Archive for the ‘Bankruptcy’ Category

4 Things to avoid while you rebuild credit after a bankruptcy

Wednesday, June 30th, 2010
Do you know that you can get credit soon after you file a bankruptcy and get discharge from your debts? Yes, it is true. Though bankruptcy has a devastating effect on your credit score, yet it gives you the opportunity to make a fresh start. However, while trying to rebuild your credit after a bankruptcy, you should avoid certain mistakes as otherwise you’ll not be able to establish a good credit record. Read on to know about such mistakes and how you can avoid them.
  1. Not cleaning up credit reports – After emerging from a bankruptcy, many people find that there are open and overdue accounts on their credit reports when actually the obligation have been wiped out as a part of bankruptcy. If you experience such a problem, you should contact the credit bureaus and ask them to report the accounts as “included in bankruptcy”. Failing to do so may hurt your score even more. You should also dispute other errors (if any) on your credit reports so as to build a good credit record.
  2. Not reading fine print carefully – After filing a bankruptcy, you may not be able to take out a credit card with a favorable interest rate. You may have to obtain a card with comparatively high rate of interest. However, you’ll make a big mistake if you don’t read the fine prints while taking out such cards. You should also go through the mails that you receive from the credit card issuers. Though the CARD Act has imposed certain restrictions on credit card issuers, yet you should be aware of loopholes. It is true that the card issuers cannot hike rates without giving a 45 day’s notice. As per the Act, the consumers can opt out or reject certain terms and conditions in relation to their accounts. However, you may not choose to opt out if you’re not aware of the notice period. In such a situation, high interest bills may pile up with time and it may be difficult for you to pay off debt in future.
  3. Secured/prepaid cards not being reported – Often people take out secured or prepaid credit cards so as to rebuild credit after a bankruptcy. However, many a times, the payment history on such cards are not reported to the credit bureaus. As a result, these cards don’t help in rebuilding your credit after a bankruptcy. So, before taking out such cards, make sure that the issuers report your prepaid or secured card payments to the credit bureaus. In addition to this, negotiate with the card issuers to report responsible credit card behavior to the bureaus without mentioning that the payments are made on a secured card.
  4. Not paying bills on time – It is high time that you make a habit of paying your bills on time. Otherwise, you’ll never be able to rebuild a good credit history. You can set up an automatic bill payment with your bank in order to pay your bills before on on-time.

If you use a certificate of deposit (CD) to rebuild credit after a bankruptcy, then make sure you choose a reasonable amount of time (at least a year) to lock up money in the CD. Moreover, if you need to take out a small amount of loan in order to open a CD, then you should make your loan payments on time. By the time your CD matures, not only you’ll be able to establish a good credit history, but also you’ll earn a substantial amount of money.

Samantha Taylor is the Community Mentor of MortgageFit and has been contributing her suggestions to the Community since 2005. Not just that, she has also made notable contributions through the various articles written on different subjects related to the mortgage industry. Few of her popular articles would include names like ‘Mortgage that you can afford’ , ‘ Mobile Home Loan with Bad Credit’ , and ‘ How much mortgage can I borrow”?

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Posted in Bankruptcy, Chapter 13, Chapter 7, Orange County | 3 Comments »

Bankruptcy trends till March 2010

Friday, June 18th, 2010

As per the reports published by NBKRC (National Bankruptcy Research Center), bankruptcy filings in 2010 have been significantly higher as compared to 2009. The bankruptcy filings are about 15% higher during the first 5 months in 2010, in comparison to the same time period in 2009.

Recent researches reveal that the bankruptcy filings are highest in the Southeast and the Southwest region. Nevada and Georgia have topped the list of household-adjusted bankruptcy filing rates, whereas lowest filing rates have been in the District of Columbia, Alaska and South Carolina.

Industry experts are of the view that the recent economic downturn (2007-2009) has led to more number of bankruptcy filings, especially among the middle-class people. As per the National Bankruptcy Research Center, personal bankruptcy filings have hit 1.41 million in 2009 that is 32% more from the year 2008.

In the 12-month period that ended in 31st March 2010, the bankruptcy filings have increased by about 27% as compared to that of 2009. As per the statistics released by the Administrative Office of the US Courts, there have been a total of 1,531,997 bankruptcy filings in the 12-month period that ended in 31st March 2010. It is significantly more than that the bankruptcy filings in the 12-month period that had ended in 31st March 2009. The figures show highest consumer-bankruptcy filings since 12-month period that had ended in March 31 2006, when the BAPCPA (Bankruptcy Abuse Prevention and Consumer Protection Act of 2005) had come into effect.

Attorneys, who help people to file bankruptcies, have noticed certain bankruptcy trends in the recent times. The trends are discussed below.

  • More Chapter 7 filings in recent times: The bankruptcy trends in 2009 and 2010 reveal that Chapter 7 bankruptcy filings are much more as compared to Chapter 13 bankruptcy. Chapter 7 filings have risen to about 34% in May 2010 in comparison to March 2009; whereas, Chapter 13 filings have risen to about 12% in the same time period.
  • High income/employed people filing more: A few years back, people earning between $(40,000 – 80,000) annually used to file bankruptcy. However, in the recent times, bankruptcies are comparatively more common among people earning high-income salary, as much as 6 figures annually. Due to economic downturn, many people have either lost their jobs or had to manage with relatively smaller paychecks.  So, according to industry experts, people are yet to adjust their lifestyle as per their smaller paychecks and they’re also struggling to pay off debts.

The trend also reveals that employed people are filing more in comparison to those who’ve lost their jobs. This may be due to the fact that the home values have fallen significantly month after month and the homeowners have lost the hope that the property values would recover soon. As a result, the homeowners are filing for bankruptcy in order to get out from their upside-down mortgage. As per industry experts, bankruptcy filing may continue to rise more in the rest of 2010.

As per the reports published by NBKRC (National Bankruptcy Research Center), bankruptcy filings in 2010 have been significantly higher as compared to 2009. The bankruptcy filings are about 15% higher during the first 5 months in 2010, in comparison to the same time period in 2009.   Recent researches reveal that the bankruptcy filings are highest in the Southeast and the Southwest region. Nevada and Georgia have topped the list of household-adjusted bankruptcy filing rates, whereas lowest filing rates have been in the District of Columbia, Alaska and South Carolina.    Industry experts are of the view that the recent economic downturn (2007-2009) has led to more number of bankruptcy filings, especially among the middle-class people. As per the National Bankruptcy Research Center, personal bankruptcy filings have hit 1.41 million in 2009 that is 32% more from the year 2008.  In the 12-month period that ended in 31st March 2010, the bankruptcy filings have increased by about 27% as compared to that of 2009. As per the statistics released by the Administrative Office of the US Courts, there have been a total of 1,531,997 bankruptcy filings in the 12-month period that ended in 31st March 2010. It is significantly more than that the bankruptcy filings in the 12-month period that had ended in 31st March 2009. The figures show highest consumer-bankruptcy filings since 12-month period that had ended in March 31 2006, when the BAPCPA (Bankruptcy Abuse Prevention and Consumer Protection Act of 2005) had come into effect.   Attorneys, who help people to file bankruptcies, have noticed certain bankruptcy trends in the recent times. The trends are discussed below.

  • More Chapter 7 filings in recent times: The bankruptcy trends in 2009 and 2010 reveal that Chapter 7 bankruptcy filings are much more as compared to Chapter 13 bankruptcy. Chapter 7 filings have risen to about 34% in May 2010 in comparison to March 2009; whereas, Chapter 13 filings have risen to about 12% in the same time period.
  • High income/employed people filing more: A few years back, people earning between $(40,000 – 80,000) annually used to file bankruptcy. However, in the recent times, bankruptcies are comparatively more common among people earning high-income salary, as much as 6 figures annually. Due to economic downturn, many people have either lost their jobs or had to manage with relatively smaller paychecks.

So, according to industry experts, people are yet to adjust their lifestyle as per their smaller paychecks and they’re also struggling to pay off debts.  The trend also reveals that employed people are filing more in comparison to those who’ve lost their jobs. This may be due to the fact that the home values have fallen significantly month after month and the homeowners have lost the hope that the property values would recover soon. As a result, the homeowners are filing for bankruptcy in order to get out from their upside-down mortgage. As per industry experts, bankruptcy filing may continue to rise more in the rest of 2010.

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Posted in Bankruptcy | 2 Comments »