & McNutt, P.C.

Web: www.bondnbotes.com

Facebook: facebook.com/Bond-Botes-Sykstus-Tanner-McNutt-PC-203986783117475/

102 South Court St, Suite 314, Florence, AL 35630

Phone: 256-760-1010 • Fax: 256-760-1023

Office Hours: Monday – Friday • 8am to 5pm

No representation is made that the quality of legal services to be performed is greater than the quality of legal services to be performed by other lawyers.

Source link

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

News

Dave says: If you need a cosigner, you're not ready – Northeast Mississippi Daily Journal

Published

on

Dave says: If you need a cosigner, you’re not ready  Northeast Mississippi Daily Journal

Source link

Continue Reading

News

How to improve your credit score in 2021: Easy and effective tips

Published

on

If you’ve ever wondered “What is my credit score?” it’s probably time to find out. Having a good credit score can make life a lot more affordable. If you’re about to buy a house or car, for example, the higher your credit score is, the lower your interest rate (and therefore, monthly cost) will probably be.

Your number may also be the deciding factor for whether or not you can get a loan and ultimately determine if you are even able to buy something you want or need.

So, yes, the goal is to have the highest possible credit score you can, but increasing the number doesn’t just happen overnight. There are important steps to take if you want to increase your score, and the sooner you start working on it, the better.

“If you’re trying to increase (your credit score) substantially to accomplish a goal, you’re really going to have to have as much lead time as possible,” said Thomas Nitzsche, director of media and brand at Money Management International, a nonprofit financial counseling and education provider that advises people on how to legally and ethically improve their credit score on their own.

If you have fair credit and you’re trying to improve the number for a house purchase, for instance, you’ll want to start working on it at least a year in advance, he explained to TMRW.

But even though that sounds like a long time away, you can (and should!) start doing things right now to bump that number up. Below, see seven things you should do — and not do — to help improve your credit score:

1. Review your credit report

Review your credit report and look for errors that might be hurting your score. Morsa Images / Getty Images

The first thing you’ll want to do is pull up a copy of your current report so you know where you stand. You can get free reports from all three agencies — TransUnion, Experian, and Equifax — at annualcreditreport.com. Nitzsche said it’s important to take a moment and understand the financial snapshot of where you are today and where you want to be.

You’ll also want to take some time and look for any errors on your report, which could negatively impact your score. “If your name is misspelled, that’s not going to hurt your score,” he explained. “But if you see a late payment or missed payment (that’s in error), or maybe you have an account that should be reporting but isn’t, then that’s a problem and that will impact your score.”

If there is an error, you should dispute it and try to provide as much proof as you can.

One other thing: You can also ask a creditor to remove an issue if it’s been corrected (i.e., if you paid off a collection debt). Nitzsche said it doesn’t hurt to ask and the worst thing they could say is no.

2. Have good financial habits

“The biggest part of your credit score is payment history, so the most critical thing is never missing a due date,” Nitzsche said. Set up a monthly autopay or add all due dates to your calendar so you never miss a bill.

You can also achieve a higher score when you mix different types of accounts on your credit report. It may seem counterintuitive to get extra points for having debt in the form of student loans, mortgages and auto loans, but as long as you’re paying them off responsibly, it shows that you’re reliable.

3. Aim to use 30% or less of your credit at any given time

Know your credit limit and aim to only use 30% or less of it for a better credit score.Tim Robberts / Getty Images

Know your credit card limit, and try not to use any more than 30% of that number each month, otherwise your score could lose points for too much credit utilization.

Another thing you can do is ask your bank to increase your limit. “That will give you more flexibility to spend more,” Nitzsche said. You could also pay it off twice a month to keep the balance low. But he does warn that you never know when the balance is going to be reported to the bureau. It can happen at any point during the month, so it might be the day after you make the payment or the day before. “You don’t necessarily want to use the card and pay it the next day because that doesn’t give the bureau the chance to know that you’re using it,” he said.

4. Avoid requests for new credit

If you’re looking to increase your score around the time you want to buy a house or car, you won’t want to open up a new line of credit, like a retail card, credit card or loan. That’s because “hard” credit inquiries like those can lower your score, and sometimes it comes down to a few points over whether you’re approved or what your rate will be, Nitzsche said.

“Soft” credit inquiries, like when an employer checks your credit or when you pull your own report, won’t affect your score.

5. Keep all accounts open, even ones you don’t use anymore

Even if you don’t use that credit card from college, it’s a good idea to just keep it open because closing it could hurt your score. Nitzsche explained that you’ll be dinged some points for each account that is closed. If you want or need to mentally break up with a card, just cut it up instead.

6. Build your credit if needed

If you haven’t established credit yet, you might not even exist … in the credit report space, that is! “If someone has never fallen in delinquency on any subscriptions or utilities or never had collections on anything and they have not utilized credit cards or loans in the past seven to 10 years, they may not have a credit profile at all,” Nitzsche said. “That presents a challenge when you want to buy a home.”

If this sounds familiar, you may have to get a secured credit card where you put down a deposit, he advised. “You still have to make payments and use it responsibly. Not all banks offer them but you can usually check with your local bank or credit union.”

7. Reach out for help

If you want personal guidance on boosting your credit score, make an appointment with a credit counselor.kate_sept2004 / Getty Images

There are many apps and credit-monitoring services that can help you stay on top of your credit score. You could also reach out to a professional credit counselor who can help you navigate your specific situation. (Here’s a good resource about finding a reputable service.)

One last thing: Nitzsche warned that everyone should beware of credit repair scams that claim to be able to increase credit scores for an advance fee to get accurate negative information removed (even temporarily) from credit reports.

Related:

Source link

Continue Reading

News

Lifestyle News | ⚡How J&G Credit Recreations Assists Individuals to Gain Financial Stability Through Credit and Homeownership – LatestLY

Published

on

Lifestyle News | ⚡How J&G Credit Recreations Assists Individuals to Gain Financial Stability Through Credit and Homeownership  LatestLY

Source link

Continue Reading

Trending