Published Friday, March 5, 2010 @ 10:31 pm

Successfully coming out of bankruptcy is a financial rebirth. As you move on from your financial setbacks (and you will), you will be better prepared to build a healthy fiscal future. Part of that, or better stated, a huge part of that, will involve how you make decisions regarding money. It would be understandable, for example, to simply save everything in a conservative money market (savings) account or maybe drop a small bit of your monthly income into a 401k. Both options are solid and should be considered part of a comprehensive investment strategy.

So if bankruptcy has changed the way you handle money and it’s time for you to start moving forward building responsible, long-term wealth, consider the following investment tips:

1. Stocks have consistently outperformed all other investment methods.
Since literally before the Great Depression, the best asset class in which to have money invested for the long term is the S&P 500. The “Standard & Poor’s” 500 is basically a group of stocks from 500 common large-cap companies. “Large Cap” is another way of saying very big, publicly traded companies. Remember though, stock investing carries risk, so we strongly encourage you to consult a professional financial planner.

2. For the short term, stocks can be dangerous.
You know that whole day-trading craze? Yeah, well ignore it. Don’t try it. Those E-Trade babies are witty but they’re not talking to you. Trying to make money on stocks with brief holding periods is rarely a healthy investment strategy. Stocks are better when held for the long term. Allow the ups and downs to happen, and don’t panic. And again, talk to an experienced professional.

3. Inflation can hurt long-term investments.
Inflation is just another way of explaining the general increase in the price of consumer goods. Movie tickets going from $1.25 to $9.50 is an example of inflation. If you buy stocks this year at a certain price and next year inflation erases, let’s say the average of about 3.2 percent of your dollar’s worth when you bought those stocks, suddenly your investment isn’t worth as much. In other words, every year, a dollar buys less, so what portion of a stock you could buy for a dollar has become smaller. Thus, this is exactly why you want to hold retirement accounts for as long as possible, so they eventually outpace inflation as the market goes up over time.

4. Diversify.
Like a buffet restaurant? Good, now take the same approach with your investing. Don’t just buy stocks or just buy bonds. By spreading your money around, you reduce risk. As one investment falls another may rise. This is where your financial adviser can really help, as too much diversification can slow growth, so let them arrange for you a solid variety of investments that will still grow your money.

5. Pay attention to earnings.
As you get used to this investing thing and want to start making recommendations to your planner, watch a company’s earnings. A lot of things can impact stock prices but over the years, there has been no better indicator of stock performance than earnings. If a company makes more, it’s stock will follow.

In summation, we can’t express enough the importance of working with a legitimate, certified financial professional when it’s time to invest. You’re uncle or spouse’s brother doesn’t count. Even if they have an E-Trade account.

+ Continue reading this article

Published Friday, March 5, 2010 @ 4:30 pm

Life after bankruptcy is beautiful thing. Your stress levels go down and you become more confident with money. Now that things are back on track, maybe it is time to take a whole-life approach to changing the way you live. For some, it’s a new, but smaller, home; a more economical car; or a strict monthly budget. For others, re-starting your life may include relocating. Boy, that sounds like a big decision, huh?

So if you have a new financial outlook on life and think it’s time to move, where would you go? Thankfully, our friends at Forbes.com have researched a list of the best cities in America for “getting ahead.” Their research was based primarily on areas that have good job growth and income growth and a relatively affordable cost of living. Call U-Haul, because here are some of your options, in no particular order:

Like Winter? Well, if so, point the GPS toward Delaware County, Ohio. The home county of Columbus has a three-year income growth of 11 percent and is the fastest growing county of the state. Forbes tells us it has a wide variety of jobs and a number of grounded, family-oriented neighborhoods that help prop-up a stable workforce.

If you don’t mind the rooting for the Texans over the Cowboys, Fort Bend County, Texas, outside of Houston, realized 10 percent job growth between 2007 and 2008 and added just under 6,000 jobs since the middle of 2007. A large portion of employees can be found working in energy companies but it’s diverse enough for people to find opportunity in education and hospitality. Many members of Forbes’ 400 Best Big Companies reside in Fort Bend County.

Another relocation is near Frank Sinatra’s kind of town. No, not Vegas. Chicago. Outside of where the wind blows is Kendall County, an area that experienced a 90 percent population increase from 2000 to 2008 and as a result, a seven percent jump in income. You can find another attractive option near Chicago in Will County, Ill., which in 2007 and 2008 saw its residents’ income climb by seven percent.

A bit north, you can settle in balmy Carver County, Minnesota where income jumped by five percent for the same two years. Carver is close to Minneapolis, one of the Twin Cities along with St. Paul which are consistently present in many “Best Places to Live” lists.

If the Midwest or Lone Star State do not appeal to you, head just north of the Triangle to Hanover County in Virginia, an area which saw its per capita income also grow by five percent.

Drive by an ever-expanding government, other regions in Virginia that made the list include Loudon and Alexandria Counties. However, even with the income growth, these areas are very expensive in which to live. Thus, their presence on the list is somewhat questionable because for the most part, to get ahead in Alexandria County, you need to already be ahead.

Relocating can be an expensive endeavor. If you are lucky enough to have a new employer cover some costs, then terrific, you are already on your way. The key is to start planning early and do not rush. After all, it’s not like the real estate deals are going anywhere.

+ Continue reading this article

Published Friday, February 26, 2010 @ 4:19 pm

Everyone—from the halls of Congress to the many channels of media—is paying a ton of attention to those Americans who have lost their homes in the seemingly endless mortgage meltdown. Virtually ignored have been the millions who continue to pay their mortgage every month, even when they really can’t afford to. As a result, most homeowners are losing big on what used to be their biggest investment.

Which begs the question: Is the best solution to stop paying your mortgage?

For homeowners around the country who haven’t skipped their mortgage payments—but are seriously struggling—there are several reasons why homeownership is going less than swimmingly:

You’re Trying to Staying Afloat While You’re Underwater
Many of you are struggling to pay off a mortgage balance that is significantly higher than the value of your home. As a result, selling your home is simply not an option, since you would ultimately have to come up with the difference to settle with your lender.

You’re Drowning in the Deep End of Debt
Many homeowners just like you are spending down their savings, taking cash advances and/or relying on credit cards to buy bare necessities. Why? Because you’re using every actual dime that’s coming in to keep up with your mortgage payments. The result is millions of Americans who are not only underwater on the their mortgages, but who are also drowning in debt.

While staying current on your home commitment is admirable, and very much the American way, it’s also a quick and easy way to drain your savings, retirement, or nest egg, while also accumulating enormous debt, simply to avoid the dreaded “F-word.”

Consider Foreclosure
While it can be scary, this particular “F-word” can be your first, best step to a pair of “F” positives: financial freedom. If you are now hundreds of thousands of dollars underwater and go into foreclosure, your losses are essentially erased. In most cases, your lender can take the house, but not your future earnings with the only real financial consequence being trouble getting a loan for almost a decade (in an era when getting a loan isn’t easy even for those with stellar credit).

Unfortunately, most foreclosure alternatives are simply bad ideas. Let’s take, for example, the short sale. In a short sale, the lender is agreeing to accept less than what is owed to satisfy your loan. Assuming you find a buyer, you will then have run the offer by your lender. Even if they decide to go along with it, you could still be stuck with the deficiency if you’re not careful. That’s not to mention the tax implications of the forgiven debt. Why go through the hassle of a short sale, if it’s just as likely to hurt your credit, and may lead to even more debt.

Another foreclosure alternative, the loan modification, would be an option if lenders were granting permanent modifications. The problem is, most lenders are understaffed, behind on applications, and you’re likely to get lost in the shuffle. As of 9/1/09, over 362,000 loans have been granted a trial modification. Of those trial modifications, only 1,711 have been approved for permanent modifications.

And Then There’s Bankruptcy
If your credit score is going to suffer anyway, why not create a completely clean slate? As a hurting homeowner, knowing a qualified bankruptcy attorney can also help you face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future.  The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

+ Continue reading this article

Published Sunday, February 7, 2010 @ 12:54 pm

In the Bad Ideas for the Bankruptcy Bound series, you’ve received an introductory look at the many reasons why it’s never a good idea to hide, or attempt to hide, a bankruptcy filing from your spouse. In later discussions we’ve seen how to avoid many of the pitfalls and pratfalls of filing for personal bankruptcy, including transferring property, using credit and avoiding creditors. Here, we’ll expand on why automatic bill payments from your checking account can lead to a loss of precious control for the bankruptcy bound.

Without a doubt, the ease and convenience of having recurring monthly bill payments paid through an automatic deduction from a checking account has made the time-saving process a no-brainer for many time-stretched citizens.  From car payments to credit card bills, automatic bill pay seems a trusty deduction process that avoids snail mail send outs, freeing up time, and peace of mind, to move on to bigger and better things.

But many argue that “free time” is precisely the problem for many cash-strapped citizens.

While auto pay allows for other things, it also frees up space for financial matters to go unnoticed. Precisely the same logic applies in credit card spending: you pay for items without the immediate financial repercussions, and pressing conclusions, that you’re spending money you don’t have.

Not thinking about fiscal matters is not only the exact opposite thing a cash-strapped person needs to do, but it also leads to a continuous cycle of avoiding the painful, but necessary, lessons of budgeting funds and reacting to changing financial circumstances: precisely the same denial of dire financial straits that put so many in a poor economic condition in the first place.

Like a credit card, having an automatic debit of a car payment, or gym fees, or house note, taken directly from your checking account, deprives you of the ever-important opportunity to think, however briefly, about the quality (and quantity) of your spending.  The auto pay acts like a thief in the night, taking from your precious and limited funds without concern or awareness for your balances. Too many of these “takings” can wreck monthly finances and take away a person’s power to prioritize each precious payment.

As such, in addition to making budgeting difficult, automatic bill payments from your checking account also take control away from the debtor—removing any option to determine when to pay which creditor and how much. This small fact can have a major impact on basic needs as auto pay can give your gym membership payments priority over that of your mortgage or car notes.  Not only that, but depleted accounts can mean substantial upturns in interest when credit card bills come due unexpectedly through the auto pay process.

What’s worse, if you’re considering bankruptcy, automatic bill payments can be especially inconvenient in terms of losing track of who’s getting what. Long story short, auto pay plus bankruptcy can mean you unwittingly pay out to creditors from whom your debts are discharged. For example, once you file for bankruptcy, non-exempt bills currently paid by auto pay will be discharged—either through a bankruptcy discharge of the underlying debt, or through a Chapter 13 plan to pay back debt incrementally.  Untracked auto payments can mean your creditors get payments they don’t deserve—especially if it takes transactional time to cease the automatic  debits.

So whether you’re filing for bankruptcy or not, begin 2010 by taking control of your personal finances. Pay your bills with your checkbook, confronting your debt head-on.  After all, it’s your money—treat it like you own it, and remember to “check” before you “spend.”

If you are considering bankruptcy, knowing a qualified bankruptcy attorney can also help you make the right spending decisions, yielding the right kinds of support, information and insights—at a low cost— for a financially viable and secure future.  The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

+ Continue reading this article

Published Saturday, February 6, 2010 @ 8:29 am

As someone facing serious financial difficulty, learning how much money is made by the huge banks to which you owe money can be frustrating. While we understand that we need to be accountable for our decisions, it stings to realize that profit models are often based on customers going into debt. Therefore, we can’t help but a feel a bit had, like the rube who just bought a cure-all tonic from the traveling pitchman selling from a horse and buggy.

CNN.com published an article recently that described what it deemed the “biggest rip-offs” in today’s society. We thought it relevant because knowing how some of these products are sold may encourage you to quit buying, using or subscribing to them and in the process, start saving more money to pay down debt or keep rebuilding after bankruptcy. We’ve summarized a few here:

Text messages
Wow. Rapidly replacing e-mail as the communication tool of choice for everyone under 25, text messaging has seen nothing short of a meteoric rise in usage in just the last 24 months. It’s an entirely new communication vertical, spawning marketing strategies and literally changing the way cell phones are developed and sold.

No doubt you have seen teenagers, maybe even your own, thumbing madly away on their mobile device, ignorant to the world around them. Well, with every OMG and TTYL the cell phone companies are LOL. Really loudly.

Text messages, which are causing cell phone bills nationwide to climb to record amounts, cost wireless phone companies roughly one-third of a cent to deliver. However, they cost you on average up to 20 cents to send and 10 cents to accept. That’s a 6,500 percent mark-up. :(

“Free” Credit Reports
Here’s one that stings. In a time when the nation is collectively reeling from a historic recession, when foreclosures are rampant, bankruptcies booming and no one’s credit rating is safe, several organizations are profiting off of selling you your own personal financial data.

You know the biggest name, Freecreditreport.com. The cheesy songs and redundant commercials sure do hit their target. But what they don’t do is sing honesty. At this site, and others like it, your credit report is not free, it’s simply provided for you in return for a monthly credit monitoring service. It’s like the cable company telling you HD programming is free.

Chances are, if you are worried about your credit report, you can’t afford another $15.00/month. The company is owned by Experian, a credit reporting agency, which means it costs them nothing to give that report to you. Let this sink in: a representative for the company had this to say: “We do realize there are a very small percentage of consumers who genuinely do not understand they have signed up for a credit monitoring service. We work to resolve issues with these consumers on a case by case basis.”

For a truly free report, as provided by law, go to: annualcreditreport.com

Movie popcorn
On the lighter side, it’s no surprise that movie food is expensive. Heck, they don’t even hide it. However, the movie industry is set up so theaters see a very small cut of the ticket proceeds. Therefore, concessions are their true money maker. Popcorn, for example, has a 900 percent mark-up, costing about $.06 to make and around $6.00 to eat. Many theater owners consider themselves to be in the concession business, not the film industry. As the recession continues its grip on the country, watch for more theaters to start offering beer and wine.

If you reserve a night out at the movies for the occasional reward for good financial behavior, skip the concession stand. Sneak in a bottle of water and some gum. Your cholesterol level will thank you.

+ Continue reading this article

Published Friday, February 5, 2010 @ 12:07 pm

Foreclosures have become a plague across the country, sickening the economies of small towns, the general contractor industry and even the commercial real estate industry. No facet of the real estate world has gone unaffected.

Whether your home was foreclosed upon or your mortgage lender granted you a short sale (negotiated permission to sell your home for less than what is owed), it was probably considered a tremendous relief to drop the proverbial financial anchor tied around your neck.

However, thousands of Americans once in the same boat are now finding that the tide is again rising around them, as banks and lenders are coming back months later for the remainder of what is owed on the home. The most common occurrence of mortgage companies coming back for the difference is happening after auctions when a home did not sell for enough money. But it’s also happening after bank-approved short sales.

A woman in Virgina, who legitimately short sold her home after a divorce and her commission income plummeted as a result of the recession, was shocked to receive a letter from an attorney stating she owed the bank another $65,000 months after the sale closed. Called a “deficiency judgment,” the extra amount owed eventually led to her having to file for bankruptcy.

It is a common belief, and in most cases the truth, that a short sale ends a commitment to owing any more money on a mortgage. However, banks are finding a way to come back for more through the use of deficiency judgments. Often, a former homeowner doesn’t get notified of the judgment until months later.

And, believe it or not, some banks will wait until you have become more financially stable before pursuing the deficiency.

Making matters worse is that the practice of short-selling, which is the most common cause of a deficiency judgment, isn’t just a strategy used by those who took out a sub-prime loan or who are facing foreclosure. Homeowners with standard mortgages who simply watched their home value fall can use a short sale, even of just a few thousand dollars, to get out from under their mortgage.

A number of factors also contribute to whether or not your lender will pursue a deficiency. For example, the foreclosure rate of your home state can play a role, as can the presence of any additional liens you may have had on the home, like a home equity line of credit or second mortgage.

Still, because a deficiency judgment can follow you anywhere and lead to the garnishment of wages and serious credit report marks, it is essential for you to make certain that your short sale or foreclosure is indeed the end of your relationship with that lender.

But without a promise in writing, are you really going to trust the lender’s word that your debt has been extinguished? The only way to ensure a lender does not try to collect from you after a foreclosure or short-sale is to coordinate foreclosure through a bankruptcy. In bankruptcy, you can surrender your interest in the property, ending any possible future liability should the property sell for less than your mortgage.

And despite what your bank has told you, you don’t need to short sell your home. Obviously, your credit is already going to take a hit from conducting a short sale, even if you haven’t missed any payments. Going through the hassle of a short sale with no perceivable benefit for you or your family is just senseless. The only beneficiary of a short sale is the lender, who saves on the expensive legal costs of a foreclosure. Do you and your family a favor, talk to a bankruptcy attorney today and discuss your rights under federal bankruptcy law.

In North Carolina, contact the Law Offices of John T. Orcutt at 1-800-899-1414. With convenient offices in Raleigh, Durham, Fayetteville and Wilson, we’re close to you.

+ Continue reading this article

Published Friday, February 5, 2010 @ 10:06 am

Try as we might to understand some the esoteric banking principles that contributed to the recession or give the industry any benefit of the doubt, the folks on Wall Street just keep giving us reasons to believe they are, and will forever be, drastically out of touch with the way the rest of America lives.

Last year, CitiBank, one the nation’s major banking services players, announced a plan to provide customers with a truly free checking account, provided some account usage stipulations were met, in an effort to attract new accounts and to do their part in helping us stave off the effects of the recession. However, come November 2009, an announcement was made that additional fees would be applied to individuals that carried less than $1,500 in all accounts.

The fees were going to be applied to “EZ Checking” and “Access” accounts. The products would allow customers who made at least two monthly online bill payments or used direct deposit to not be subject to maintenance fees and per-check charges.

Needless to say, this did not sit well with a lot of people. Nor did it pass the smell test for the New York State Attorney General’s office. Citing that the bank did not make it known within a reasonable timeframe that the fees would kick-in, Attorney General Andrew Cuomo managed to convince the bank to suspend any impending costs for consumers who had signed up for the accounts.

Those who registered for one the “free accounts” can continue to bank free of charge until the end of January of next year. Despite the case being tackled in New York State, customers across the country are eligible to continue using their accounts without being subject to the announced fees.

Cuomo, in a press conference about the settlement, spelled it out clearly for CitiBank customers. “If you signed up for free checking, the bank can’t change the terms and must extend the offer for a reasonable period of time. We are defining reasonable, in this context, to be for one year.”

The practice of surprising consumers with short notice announcements of interest rate hikes or banking fees is exactly what led to the recently enacted credit card reform. Far too many Americans have been subject to incentives that promise free services and discounts only to have them yanked away at the moment it hurts the most.

There is nothing wrong with a company making money. However, doing so with deliberately vague or misleading tactics is an entirely different story. There is not one in the industry that believes CitiBank intended to continually provide its customers with free checking; not in this economy. And sure, their marketing is most likely perfectly legal. But is it ethical?

These tactics can lead those teetering on financial ruin right over the edge and often into bankruptcy. Worse yet, it can severely disrupt the plans of a person emerging from bankruptcy who was seeking affordable checking options.

Consumers continue to be victimized in today’s post recession-landscape. And while Washington is doing what it can to adjust mortgages, ease bankruptcies and fix unemployment, there seems to still be too many sharks and plenty of guppies. Stay on your toes, folks.

+ Continue reading this article

Published Sunday, January 24, 2010 @ 10:25 am

So the impact of your bankruptcy is settling in. You have mixed emotions but underneath, feel confident that it was the right thing to do. The phone has stopped ringing, the mailbox delivers good news (for the most part) and best of all, you can sleep again.

Now that it’s time to get back on track, saving money should be a top priority. And one way to do that is by examining what it takes for you to keep a roof over your head every month, even if you managed to avoid foreclosure. Today, thanks to the real estate crisis which saw developers nationwide building new home homes and apartment communities on every plot of improvable land, it is a buyer’s market. Or in your case, it can be a renter’s market.

Apartments today are not what they were 20 years ago. Heck, they’re not what they were 10 years ago. Amenities like multiple pools, saunas, movie theaters, free Internet Access, fitness facilities, online rent payments and adjacency to high-end retail and entertainment districts make apartment living a very attractive and value-driven living option.

It’s important to put aside for a moment the aura of home ownership. There is without doubt pride in being able to maintain a home. The neighbors, yard space, security—all elements that many consider part of the American Dream.

However, the “dream” is not really home ownership. It’s about seeking a sense of accomplishment and the ability to create opportunity. But that’s not what happened.

Because home ownership was at one time a rare thing, a symbol of iconic Americana, it became the physical manifestation of our desire to experience those concepts. We somehow believed the signing of a mortgage was tantamount to everything our grandparents came here for.

However, the “dream” continued to manifest, morphing into a distorted, material facade of success–yet another symbol of where we like to position ourselves within society. And through the fog of that notion we watched the American Dream derail and plow violently through the psyche of the masses.

Now, as we learned in the crash’s aftermath, people are just happy to be under a dependable roof. And that’s a good thing; because maybe now we’ll realize that upon examination of our cost of living, we’ll realize just how much money we spend on what we were told was the culmination of the American Dream: owning a home.

The point here is that the housing crisis helped facilitate a historic financial demise. It was the marketing of home ownership in the face of viable, more than suitable alternatives in the the apartment market that led hundreds of thousands of Americans into foreclosure. Now all that’s left are faint apologies and the drive to get the Dream back on track.

Today, apartments are plentiful. Nice, well-kept three and four bedroom flats with multiple bathrooms, tile floors and clean carpets. In fact, according to new industry report, there have not been so many available apartments in three decades. The national average vacancy rate (the percentage of vacant apartments of total available) is 8 percent, which is the highest number the reporting agency has ever published as a country-wide statistic.

So do you know what that number means for renters? Savings.

A high vacancy rate means landlords are willing to negotiate to the fill their vacant units. In other words, renters have the upper hand. And for someone trying to save money and build a life after bankruptcy, renting should be a serious consideration, regardless of your current living situation.

Know someone who would also benefit from filing bankruptcy? Keep in mind that the Law Offices of John T. Orcutt offer a totally FREE consultation out of 4 offices conveniently located in North Carolina: Raleigh, Durham, Fayetteville and Wilson. The number is toll free 1-800-899-1414, or suggest they visit the website at www.billsbills.com for information about just about everything there is to know about bankruptcy, how it works and what it means.

+ Continue reading this article

Published Wednesday, January 20, 2010 @ 11:34 am

In this special series, entitled “Bad Ideas for the Bankruptcy Bound,” we’ll introduce what to avoid when bankruptcy is your next, best step.

Love may move mountains,
but money can crumble the strongest marriage.
– Ron, Lieber, The New York Times

Everyone who’s married knows: money can be a primary cause of marital strife. As a result, in this especially difficult economic climate—full of job insecurity, rising mortgage costs, health care uncertainties and other mounting money woes—many debtors who have accumulated all kinds of debt without the knowledge of their spouse are sometimes tempted to file for bankruptcy “secretly” and avoid sharing the financial “bad news” with their spouse.

Regardless of the fiscal reason, this path can lead to losing it all with your better half. While one petitioning spouse doesn’t mean the other has to file for bankruptcy also, it’s assuredly never a good idea to hide a filing from your husband or wife. Here’s why:

Disclosure of Your Debts is Inevitable
While married people like you have a legal right to file for bankruptcy by your lonesome, what you don’t have readily available is any way to keep the news of your bankruptcy filing from your spouse. When you stop paying your creditors in anticipation of your bankruptcy filing, inevitably these same creditors will begin calling and writing your home—the same space you share with your unknowing spouse.  Remember, the bad news of your insolvency can come from you or them, with a bit less sensitivity from the latter.

You’ll Need Your Spouse’s Support
Married folks who file for bankruptcy must provide information regarding their spouse’s pay, last year’s tax returns, proof of retirement and an array of other information that might require your better half’s information and input.  Keep in mind, your requests for this information will ultimately raise your spouse’s suspicions and the likelihood of your spouse finding out—one way or another.

Joint Accounts Automatically Get Your Spouse Involved
Filing for bankruptcy means that if your spouse’s name appears on any of your debts—such as joint credit cards, mortgages, or the like—they’ll find out the hard way when creditors pursue them for an alternative way to get paid.  In addition, if your spouse is using one of the forms of credit that will be included in the bankruptcy filing, you’ll need to tell him or her to stop using this credit before you file—another reason your spouse will be alerted to your insolvency.

Don’t Risk More Stress in Insolvency
Obviously, hiding your debts from your spouse is dishonest. Hiding your bankruptcy from your spouse, as you’ve seen, is almost impossible.  Both non-disclosures will add unnecessary stress and strife to your relationships. And amid these harsh economic times, life can be tough enough without all of this interpersonal withholding.  The first step to a fresh financial start together, is being honest about your bankruptcy with your spouse. Don’t forget, there is no more ruinous a financial move than a divorce and no greater road to divorce than fiscal dishonesty.

Knowing a qualified bankruptcy attorney can also help lessen the marital stress of bankruptcy, yielding the right kinds of support, information and insights—at a low cost— for a financially viable and secure future.  A good bankruptcy attorney can also dispel the many myths and stigmas of bankruptcy, offering truthful information about this powerful form of debt elimination. The bankruptcy experts at the Law Offices of John T. Orcutt offer a totally FREE debt consultation and now, more than ever, it’s time to take them up on their offer. Just call toll free to 1-800-899-1414, or during the off hours, you can make your own appointment right online at www.billsbills.com. Simply click on the yellow “FREE Consultation Now” button.

+ Continue reading this article

Published Thursday, January 14, 2010 @ 11:34 am

It’s 2010, the year we take charge, so to speak, of our credit cards. In only a couple of months, credit card companies will have to fully abide by the provisions of the Credit Card Accountability, Responsibility and Disclosure Act (CARD). Some components of the act have already been in action.

Nevertheless, consumer advocates are expecting a slew of new credit card company tactics to increase, damage and elevate our debt, credit reports and heart rates. This is especially frustrating for those trying to re-establish a sound credit rating after bankruptcy. If more fees and restrictions come into play, it will take that much longer to use a credit card as a reputable credit source. (Remember though, this may not be a bad thing. Charge cards are a good way to use plastic and remain on top of your balance.)

We’ve discussed several times on the blog how credit issuers have started to counteract the measures by pushing interest rates just enough to not warrant any additional legislation yet get as much as possible from those Americans who already carry a significant monthly balance. For those with solid credit who manage a small balance over multiple cards, lenders have seized credit limits, decreasing what’s available and consequently creating marks on credit reports.

(It should be noted that action is underway to prevent those specific initiatives from harming a credit rating.)

Here are a few new methods by which credit card companies will be able to gouge their customers.

• Expect many cards to start charging annual fees. Currently, 80 percent of the available credit cards in the marketplace do not charge an annual fee. For those carrying solid credit ratings, annual charges are rare. Reports are coming in nationwide about some banks delivering notices about annual fees, which can in some cases climb to around $100. Other banks will only charge if you fall below a specific balance, which encourages card holders to not pay off a balance in order to avoid additional costs.
• Your one-time fixed rate card may suddenly shift to a variable rate, leaving you open to rapid jumps in balance. This is actually a byproduct of the law that prevents surprise interest rate hikes. Lenders bypassed it by simply creating credit cards with interest rates that will vary on their own. In other words, your card company isn’t deliberately increasing your rate, the market is doing it. Granted, that means your rate can sometimes go down, too. However, take a look at the markets. The Prime Rate is already as low as its been in a long, long time. It’s only going up from here.
• While the CARD act will prevent sudden rate hikes on existing cards, it does not address rate limits on new cards. Clearly, you don’t have to apply to a high rate card but the practice will make it much more difficult for people to obtain cards and also limit consumer choice.
• Scaring consumer advocates the most is the expected new fee strategy. It is believed that the credit card industry will start assigning fees for an array of membership services and card ownership privileges. You may also see vague charges on your statement, not unlike what’s found on most phone bills. For example, keep an eye out for inactivity or minimum balance fees.

Thankfully, consumers’ use of credit cards is at its lowest point in more than two decades. And it looks as if it may stay that way.

+ Continue reading this article

Published Thursday, January 7, 2010 @ 12:27 pm

Are you putting off declaring bankruptcy because you’re afraid you’ll never be able to rent an apartment again? Have you heard horror stories from friends or relatives about how they got turned down for a rental because of their bad credit? Relax. Having a bankruptcy on your credit report won’t prevent you from finding a great place to live.

It’s true that some places – particularly apartment complexes – do check your credit, and do accept or deny your application based on the results. If you have your heart set on living in a place like this, do yourself a favor: call them up beforehand, and ask what their requirements are. Be specific. Ask if they refuse to rent to anyone with a bankruptcy on their record. Find out your credit scores in advance, and ask the apartment manager if your scores sound like they’re in the right range. If not, you’ve just saved yourself the $40-50 application fee. If the manager says, “well, they’re a little low,” offer to bring documentation showing your reliability: pay stubs from work, bank statements, savings accounts, rental history, letters of recommendation. Some apartment complexes will rent to people with lower credit for an additional deposit.

Remember, too, not every apartment owner will check credit. Many individual owners don’t do a credit check. Even those who do are likely to listen to your story about what happened, and why you declared bankruptcy. Be brief but honest; most importantly, explain how your situation has changed. Make sure they understand that the bankruptcy means you owe less (or no) money now, and are therefore better placed to make the rental payments. Again, bring documents to support your story. You can also point out that since a person can’t declare bankruptcy for another seven years, you are actually, in some ways, a better risk than someone who hasn’t declared bankruptcy – if you stop making payments, they could take you to court and you wouldn’t be able to discharge those debts. Be careful with this argument though: although it’s both true and valid, some landlords might consider the fact that you’re bringing up the possibility of not paying rent as a bad sign.

Another suggestion is to look for places to rent that are less strict. Some rentals will advertise: no credit check required. Check out apartments that are offering specials: one month free if you rent by June 1st, for example, or no deposit required. Generally, this indicates a place with low occupancy, and owners who can’t afford to be quite as picky.

Finally, once you get established in a new apartment, do everything you can to maintain the path to financial stability you started by declaring bankruptcy. Take steps to rebuild your credit. Begin to establish a nest egg so that you have some savings in case of emergencies. Most importantly, pay your rent on time every month. If you need to rent another place in the future, having a solid record of making monthly payments could be invaluable.

+ Continue reading this article

Published Wednesday, January 6, 2010 @ 8:20 pm

Throughout the Chapter 12 Bankruptcy series we’ve explored how bankruptcy bound family farmers and fishermen can reap the many rewards and special rights provided by a Chapter 12 filing. This series included an introduction to the concept of Chapter 12, along with additional benefits drifting from this protection; a detailed look at how this process works for farming and fishing families; and what you can expect at a Chapter 12 hearing—from the earliest bankruptcy petition to the negotiated repayment plan. In the conclusion of this four-part series, we share the specifics behind, and results of, this type of bankruptcy discharge, along with an understanding of Chapter 12 debt relief exemptions, and the ins and outs behind what is known as the Chapter 12 “hardship discharge.”

Under Chapter 12 bankruptcy laws, if you were initially defined under the Bankruptcy Code as a family farmer or fisherman at filing, you can receive a debt discharge after completing all necessary payments under your court-sanctioned Chapter 12 repayment plan. In some cases, in order to ensure this discharge, you must also certify that all domestic support obligations due prior to making this certification have been paid.

The effect of the Chapter 12 bankruptcy discharge involves releasing you from all debts provided for by the repayment plan, with a few exceptions. This means that your farm or fishery’s financial slate is clean, and any creditors  (whether priority, secured, or unsecured), who were provided for in full or in part under your repayment plan may no longer start or continue any legal action against you to collect any discharged debt obligations.

There are a few exceptions to the Chapter 12 bankruptcy discharge. According to the Bankruptcy Code, certain categories of debts not discharged in Chapter 12 proceedings include: “debts stemming from domestic support such as alimony and child support; money obtained through filing false financial statements; debts for willful and malicious injury to person or property; debts from fraud or defalcation while acting in a fiduciary capacity, embezzlement or larceny, and any debts for death or personal injury caused by the debtor’s operation of a motor vehicle while the debtor was intoxicated.”

Your Chapter 12 plan usually lasts three to five years and normally provides for full repayment of all priority claims. Any debts that are not discharged will need to be paid in full under your individual repayment plan. Because an added benefit of Chapter 12 bankruptcy is that payments to secured creditors can sometimes continue longer than the three-to-five-year period plan, these debts are therefore not discharged until fully paid.

Another benefit of Chapter 12 bankruptcy is the “hardship discharge.” The court may grant you a “hardship discharge” even if you’ve failed to complete all of the payments under your repayment plan. This type of discharge is available when your failure to complete payments under your individual repayment plan is due to circumstances beyond the debtor’s control and through no fault of the debtor, such as injury or illness that prevents you from keeping an income. In some cases, the Chapter 12 hardship discharge falls under many of the rules and limitations applied in Chapter 7 bankruptcy cases.

During the complex Chapter 12 process, primarily used to bail out working families who are, in this savage economy, beleaguered and bankruptcy bound, it’s always helpful to seek the assistance of a qualified bankruptcy lawyer. While the Law Offices of John T. Orcutt do not file for Chapter 12 relief, we will evaluate your unique financial situation and refer you to a Chapter 12 bankruptcy expert if needed. Call today to set up your free initial consultation. 1-800-899-1414.

+ Continue reading this article

Published Tuesday, December 29, 2009 @ 2:59 pm

The theme of making resolutions for the New Year is hard to ignore when it comes to dishing bankruptcy advice and related financial insight. It seems that every year, our resolutions become more important. Most likely, that’s because we feel more mature in age, but not in our financial outlook. Given the way 2009 went for most folks or for those who filed bankruptcy, that’s an easy-to-understand feeling.

So what are you going to do differently this year? Here are some ideas from a recent article in The Wall Street Journal, written by Dave Kansas, as reprinted in the Raleigh News & Observer.

Establish a concrete savings plan
It doesn’t matter how little, but resolve to put some money away with every paycheck. The recession has taught a lot of Americans how important savings can be, especially in the face of unemployment. The feel-good stories about “getting back to basics” and keeping money under the mattress are – for most of us — just that: stories. But it’s much easier than you think to make such a strategy a reality. Whatever the amount—$10, $25 or even $50—the point is to make it a habit, especially if a recent Chapter 7 bankruptcy has given you a fresh start. You may not realize it, but time is an investor’s best strategy. In a few years, you’ll soon realize that interest can actually work for you, not just against you. Put it away and keep it away.

Build an emergency fund
This concept is closely related to your savings plan, but the intent is different. This money, once established, should be considered more liquid. That is, it may not be in place for the long term. Determine how much money you would need, when conserving, for three to five months of bills, groceries and rent or mortgage. Consider this fund a form of insurance against the same type of life emergencies that may have led to your bankruptcy. You can use your savings plan to help build it and once at a comfortable level, leave it alone and use the excess for your savings plan.

Change credit cards, preferably to one that requires full payment each month
Although you may have already done so, consider this a reminder to shred any credit card account that does not offer the absolute best terms available. Be stingy. If you have to resort solely to a debit card, do it. After all, they are accepted anywhere traditional credit cards are taken but they limit the amount you can spend. Also, look into cards that require that the balance be paid in full every month. The comfort in knowing you do not carry any debt is very beneficial and you’ll feel a terrific sense of accomplishment.

Reward yourself
Wait? What happened to staycations and storing money under the mattress?

Look, being conservative with your money is always a great idea—but remember why we have money. To do stuff and to enjoy life! It’s okay to reward yourself within reason and in fact, personal entertainment should be a line item in your monthly budget. You need to live. Plus, keeping yourself bottled up under the confines of an over-zealous savings strategy will only lead to more frustration and an inability to ever spend without regret. Your savings plan should include things like the occasional weekend trip, nights out or tickets to the big game. Don’t beat yourself up about every purchase, especially if you have worked hard for it.  Spend some of your hard-earned money as a reward for saving alot of it.

Take every advantage your fresh start in bankruptcy has given you. 2010 is a new year, the year you’ll begin to bounce back from bankruptcy.  Make 2010 a ten out of ten.

+ Continue reading this article

Published Wednesday, December 9, 2009 @ 12:28 pm

Filing bankruptcy, among other things, is about getting a new start. Few things can match the sense of relief that follows even the first phone call to our office, let alone the day you know for sure that your bills are gone forever.

For some, starting over may mean leaving behind everything that contributed to your old spending habits, the material goods, the car, even the house, that led you deep into the financial abyss. If that sounds like you, maybe it’s worthwhile to consider a relocation, not just a downsize.

Know that moving is expensive. So yes, you’ll have to save money. That takes time, and yes, more money. But the most important question is, of course, where to move? Thankfully, the folks at Forbes.com have assembled us a list of places that get the Best Bang-For-The-Buck when relocating. Here is how they broke it down:

Forbes examined markets that at one time were considered second to the most popular regions during the boom times. For example, at one time, homes in Orlando and Las Vegas were flying off the lots. Developers went nuts and inventory was quite high. Now? Well, not so much. Home values are depressed and the foreclosure rates are at the top of the list.

Home prices are down 29 percent from 2006, making areas that never really experienced the boom that much more affordable. And, with a solid employment base, consisting of families who have roots in the area, as opposed to transient corporate workers who ship out every couple of years, places like Des Moines, IA and McAllen, TX are nice places for those looking to get a solid re-start.

Don’t want to move that far? Try Greenville, SC or Chattanooga, TN, which made the list at numbers 20 and 8, respectively. Because the boom avoided these areas for the most part, home values stayed relatively even, as did jobs.

If you must know (why else are you reading this post), Omaha, NE was at the top of the list. Forbes researched the 100 largest MSAs (Metropolitan Statistical Area), examining foreclosures as a percentages of home prices; apartment vacancy rates; unemployment figures; three-year job forecast; three-year home price forecast; housing affordability; median real estate taxes and commuting time.

Here is the Top 25 cities that offer you the Most Bang-For-The-Buck:

1. Omaha-Council Bluffs, NE
2. Little Rock-North Little Rock-Conway, AR
3. Jackson, MS
4. Des Moines-West Des Moines, IA
5. Augusta-Richmond County, GA-SC
6. Wichita, KS
7. McAllen-Edinburg-Mission, TX
8. Chattanooga, TN-GA
9. Colorado Springs, CO
10. Ogden-Clearfield, UT
11. Scranton–Wilkes-Barre, PA
12. Columbia, SC
13. Harrisburg-Carlisle, PA
14. Provo-Orem, UT
15. Syracuse, NY
16. Baton Rouge, LA
17. Buffalo-Niagara Falls, NY
18. Palm Bay-Melbourne-Titusville, FL
19. Tulsa, OK
20. Greenville-Mauldin-Easley, SC
21. Raleigh-Cary, NC
22. Pittsburgh, PA
23. Knoxville, TN
24. Louisville-Jefferson County, KY-IN
25. Youngstown-Warren-Boardman, OH-PA

You may note that a number of the cities are from regions away from the coast, as those regions tend to experience serious market growth in a fast-moving economy. You may notice too that there is not one California city in the Top 25. In fact, there is only one in the Top 50.

Cities in the mid-west, west and industrial regions of the east tend to hold a particular attraction to folks looking to find affordable homes and jobs. Many places in the west offer outstanding recreation and service industry jobs as well cities that cater to the younger, live-life-with-less crowd that is continuing to grow in the midst of a Wall Street-driven recession.

Whereever your final destination, remember that http://www.billsbills.com/bankruptcy-blog/ is always as close as your Web browser.

+ Continue reading this article

Published Tuesday, December 1, 2009 @ 11:34 pm

In an era of extreme homeowner hardship and surging unemployment, most people worry that debt-free living through bankruptcy will leave them without a credit card in an uncertain world where plastic is widely-accepted. Fortunately, filing for bankruptcy doesn’t have to mean losing your credit cards—or the opportunity to access new ones.

While you’re required to list all outstanding debts owed when filing for bankruptcy, including credit card debt, accounts with no balance can be omitted and kept. Additionally, for those cards with balances, a majority of credit card providers allow you to hold on to their credit card for use after bankruptcy if you agree to reaffirm the card balance and enter into a new agreement after filing. This “Reaffirmation Agreement” documents your willingness to continue to be responsible for this debt after the bankruptcy is discharged—allowing for a little extra insurance for unexpected expenses in the years to come. While reaffirmation may be an option, you should really take full advantage of your bankruptcy discharge by getting rid of all of your debts. What sense does it make to file for bankruptcy, but remain on the hook for some of the debt?

Even if your credit cards don’t follow you after your bankruptcy filing, it doesn’t mean you remain credit-less. While you may not qualify for certain loans following a bankruptcy, secured credit cards (otherwise known as “second chance cards”) are still available to reestablish and rebuild your credit by continually proving, and improving, your credit score even before your bankruptcy falls from your credit report.

Even better, secured credits cards are low risk. When you receive a secured card, an upfront deposit is required creating a sort of savings account for that card. The credit limit of your card is often very low— typically $500 or less to start—constituting the amount of money in your card’s account. As a result, this type of card promotes healthy spending practices and prevents missed payments, an inability to easily pay off the card’s balance, and many of the other financial woes sometimes associated with unsecured cards. As such, a secured card’s limit can actually rise with your credit score or after several months of on time payments—thereby rebuilding your credit, and your credit confidence, after bankruptcy.

To begin making a secured credit card work for you following bankruptcy, it’s always a good idea to read the fine print. Look for a card with no application charges. Also, seek a reasonable annual fee as these automatic expenses don’t count toward your credit score and might otherwise easily eat away at a small credit limit. Similarly, verify that your secured credit card reports to the three major credit bureaus, assuring that there’s a clear record of your positive credit usage—even if it is credit created with your own money.

Finally, depending on the programs available at your bank, credit union or other secured credit provider, you are able to inquire as to whether your card can be converted to a more familiar, higher limit unsecured card after you’ve been on time with your secured payments for a year or more. The result is a new credit-rich card in your wallet and, this time around, months of healthy spending habits under your belt.

For more information on “The Truth About Bankruptcy,” click here to visit The Law Offices of John T. Orcutt online.

+ Continue reading this article

Published Tuesday, November 24, 2009 @ 8:40 am

Most people believe that their credit rating will be ruined for the next 8-10 years if they file for bankruptcy. This could not be further from the truth.
Bankruptcy is not a shiny gold star on your credit report, that is for sure, but it is far from a death toll on your credit. In reality, your credit rating is already pretty darn low from all the missed and/ or late payments you have been piling up prior to filing. While I highly doubt any creditors will actually see things this way, filing is actually you showing that you do want to improve and do better for the near and foreseeable future.

Yes, your credit rating will take a hit. Yes, your interest rates will be a bit higher than the norm for a few years, but you are not in a credit purgatory. Once you have filed, you will find that there will be ample opportunity for you to rebuild your credit rating. Do not be surprised if you are flooded with credit card companies offering to help you rebuild your credit. Car dealerships will jump on this bandwagon as well wanting to give you a loan regardless of the fact that you just went through bankruptcy proceedings.

They do so not out of the kindness of their hearts, but out of the greed in them instead. Car dealerships and credit card companies know full well that you have no other option than to take the outrage offer they give you in order to rebuild. You need them; they do not need you. They take advantage of this by hiking up the interest rates and killing you with annual fees.

It can be tempting here to fall back into old habits. If you have yet to get back on solid financial ground than you would probably be better off doing nothing. It takes activity to rebuild your credit rating, but at least you are not doing anymore damage. If you have student loans that are as yet unpaid either start or continue making those payments once your case is discharged. Making installment payments like with a student loan can help rebuild your credit as well.

Bankruptcy is a scary option to consider when you have already been undergoing some tough financial times. The stigma that it carries is enough to keep some people from filing. For others it is the perceived damage that will be incurred on their credit rating. What they fail to realize is that the damage has already been done. Filing bankruptcy cannot do much more than the last year or years of lackluster financial mismanagement have already done.

In fact, bankruptcy will actually be the first step in getting your credit rating back where it needs to be.

+ Continue reading this article

Published Tuesday, October 20, 2009 @ 10:15 pm

Stomach turns? Sleepless nights? Ah, the memories of your time before filing bankruptcy. Not much fun, were they?

Despite all the things that your robust credit limits may have provided you (it’s okay to admit it), somehow you would have given it all back to stop the phone from ringing and guilt from weighing you down. And while that is what bankruptcy did for you, the numbers show that a number of people often have to file a second time. Don’t do that to yourself.

To pull yourself away from the lifestyle habits that contributed to your first go-around with Chapter 7, start a new life by determining what is most important to you. Make a small list of the things you would do if you had an hour of free time. How about time with friends? Get back to the gym? Maybe start mountain biking again. Whatever is, do it.

Keep your list handy and start small. Don’t try to entrench yourself into a lost hobby right away or it will remain lost. Schedule a time with friends or a local group once a week with a similar interest, whether its running, walking or even rock climbing. The group dynamic will encourage you to participate.

Fitness has proven to be a fantastic stress reliever. If you still have the mountain bike collecting dust in the garage behind the water heater, get it out and get on the trail. Cycling has become a tremendously popular form of exercise and there are clubs in every major city, just poke around on the Internet. The outdoors, challenge and even the occasional tumble down an embankment will do a lot to put your mind in another place.

What to do with all that money you no longer have to pay to unsecured creditors? Consider joining a gym. You would be very surprised at how cheap many gyms are today. Market competition has demanded many fitness centers charge as little as $9.00 a month. Best of all, many of them do not require any sort of contract, which means your credit will not come into play upon joining. Once there, don’t just jump on the treadmill or recumbent bike–pick up some weights. Look around online for new exercises that push body weight mechanics and combine aerobic activity so your muscles are challenged each and every time. You’ll come out of each workout feeling great about yourself and full of the endorphins that incite happiness and confidence. Little by little, you will discover a new body–and state of mind–that you didn’t realize was there.

On the psychological level, exercise simply makes you forget what it was you were so worried about. A long hike in the woods or climb in the rock gym makes your focus switch to the physical nature of your situation, whether it be one grab left on your first 5.10 climb or a steep scramble up a local ridge line. Experts have found that these brief moments of concentration on physical challenges can quickly clear your mind and help your body relax in order to overcome it. In that process, the stress of the day is what gets left behind.

Beating the stress of financial worries is no easy task. Countless books have been written and studies published that discuss the harm stress can have on our physical make-up. Muscle aches, joint pain and serious health issues are often traced back to personal stress. Exercise literally pushes it out of your system, gives you a sense of personal accomplishment and helps you build a new lifestyle.

The first step to releasing the stress of debt is to talk to an experienced bankruptcy attorney. In North Carolina, contact the Law Offices of John T. Orcutt to set up a free and confidential debt consultation. Call 1-800-899-1414 or visit www.billsbills.com for more information.

See you on the trail!

+ Continue reading this article

Published Sunday, October 18, 2009 @ 1:03 pm

Apart from the more typical fraudulent charges and billing errors, a common situation leading to credit disputes concerns purchase protection. This comes into play when you make a big ticket purchase from a merchant, charge it to your credit card, and then receive the good…only to discover that it is defective. Under federal law, you will be able to dispute the charge if the purchase was for more than $50 and was made within 100 miles of your home. Even if you don’t meet one or both of these requirements, it’s worth a try to dispute because not everyone will insist on enforcing the bar, especially if you made the purchase online.

The first step you should take is to contact the merchant and attempt to resolve the dispute directly. The merchant may well accept your complaint and work with you to reach a solution.  If you’re not getting anywhere by talking, your next step is to put your complaint in writing and send it to the merchant by certified mail. Keep a copy of this letter, because you may need it later to send to the credit card company if it becomes necessary to file a dispute. The letter should be brief, to the point, and contain all relevant details, including a description of the item and why it is defective. If the written complaint gets you nowhere with the merchant, it’s time to turn to the card issuer.

Within  60 days of receiving the bill with the disputed charge, write a letter to the credit card company explaining the situation and why you refuse the charge. Include relevant information such as the date of the bill, where the charge appeared, the transaction number, amount and date of the charge, and descriptions of the item and alleged defect. This letter should be mailed to the billing department of the card company. If you’re unsure about where to send the letter, call their card issuer’s customer service line and request the appropriate address to submit your dispute.

Once they have the complaint, the credit card issuer may contact the merchant to hear their side of the story, and then make a decision one way or the other. If they decide for you, happy ending, you get your money back. Many card companies will also provisionally remove the charge from your account while the dispute is being resolved. Be aware, however, that sometimes the credit card company will side with the merchant, in which case you will have to pay for the purchase, including finance charges. In order to present your case in the best light, file the complaint promptly and carefully.

As you can see, credit cards can be useful and can provide some level of purchase protection. But if you’re weighed down by big bills and maxed out credit cards, more credit is not the answer. Contact a bankruptcy attorney today to find out how to get a fresh start.

+ Continue reading this article

Published Wednesday, October 7, 2009 @ 8:40 am

With the government’s new credit card legislation possibly reaching its stride two months early on December 1, a lot of frustrated credit card users may be breathing a collective sigh of relief. Given the tighter restrictions on credit card issuers, you might want to take the opportunity to be a little more choosy in selecting your new card, as industry players are going to push hard to win customers from competitors, using reward plans and low introductory rates as incentives. However, unknown to many credit card users is how reward plans are handled when payments are missed.

What far too few consumers understand is that not only do credit reports get the news when a payment is missed, so do the third party companies that handle the reward plans. Understandably, most people find themselves worried more about the late fees and interest rate bumps that occur when a balance goes unpaid. However, if you’re counting on the reward points to finance your next vacation, you may be in for a big surprise when they are told that as a result of missed payments, a big chunk of those rewards have been taken away.

A research effort at www.cardhub.com showed that each of the major credit card companies employ rules which revoke reward points when a payment is missed. That list includes American Express, Bank of America, Capital One, Chase, Citibank and Discover.

Discover seems to be a bit more brazen than their competitors. For example, miss your due date for two months and all of your points go away. All of them. (Don’t forget, Discover is “the card that pays you back.” Maybe.) American Express examines situations individually but will seemingly not hesitate to take away what you have earned. With all the other penalties for missing payments, like late fees, interest rate spikes, credit report dings and dinner time phone calls, this is just one more slap in the face to consumers.

Also, remember that the credit card companies can change the terms of a reward program at any time, without notice. Essentially, the lending industry allows points to be accumulated but not necessarily returned. Thus, a consumer may be using a card for a specific rewards program only to find that program is suddenly no longer available. Furthermore, reward programs are marketed as perks, gifts for simply doing business with a specific bank. Yet, that gift can be revoked without notice. Thanks for nothing.

Consumer advocates preach that those looking for a card with a rewards program should choose only those that offer cash back, because it can’t be devalued. Plus, you are more apt to take the cash reward earlier than if it was simply a pile of points accumulating in cyberspace over time for you to “eventually” use for a new mountain bike, kayak or trip to Yosemite.

Remember, if a card’s rewards plan is the main reason you choose to open the account, as it is for more card users today, make sure you understand all of the fine print before you make a decision.

From: The Law Offices of John T. Orcutt, with 4 convenient office locations in Raleigh, Durham, Fayetteville and Wilson. Call us today to set up your free initial consultation. 1-800-899-1414.

+ Continue reading this article

Published Saturday, September 26, 2009 @ 6:17 pm

One of the greatest benefits of filing for bankruptcy protection is that it allows struggling homeowners a second chance to catch up on missed mortgage payments. For many people, the fear of losing a beloved family home is one of the most stressful parts of their struggle with debt. But is your house really worth saving?

If you find yourself living in an “upside down house,”  it may be worthwhile to consider simply letting the house go. “Upside down” refers to a property where you owe more money than the house is worth. Back when the housing  market was still booming, this situation was almost unthinkable, but now that the bubble has burst, short selling―selling a home for less than what is owed―is all too common. Unfortunately, a short sale leads to all kinds of nasty repercussions: Unless your mortgage lender agrees otherwise, you will still be responsible for the difference between the sale price and amount owed. Second, even if your lender agrees to forgive the debt, you’ll still be hit with the tax consequences.

If you’re a homeowner and considering bankruptcy, now is the time to take an objective look at the big financial picture and make some tough choices. Your equity situation is a great place to start this assessment. If you don’t have any equity in the home, holding on to that upside down house can’t even be justified on the basis that home ownership is a good investment. Just a few years ago a house was a sterling investment―but if you’re continuing to sink in negative equity, you don’t own a good investment, just a bunch of debt. And if you are living in an upside down house, how bad is your situation? In other words, how much more money do you owe the bank than the house is worth? If the difference is only a few thousand dollars, it may be OK to hold on to the house if you can really afford the payments. But if the difference is huge, you may want to consider the idea of surrendering the property in bankruptcy.

Second, take a look at your budget. Why did you get behind on your payments? Were you always struggling to make the payments, always one emergency away from getting behind? If getting rid of your credit card debt doesn’t free up enough money to comfortably make the mortgage payment, bankruptcy won’t help you save the home in the long term. If, on the other hand, you got behind because of a temporary drop in income that has since rebounded, bankruptcy can get you back on track with your mortgage and put your in a better financial position by dumping your unsecured debt.

The costs associated with home ownership go beyond the monthly mortgage payments. Can you afford property taxes? Your homeowner’s insurance? Does the house require a lot of maintenance? What are your utility payments like? These are all good questions to consider as you assess whether it makes sense to hold on to your home. Another thing to keep in mind is the structure of the loan. If you were one of the many unfortunate borrowers who signed on to an adjustable rate or interest only loan, your loan terms will never allow you to get ahead.

The good news is that the depressed housing market means that a lot of places that can’t sell are being offered for rent. Renting can be a good solution for someone seeking to rebuild their financial health, especially in the short term. If you are trying to keep your kids at the same school or are reluctant to leave the comforts of a familiar neighborhood, you may be able to find a good rental in the same area as your house.

Make sure to ask your bankruptcy attorney for advice on this issue. Letting a foreclosure proceed unchecked is not a good way of dealing with the situation. If the property sells for less than the outstanding loan balance, you will still owe the difference.. Surrendering the home in bankruptcy shields you by eliminating any personal liability after the foreclosure sale. If you are facing foreclosure now, contact a bankruptcy attorney immediately to ensure that you remain in control. Your attorney can help you assess your financial outlook rationally and help you make the right decision.

From: The Law Offices of John T. Orcutt. We always offer a free initial one on one consultation. Call today to set up your appointment. If you are in North Carolina, call 1-800-899-1414, or visit www.billsbills.com to fill out our free and confidential debt questionnaire.

+ Continue reading this article

Published Friday, September 11, 2009 @ 8:53 am

My parents filed bankruptcy when I was about fourteen. I remember being worried and a little frightened by the word “bankruptcy” and the unknowns surrounding the concept. But I also knew that it was not something my parents were entering into lightly and that every other option had been considered. It was the first time I really took notice of financial issues concerning our family.

They had bought a small business that seemed to be a melding of their passions and the promise of some freedom from the ‘rat race’ and anonymity of employee-hood. While they had a passion for the business, they were not very business savvy, and ended up being taken advantage of by many people they thought were loyal to them.

I wish I could say that my parents’ bankruptcy had no discernible impact on me, a shy, awkward teenager, and my siblings, but that isn’t true. There were big changes in our lives. In most cases, a bankruptcy filing will allow a family to continue living in their home by staving off foreclosure proceedings. But since the house my family lived in was located on land owned by the business, we ended up moving. We changed schools and made new friends. My parents went back to being employees.

Now, before you conclude that this is a sad story and that your kids would be emotionally or socially scarred for life if you filed bankruptcy, I should tell you about all the positive things that came of my parents’ bankruptcy. First, we moved to a nice neighborhood where I met two of my best friends. Before moving, our home had been very isolated and we spend a lot of time alone while our parents worked their business. Afterward, our home was filled with kids from the neighborhood.

Second, while my parents did return to being employees, they found better jobs than before and worked regular hours. When you run a small business, the lines between working and not working are blurred. The business becomes a 24 hour occupation. Third, the constant stress and anxiety that my parents were subjected to from trying to keep a sinking business afloat was gone. The fear, anger, and feelings of despair finally left our home and we were finally able to function like a normal family again.

Aside from the positive benefits bankruptcy affords by removing the financial strain that may be adversely impacting your family, here are a few more things to consider when you are thinking about bankruptcy and kids:

Bank Accounts: If you’ve opened a bank account for your children’s birthday money, gift money from relatives, or money they’ve earned, it’s important to make sure this account is set up correctly. If the account is just under your name or if you’ve drawn money out to pay your own bills, this account could be jeopardized by your bankruptcy filing. Of course, any 529 college savings plans are completely protected under North Carolina exemption laws, and the funds contained in those accounts will not affected by a bankruptcy.

Opening accounts under the Uniform Gifts to Minors Act (UGMA) or the Uniform Transfers to Minors Act (UTMA) can help protect these assets. The idea behind these two methods is that the “giver” remains custodian of these accounts until the minor reaches majority. Once the money is transferred into these custodial accounts, it can’t be taken back. The child is the true owner of the asset, and therefore the money does not come into the bankruptcy estate.

Child Support Payments. Debts resulting from child support will not be discharged by bankruptcy if you or an ex-spouse files for bankruptcy. In a Chapter 7 bankruptcy filing, child support obligations become top priority when assets are being liquidated. In a Chapter 13 bankruptcy filing, child support payments will be structured within the agreed repayment plan.

This bankruptcy protection for children applies whether or not a debtor is behind on support payments. The good news is that ex-spouses may find it easier to fulfill their child support obligations once the bankruptcy alleviates a majority of their other debt burdens.

If you’ve been wondering about whether your child’s future could be jeopardized by bankruptcy, a bankruptcy lawyer can examine all the details and clear any confusion. Remember, your family’s future is dependent on your financial viability. If you are buried beneath a burden of debt, protect your family by filing for bankruptcy.

The attorneys at the Law Offices of John T. Orcutt have helped thousands of families seek debt relief. In North Carolina, call 1-800-899-1414 to schedule a free initial debt consultation today.

+ Continue reading this article

Published Thursday, September 3, 2009 @ 9:43 am

The economy is so grim right now it’s hard to see the silver lining, but the good news about markets is that they rarely stand still forever. Even now, economists are slowly and cautiously becoming more optimistic about the situation, and consumers are gradually gaining back confidence. The housing market, for example, posted a quarterly rise in prices for the first time in three years, which may indicate a stirring of recovery. Still, there are a lot of homes out there not worth half what they were recently, and new construction has ground to a halt for the time being. Is there a silver lining in this one for you?

Well, there may be if you are not a homeowner and not looking to become one immediately. With so many properties sitting empty while the market waits for buyers to return, people who are not homeowners can enjoy a renter’s market. Suddenly there are many options for housing–nicer places at must lower prices. In some areas of the country, it is actually cheaper to rent than to buy at the moment.

If you are considering or already preparing to file for bankruptcy protection, you may be worried about your ability to rent a home, since so many landlord applications now require a credit check and/or ask about past bankruptcies. Don’t let such questions dissuade you from pursuing a rental you really like. Because this is a renter’s market, landlords may soften some of these requirements. Most landlords will be more concerned with your payment history with past landlords than whatever happened with your credit cards. If you have a good history with someone, ask him if you can use his name for a reference and offer to provide it for the new landlord when you apply. Other times you may be able to bargain with the landlord by offering to pay a slightly larger security deposit or providing other assurances of payment. Remember that as much as you need a place to live, landlords need tenants to make money from their real estate investments―or in this market, just to minimize losses!

Home ownership has some real advantages, and many people feel that it’s a waste of money to pay rent that will never translate to equity. However, home ownership comes with its own host of troubles, and renting can be a good solution, even if just in the short term. Home ownership is a big step, and you may want to allow yourself some breathing room (and an opportunity to rebuild your credit) before taking the plunge. If so, you might as well take advantage of a renter’s market!

If you already own a home, but are having trouble with the monthly payments, bankruptcy is a great option to get caught up on the missed payments. Unfortunately, some people wait until it’s too late to take advantage of these protections, and by the time they accept that bankruptcy is their best option, it may be too late for bankruptcy to help. That’s why it’s important to contact a bankruptcy attorney early in the process, before your finances are beyond repair. If you have conceded that it not financially feasible to keep your home, bankruptcy acts as a shelter from the after effects of a foreclosure, such as tax liability and deficiency judgments. Further, if foreclosure is imminent, a bankruptcy will stop the foreclosure from proceeding, even if you intend to surrender the property in the foreclosure. This strategy can buy your family some time to transition to a new living arrangement.

These are strange days for homeowners and those considering home ownership. If you have doubts about your future financial viability, it may be best to wait out the recession before plunging into the real estate market. If your income is already stretched to the max by debt payments, consider speaking with a bankruptcy attorney. A properly planned bankruptcy can put you in the best possible position to rebuild your damaged credit and pursue home ownership in the future.

+ Continue reading this article

Published Wednesday, August 26, 2009 @ 10:04 pm

A successful bankruptcy is as much about post-bankruptcy decision making as it is about making the initial decision to file. A lot needs to go into each spending choice, every credit consideration and your personal financial management goals.

Multiple bankruptcies are common. However, if you feel you may be getting close to having to file again and the reason is not the direct result of an uncontrollable emergency, there may be some broader, underlying personal issues that were not addressed the first time around. At the Law Offices of John T. Orcutt, we take pride in preparing our clients for a life outside of bankruptcy as well. While we very much appreciate your business, we hope we only have to help you file one time.

We’ve compiled in this post a few strategies to help keep you on track after you are back on your feet:

• Pay bills on time. Sounds easy, right? Hardly. For even those people who have never even sniffed a financial difficulty, staying on top of a pile of monthly bills takes very sound organization skills. Like most people who begin to have trouble making ends meet, dates become critical. All kinds of dates: due dates, late charge dates, power bill dates, mortgage payment dates and so on, all start to come together into a menagerie of calendar markings and PDA notifications. One way to ensure everything gets paid on time is to use a completely separate calendar for bill dates. And, mark each one due five days before their actual due date. This way, you can avoid hundreds of annual dollars in late fees and prevent nasty marks on your credit report. Be careful with online bill pay services as well. While they offer convenience and scheduling, make doubly sure they are paying on time and that there isn’t some sort of delay that leaves your money dangling in cyberspace.
• Choose expenses carefully. This involves reminding yourself daily about the things you really need. Lifestyle items are for the “old you.” Remember, you don’t need what your co-worker or neighbor has. This is also about paying for things in cash and keeping the new credit card for emergencies, like car repairs or house damage. The reward from knowing you saved up and purchased something cleanly is well worth the wait. Try it and see.
• Balance your checkbook. Seems like another obvious tip, doesn’t it? You would be surprised. Today, banks are tacking on very high fees for bounced checks, overdue settlements of overdrawn accounts and service charges. Not only can you not afford to know exactly what is in your checking account, it’s a poor financial habit to get into. With simple addition and subtraction, you can be sure of how much money is coming in and going out every month. This helps in budgeting and uncovers places where you can save each month. Pay attention to the balance daily as well. Every morning, use the Internet or automated phone lines to get an update on your account. Even if you think you know, it’s always smart to really know.
• Handle setbacks as soon as they occur. Don’t let a disputed expense fester in your monthly balance, where it can gain interest or get lost in the administrative shuffle. And don’t take every little mistake you make as a sign of collapse or failure. Address every question or complication head on and be assertive.

Your financial solvency is a key part of your well-being. Try to stay on top of your finances after bankruptcy and truly take advantage of your fresh start.

+ Continue reading this article

Published Tuesday, August 25, 2009 @ 10:00 pm

What should you do if you need to buy a car before you have finished repairing your credit, or while you still have payments to make in a Chapter 13 bankruptcy? If you are used to buying new cars straight from the dealership, be prepared to adjust your approach.

Did you know that a $20,000 car is worth a couple thousand dollars less the second you drive it off the lot? A used car in good condition is often just as a good as a new car, because part of what you pay for in a new car is merely the cachet associated with having something new. A best practice for avoiding financial pitfalls is to make rational purchases that conform to your spending ability. Lest those monthly payments come back to haunt you―the last thing you want after a successful bankruptcy!― it’s time to think beyond credit traps.

If you find yourself needing to buy a car, why not pay cash for the total price? For a few thousand dollars, you can buy a perfectly good car that can carry you around for years; no credit check, no monthly payments, no worrying about repossessions. Look to make a private purchase from an owner; avoiding a dealership altogether can only save you money and pressure to spend beyond your means. If you need to buy a car while you’re still making payments on a Chapter 13 bankruptcy, you may need to obtain permission from the trustee to do so; however, if you buy a sensibly priced (read: not exorbitant) vehicle, this shouldn’t present a serious obstacle.

A good place to look for cars is the classified section of the newspaper, or, even better, on-line classified services like Craig’s List (www.craigslist.org) where ads will generally contain pictures of the vehicle. Once you’ve gotten in contact with a seller, you should obtain the car’s Vehicle Identification Number (VIN) and run a search on its records to discover whether the auto has been in any serious crashes or required major repairs. Fender-benders are no problem; serious front end crashes requiring reconstruction or electrical problems can spell major trouble. Searching the car’s records is a good step, but you should also have a trusted and experienced mechanic examine the vehicle before you buy it. A mechanic will also help you to determine whether a used car will require major repairs. Ideally your car should require no more than tune-ups or perhaps a few inexpensive new parts. A new radiator for a Honda is pushing it at about $300; a new transmission can cost as much as $2000!

If you’re just starting out, let a trusty used car do the job. In the meantime, work to rebuild your credit while avoiding interest payments on a rapidly depreciating asset. With careful work, you could save up to finance a new car in your future or even buy one outright! Still, when you get to that point, it might be a good idea to buy a car that’s two or three years old―that way you get most of the benefits of a new car without paying for novelty.

+ Continue reading this article

Published Monday, August 24, 2009 @ 7:06 am

So, now that you’ve come through bankruptcy with a clean slate and made the decision to stay off the credit treadmill, it’s time to examine your money habits and behaviors. It is surprising how many people view their credit limits as unofficial raises and create lifestyles that reflect a higher actual income than they actually earn. Are you one of them? Do you subscribe to the belief that credit scores are a reflection of your good character and trustworthiness?

One of the biggest concerns many people have when considering filing for bankruptcy is that it will absolutely ruin their credit rating for a very long time. They fear that they will never be able to buy a home or finance a new car. They believe they will not be able to get a credit card to travel, rent a car, or even a hotel room. And so there is a great deal of emphasis on quickly rebuilding credit scores by those exiting bankruptcy. Without decent credit, they fear, their lives will be reduced to a mere shadow of what they once were.

Well, in a sense, that last sentence is true – without the crutch of credit and the illusion of credit limits as extensions of their incomes, the lives of people who have gone through the bankruptcy process will be very different than what they were before pre-bankruptcy. But the difference is, they will be living on their actual income, not some inflated version of their income that they’ve invented through maxing out credit cards. There will be no heavy weight of debt on their shoulders, no trepidation on their way out to the mailbox, no creditor phone harassment. In short, without the potential pitfalls and enslavement of credit payments, a post bankruptcy life can be ever so peaceful—if it’s managed right.

For those who landed in bankruptcy through money mismanagement rather than by some other external financial blow, such as medical bills, it may prove not to be. If those people continue to deal with money after bankruptcy the same way that they did before bankruptcy, they may find themselves right back in the same stressed out, overextended situation that landed them in bankruptcy in the first place. And credit card companies know it. They know that most people emerging from bankruptcy have not really learned to manage their finances any better than they did before bankruptcy. Most people who get a new credit card after bankruptcy are carrying a balance each month within one year after discharge.

Credit card companies know that those who have taken on a lot of debt in the past, carrying growing balances month after month, and then falling behind on their payments are apt to do it again. And so sooner or later, they will extend credit even to people who’ve declared bankruptcy. Why? Because doing so makes the credit card companies the most money. Although it seems counterintuitive, the truth is that creditors see bankrupt consumers as a much more profitable customer base than the general population. They know that a person can only file a Chapter 7 bankruptcy once every eight years, so chances are high that, once hooked, the debtor will be on the creditor’s line for a long time.

You may be feeling like you’ve learned your lesson about staying on top of your payments since enduring the bankruptcy process, but even cautiously getting back into the credit game is like wading into shark-infested waters. Credit card companies, car finance companies, and mortgage lenders have all figured out ways to get you to put more and more of your hard-earned money into their bank accounts. Credit card companies offer introductory rates to get you to sign up again. Then they sit back and wait until you are even one day late on your payment, or they pull your credit report see that you are late paying any bill, from any creditor, or that your ratio of debt to available credit has increased, and they jack up your interest rate to near usury levels.

With the mortgage industry collapse, mortgage companies have reaped what they’ve sown over the past several years in the form of subprime and adjustable rate notes. However, the difference between them and you is that they are being bailed out by the government. Will you be bailed out if you become a victim of this predatory lending? Not likely.

The bottom line is, that so called ‘Credit, or FICO Scores’ are nothing more than a litmus test for how much debt you are willing to take on and juggle. People who never borrow money and always pay cash generally have very poor credit scores, yet society lauds those people as the wisest and most disciplined of us all.

The sooner you realize that you are not defined by your credit score, the better. It is possible to live a fulfilling and abundant life without being a slave to your credit report. Once you are free of the credit-as-income illusion, you can establish strategies for creating a healthier relationship with money, a positive vision of money, and the freedom that comes from being in control of your money and not letting it control you.

+ Continue reading this article

Published Sunday, August 16, 2009 @ 6:41 pm

Fear of foreclosure is certainly pushing many families into bankruptcy. Although there are now many programs, both at the state and federal level, to help homeowners avoid foreclosure, if your lender is unwilling to work with you, bankruptcy may be the only way you can stay in your home.

Unfortunately, if you don’t choose to seek help through a bankruptcy attorney or your lender, there are plenty of criminal actors out there that would be more than happy to assist in escaping your financial woes.

With the rise in bankruptcies and foreclosures across America, thieves are growing more bold in their effort to take whatever belongings, and dignity, from those facing the most challenging of economic circumstances. Perhaps the most rampant perpetrators are fraudulent mortgage modification companies, who take thousands upfront from unsuspecting homeowners, only to disappear into thin air. Don’t ever agree to an upfront fee for a mortgage modification, and don’t ever agree to make your mortgage payments to a third party who promises to forward your payments directly to your lender. If you are working with a legitimate mortgage modification company, stay involved in the process. It’s important to maintain constant contact with your mortgage lender and your loan modification company.

Bogus loan mod companies aren’t the only criminals taking advantage of desperate homeowners. Grifters are moving into what appears to be a more legitimate method of theft: buying houses.

Targeting those in high-foreclosure zip codes, representatives from shell companies are offering to buy houses from those in dire straights. They sell the fear of foreclosure and bankruptcy and offer to make them a clean, easy deal and a quick sale. Heck, they even hand people money for the house. Real money! So it can’t be a scam, right?

First off, they only give you a very small amount of money, regardless of the equity in the home or its market value. Since you’re desperate, it’s a fair number, right? The plan calls for the company to buy the home and rent it, allowing you to move on with your life. However, the rent payments they collect never make it to the mortgage company. In fact, the sale never gets recorded, there’s no legal closing and you are still responsible for the mortgage. By the time it’s all sorted out, they’ve collected months of rent, from most likely planted tenants, and moved on. The hand-written signs on freeway exits and the local Craigslist’s posts that offer to buy and close fast are nine times out of ten the mark of illegal activity.

State regulators believe that there are close to 50 “fast home buy” operations currently working in North Carolina, some of which are perfectly legal with solid reputations. But those companies are easy to recognize. They have sound records with the Better Business Bureau, prominent advertising and established offices. Keep in mind though, in the majority of cases, a fast sale is a bad idea and a short sale even worse. A short sale requires your lender to accept less than the outstanding loan amount. Many times the lender won’t really forgive the deficiency, requiring you to sign a promissory note covering the difference. The tax implications of a short sale can be substantial as well. Any time a creditor agrees to accept less than what is owed, they will report the deficiency as taxable income to the IRS. Not only did you lose your home, but now you owe taxes.

Don’t fall prey to a foreclosure rescue scam just because you were afraid to consider bankruptcy. If you’re facing a foreclosure and your lender is not working with you, a bankruptcy attorney is your best ally. Bankruptcy can keep your family in your home, and if you truly can’t afford the home, surrendering it in a bankruptcy shields you from any remaining personal liability on the loan. Don’t wait another day to call. In North Carolina, contact the Law Offices of John T. Orcutt for a free consultation. 1-800-899-1414.

+ Continue reading this article

Published Saturday, August 15, 2009 @ 1:45 pm

Debit cards are one of the many spending tools that can be good for a person rebuilding after bankruptcy. For the most part, anything that is backed directly by actual cash is the best way to ensure that you don’t get too deep again shortly after things are back in order.

There are some drawbacks to using a debit card though. Mainly, it won’t do much to re-establish your credit because it does not rely on credit and therefore won’t have any affect on your credit score. Debit cards are backed by a checking account with actual cash that gets debited according to what you spend. Therefore, a number of folks in this position choose to combine a debit card with a secured credit card to practice safe spending and proactive credit building.

Since debit card usage is not reported to a credit bureau, they are best used for everyday items, like gas and shopping. This way, you can measure accurately what you are spending on both and how to reduce those expenses if needed.

Another issue with debit cards is that if they are stolen, most likely a thief is accessing the money you need for those everyday items just mentioned. For a lot of people, all they have is what’s in their checking accounts, so if that goes missing, things can turn ugly quickly.

Thankfully, a number of banks today have recognized that risk, as it is becoming a common facet of identity theft, and typically won’t hold you responsible if you are able to quickly report that its missing. Be diligent though, don’t sit around waiting for someone to use it so you can track them down via an online account. Call the bank right away, even if five minutes later you find it under a couch cushion.

Debit cards can be tied to checking accounts that have automatic overdraft protection so that if you go over your limit, you can be protected to a certain amount. However, if you are just coming out of bankruptcy, that protection may come with a fee and sometimes is tied to a line of credit that you may not be eligible for until your credit rating improves. Be very clear with your bank in regard to this rule because overdraft fees are becoming more unreasonable every day and can really do some damage if allowed to pile up.

Because of the financial industry collapse, banks are using smaller fess, like ATM transaction fees and teller access costs, to bombard their bottom line with countless surprise line items. Ask if your debit card can be backed by your savings account, if you have one. This will ensure that any money you accidentally spend will still be yours and the bank won’t ding you as much for accessing it.

Debit cards are indeed useful and can help you monitor your funds. However, if the point is to rebuild your credit after a bankruptcy, combine the use of a debit card with some other form of credit.

+ Continue reading this article

Published Tuesday, August 11, 2009 @ 6:00 pm

Believe it or not, there are some situations when credit cards can be a benefit. They are often the only option when making travel reservations, and can come in handy in the event of genuine emergencies. A credit card can also help you build good credit, or rebuild credit after bankruptcy.

Yep, so that’s about four reasons. The reasons NOT to use credit can fill a book, but here are just a few situations in which using plastic seems like a good idea, but you’re much better off just saying no!

Department store credit accounts: notoriously high interest rates are just one great reason to avoid department store credit accounts. But did you know that sometimes proprietary credit accounts from merchandisers allow the seller to take an interest in the things you buy on credit? This means that should you find yourself in a financial emergency down the line and unable to repay them, they could be entitled to take your stove or washing machine back. North Carolina law offers some protection against these disguised secured debts, but it’s best to just to avoid them altogether

Paying your taxes with your credit card: Taxes are not necessarily dischargeable in bankruptcy the way unsecured debt is…and your credit card debt won’t be either if you used the card for non-dischargeable debt! This will apply to other non-dischargeable debt as well, so be careful about putting payments to , for example, student loans, on your charge accounts. But note that only the part of the credit card debt you use to pay non-dischargeable debt will itself be non-dischargeable.

Balance transfers: A classic  marketing strategy of the credit card industry is offering lower interest rates on balance transfers. They way they sell this nonsense is to make you believe that it will be cheaper for you in the long run. But the situation isn’t as simple as they’d like you to believe. If you do a balance transfer, you’re taking on new debt. Unless you’re committed to shutting down the first account for good, you’re exposing yourself to the temptation of more debt. Many people believe they will be able to play this game successfully, and the credit card industry has made billions by playing on this belief.

A balance transfer could also force you to delay filing for bankruptcy, because if you do one just prior to filing, it may be viewed as a preferential transfer.

Big purchases right before bankruptcy: Speaking of charging up just prior to bankruptcy, you definitely want to avoid anything that could look like fraud. If the credit card company can convince the court that you made purchases on the card with the intention of filing for bankruptcy, the debt may become non-dischargeable, and you may be putting your whole filing at risk.

Living off credit to avoid filing for bankruptcy: This is an absolutely TERRIBLE idea. All you’re doing is creating bigger and bigger problems for yourself. If your situation cannot be managed without credit–if you find yourself taking out credit to pay for prior credit, it’s past time for you to consider bankruptcy as a lasting solution to your financial problems.

In North Carolina, call the Law Offices of John T. Orcutt to set up a free initial debt consultation. Convenient office locations in Raleigh, Durham, Fayetteville and Wilson.

+ Continue reading this article

Published Tuesday, August 11, 2009 @ 6:56 am

Forget getting cash for your clunker. If you want a real deal on a car after bankruptcy, hop online and get bidding. General Motors has just announced a partnership with its online auction counterpart eBay to start posting vehicles from more than 200 California dealerships as part of an ongoing effort to spur sales after the car maker’s recent bankruptcy.

While being billed as only a temporary effort, eBay and General Motors will create individually branded Web sites under eBay’s car buying arm, eBay Motors. The sites, aptly named gm.ebay.com, chevy.ebay.com, gmc.ebay.com, pontiac.ebay.com and so on are considered beta tests to see how such a program could continue to fuel car sales across the country. The promotion is scheduled to run from August 11 to September 8 and if things go well, the sites will be granted nationwide accessibility.

General Motors, the world’s largest producer of automobiles, recently sprang out of bankruptcy with the help of the federal government and is seeking new and creative ways to shed it’s lethargic, old-school image. The company rid itself of tremendous payloads of debt and is going after a customer base that has for a long time been best described as despondent relative to traditional American car brands. Toyota and Honda have dominated U.S. car sales for the last two decades.

The slick online sales partnership is aimed directly at younger, more tech-savvy car buyers who demonstrate comfort in making larger purchases online. The respective Web sites will allow buyers to enter a fixed, or “buy it now” price, and also bid on cars in traditional eBay auction format. They will also be able to engage the participating dealers in negotiations and determine whether their current car is eligible for the Cash for Clunkers program.

General Motors was also inspired by recent reports by J.D. Power and some of his Associates that said in 2008, more than 75% of new vehicle buyers used the Web to generate comparisons and research vehicles. Last year also saw the largest recorded increase in online car shopping since 2001. Additionally, as part of the company’s bankruptcy plan, it needs to shed 40% of its dealerships.

The online action plan is also part of a sweeping change in marketing strategy for GM, as it has hired new teams and is assessing how to better position itself against the foreign automakers. Experts all agree that GM simply has to make people want their cars, which may not happen just because they’re being sold on a fancy new Web site.

Because of the recession, car sales have dropped significantly, to their lowest point in nearly 30 years. Vendors and a bevy of suppliers have also been hit by the depletion of car sales. The industry, as well as the Obama administration, will no doubt be watching closely the auction activity on gm.ebay.com. Will you?

+ Continue reading this article

Published Sunday, August 9, 2009 @ 5:13 pm

The economic recovery packages rolled-out by the federal government are providing a lot of people in the midst of rebuilding their financial livelihood a chance to get back on track even faster. For those who are underway with getting back on their feet after a successful bankruptcy, today’s housing market, in conjunction with the First Time Buyer Tax Credit, is offering home ownership opportunities not seen in a long time.

Here’s a breakdown of how the homebuyer tax credit shakes out:

You are eligible for the tax credit if it has been three years since you owned a home. This is ideal for those who may have lost a home through foreclosure or decided to sell to reduce their monthly mortgage commitments before bankruptcy. You must close on the home before December 1 of this year. (However, there is very good chance the government will extend that deadline.)

The amount of the tax credit is based on 10 percent of the home’s purchase price to a maximum credit of $8,000. It is important to understand that there are limits on income, too. This means that you need to make less than $75,000 individually or $150,000 if filing jointly to be eligible.

In the tax credit’s current form, it does not have to be repaid. This makes it different than the tax incentive that was in place during 2008. The credit is claimed on your federal income tax return, specifically form 5405. Since we’re not accounting professionals, it would be best to consult a tax expert to understand the specifics relative to the paperwork. However, it seems that for once, the IRS has made that component of the process pretty simple.

Here is a quick tax lesson: A tax credit differs from a tax deduction. A credit is a dollar-by-dollar decrease in what you owe. A tax deduction is a figure taken away from the amount of income that is taxed.

You may have heard that the department of Housing and Urban Development (HUD) has announced that it will “monetize” the tax credit. This entails the ability to apply the maximum credit for which you are eligible to the home purchase right away instead of waiting until your tax return to claim the refund. This requires you to borrow with an FHA-insured mortgage, however. Don’t let that dissuade you though, as FHA-insured mortgages are very common.

If you choose to take advantage of the credit in this manner, nonprofit lenders and others that are FHA-approved will be allowed to offer up to the $8,000 limit as a short-term loan.

Another nice advantage of the first time homebuyer tax credit is that you can apply it to your 2008 tax returns. The law says that a home purchase in 2009 can be treated as if it was bought in 2008, meaning that your income from 2008 will be used to determine eligibility and that it accelerates when the credit can be claimed.

The tax credit seems to be creating a real boost for the economy as a whole, as home buying has bounced back in the last couple of months. The IRS stated that close to 1.1 million people have applied for the tax credit through amended returns and more should do so come April of 2010.

As mentioned earlier, your best source for the real nitty gritty on this tax credit is a certified tax professional. We believe it help a number of clients get a leg up on their life after bankruptcy.

From the Law Offices of John T. Orcutt. Call 1-800-899-1414 for a free debt consultation and get on the fast track to real financial recovery.

+ Continue reading this article

Published Saturday, August 8, 2009 @ 2:51 pm

Judging by statistics, people with credit problems have a lot of company! Unfortunately, many of us are never given the opportunity to develop good credit strategies–we have the credit before we know how to use it. It’s also unfortunate that you can’t just refuse to work with credit altogether. Most of us are going to need good credit to help us make major purchases like a car, a home, or an education.

With credit, little mistakes can quickly snowball into big problems, and before you know it you feel like there’s no way out of the credit trap. When your credit problems are out of control, it’s time to look into filing for bankruptcy to help you get a fresh start. Remember that bankruptcy can help you get rid of credit card debt permanently. Once you have unloaded this burden, you want to make sure you’re protecting yourself post-bankruptcy. To help you make good on your fresh start, ask yourself these important questions:

• Who’s the bank? Credit card accounts are issued by banks, and the bank offering you credit should be readily identifiable from their mailings. If you can’t tell which bank sent it, don’t apply; the offer may be part of a scam.

• What are the terms of the offer? Don’t skip reading the fine print! This is usually where you’ll find the details of fees, interest rates, grace periods, and other key information you most definitely want to have about a credit card. With the changes being made in the credit industry by the government, this information should be easier to find out, but you should still make a point of reading all the materials they send you carefully.

• Is the interest rate quoted in the offer current? Sometimes the interest rate in the letter you receive is not up to date. To find out the answer to this question, you should call the bank offering the card.

• Is the interest rate fair? Remember that whatever your financial history, you deserve a fair deal. A company that’s charging you too high an interest rate is trying to take advantage of you, and you shouldn’t let them, even if you’re starting to feel a little desperate. Panic has no place in the slow and steady work of reaching financial health.
• Are fees, penalties and other terms fair? The considerations for the interest rate also apply to fees and penalties. If these are too high on all the offers you’re eligible for, it’s not a bad idea to look for some other ways to rebuild credit. Eventually, you will receive a fair offer, so don’t just jump on the first one you get. Watch out for credit card offers that draw you in by offering a low interest rate and then, once you’ve applied, they offer a fishy excuse for why you don’t qualify for the old rate anymore.

• Which terms are subject to change? What will trigger such changes? Make sure you know full well if the bank will be able to raise the interest rate, drop your credit limit, or close the account altogether. Generally, card creditors can and WILL employ these tactics. Sometimes even one missed payment will be enough to raise your interest rate significantly. Everyone makes mistakes, so a credit card offer that seems almost too good to be true but has overly strict or unfair policies about missed payments may not be the way to go.

After your bankruptcy discharge, it is extremely important to obtain small amounts of new credit so that you can gradually rebuild your credit history. However, you also must proceed with caution, avoiding mistakes whenever possible. Study all your options carefully to make an informed and measured decision.

+ Continue reading this article

Published Saturday, August 8, 2009 @ 8:47 am

We hear plenty about the dangers of gambling addictions. Perhaps this is because the compulsion to gamble doesn’t make sense to a lot of people, and it is always easier to vilify from a distance.  Or maybe it’s that gambling addictions seem dangerous because a gambler could lose everything in an instant.

By comparison, indulging in little purchases here and there seems rather tame. But even little purchases add up, and when you get a rush from spending, chances are you’ll spend more money and spend more frequently to continue to experience that comfort. Just like someone addicted to gambling, you could lose everything; it may not happen in an instant, but little warning signs ignored for years will add up and catch up eventually.

Compulsive spending and shopping addiction are very serious problems that don’t get as much attention as they ought to. As a result, there are likely many out there suffering in silence. If you suspect you are a compulsive spender, that bad news is that you may be right–but at least you’ve recognized that there is a problem that you want out of your life. Admitting you have a problem is, as they say, the first step. If you think you may have a problem with your spending, take a moment to run through some of the items that frequently appear on compulsive spending checklists:

Is pressure from debt affecting your home life? Is it affecting you on the job?

If you are constantly having fights with your loved ones over your spending, or if you find yourself unable to work because of worrying over your debts, these are classic warning signs of trouble.

Is debt changing how you perceive yourself? How others perceive you?

If you are constantly getting down on yourself over your debt, or if you are afraid for people to find out about your spending, these too are warning signs of trouble. Sometimes people with spending problems justify their behavior by telling themselves that they deserve the things they are acquiring because they are better than other people. If you catch yourself in this kind of rationalization, take it as a warning sign.

Do you play fast and loose when it comes to creditors?

If you’ve ever provided false information in order to obtain credit, or made totally unrealistic promises to your creditors, these may indicate a problem with compulsive spending.

Does spending or taking on debt feel better than it ought to?

Sure, everyone enjoys getting something new, and if you really need a loan and it comes through, it’s natural to experience relief. However, if you live for the thrill of spending, or if getting a loan makes you feel like everything is guaranteed to work out no matter what, your relationship to debt may be a poor one.

Does debt affect your health?

If you can’t sleep, if you drink or use drugs to avoid thinking about debt, your spending could have serious, lasting effects on your health, and that’s nothing to gamble with.

Luckily, more and more awareness of this problem is starting to reach the public. Organizations like Debtor’s Anonymous (www.debtorsanonymous.org) are out there to help people dealing with spending addiction.

If you have been struggling with spending addiction problems for years, you may find yourself drowning in credit card debt. If this is the case, keep in mind that bankruptcy can help you take care of your debts for good. Second chances are rare in life, but bankruptcy can provide that for you. If you have a problem, it’s time to take decisive action, and to get your life back on track.

+ Continue reading this article

Published Thursday, August 6, 2009 @ 1:21 pm

The month of July 2009 saw yet another increase in the number of consumer bankruptcies filed in the U.S., as low employment and high consumer debt continues to be a toxic combination throughout most of the country with only little signs that an antidote can be found. The number of filings, 126,434, was a 34.3 percent increase from the same month in 2009 and 8.7 percent increase from June, 2009.

Most experts agree that the rapidly decreasing number of jobs is in direct correlation with the consistent increases in bankruptcies every month. Also contributing to the increase is the so-far ineffective Home Affordable Modification Program. According to a recent report released by the Treasury Department, the modification program has only benefited 9% of eligible homeowners. When loan modification efforts fail, many homeowners turn to Chapter 13 bankruptcy, which can immediately stop a foreclosure and allows the homeowner the opportunity to catch up on missed payments over a 5 year plan.

In each of the last three months, more than 20 percent of those who have filed cited they did so to avoid foreclosure. The data was compiled by the Consumer Credit Counseling Service of Greater Atlanta. The organization, a nonprofit credit counseling service, collected data from individuals from April to June and determined that counseling was not going to be enough to assist them in preventing foreclosure.

Even with banks being pressured by federal government (and the national court of public opinion) to work with mortgage holders, the majority of home owners are frightened by the chance they could lose the roof over their heads. This alarming trend also demonstrates, once again, that the White House is not doing nearly enough to promote or educate America on its Making Home Affordable program, which provides financial incentives for banks and mortgage lenders to alleviate the rate at which they foreclose on homes.

The report is also further evidence that a Bankruptcy Cramdown Bill is more critical than ever. A proposed legislative action that has recently shown renewed signs of life, the bill would allow bankruptcy judges to alter, or cramdown, a homeowner’s mortgage in conjunction with their approved bankruptcy plan.

As we discussed on the blog previously, Senator Dick Durbin from Illinois is fighting to keep the bill breathing, going so far as to recently issue many in the lending industry a three-month ultimatum to do more in stemming the tide of foreclosures or see renewed vigor in Congress to revive cramdown legislature. Financial Services Committee Chairman Barney Frank from Massachusetts, a lightening rod for all things controversial in government, is also pushing hard to bring the bill back to life.

Oddly enough, the cramdown battle is being waged between powerful Senate Democrats and President Obama. Meanwhile, Americans’ home loans flap helplessly in the wind of the recession.

If you are behind on your mortgage, bankruptcy can help you stay in your home. In North Carolina, contact the Law Offices of John T. Orcutt for a free initial debt consultation. 1-800-899-1414.

+ Continue reading this article

Published Tuesday, August 4, 2009 @ 11:15 am

You have been tempted by the e-mail (we all have, at least for a second) to cash a comma laden check for a desperate soon-to-be-millionaire in Tanzania and you have probably clicked on the search engine pop-up promising to make you $10,000 per month from home for only five minutes worth of work per week. Basically, when the economy slows down, scam artists kick it into high gear.

Now, amidst the hubbub of the federal government’s Cash for Clunkers program, which will eventually flood the market with more used cars, the number of stolen cars being resold through legitimate dealers is on the rise. Car theft rackets across the country employ “car cloning” tactics to disguise the true history of a stolen vehicle.

The problem is that to a person who paid nothing for a vehicle, the amount for which it sells is nothing but gravy. This means that they have the ability to sell “nice” cars for little money and do so by targeting folks in financial trouble or those who may be trying to rebuild after a bankruptcy.

We work hard through this blog to stress the importance of limiting the use of credit after a bankruptcy. Paying for things outright is always best for your finances but it also gives you a sense of accomplishment. However, that can all be for naught if the the $5,000 you have been saving for a car gets put toward one that has been stolen and cloned. What makes cloning so dangerous is that it’s very difficult to prove.

Car cloning is done by making fake vehicle identification number (VIN) plates, based on legitimately owned cars and trucks, and placing them over or in place of the stolen vehicle’s actual VIN. Using the forged VIN, thieves can produce legitimate documentation to create a fictionalized history on the car.

Recently, more than 20 people were convicted of such a practice in Georgia. Federal officials said the group made millions selling stolen vehicles across the southeast. In South Florida earlier this year, authorities shut down a car cloning ring that sold more than 1,000 cars across the country and in foreign countries. The losses to insurance companies, individual owners and dealers was estimated at more than $25 million.

Whenever this kind of money is involved with a crime operation, you can rest assured it will not go away easily.

Carfax estimates that nearly 225,000 of the 1.5 million vehicles stolen each year end up with VINs from legally owned vehicles. Should you happen to purchase a vehicle that has been cloned and its discovered, it can be repossessed. And here is another great reason for paying cash: if you borrowed to buy the cloned car, you can still owe on the loan. If you pay cash you are still out quite a bit of money but at least you won’t be reminded of it every month.

Hopes are high in the government that come next year, car cloning will be nearly impossible thanks to the creation of the National Motor Vehicle Title Information System. This is a branch of the Department of Justice that will maintain a nationwide database of vehicles that will connect every state’s department of motor vehicles to the federal government.

The bottom line is that when you find yourself in vulnerable financial situations, you need to be constantly prepared to protect yourself. Remember that if something sounds too good to be true, it is. That may sound like cliche advice but it’s simply the best way to measure the legitimacy of a “great deal.” Be smart out there.

+ Continue reading this article

Published Monday, August 3, 2009 @ 10:45 pm

Marriage is a partnership, and it works much better with each partner pulling his or her own weight. To avoid problems down the line, it’s a good idea for each partner to establish and maintain a separate credit identity. As a matter of fact, that is how the law will see it in all but the nine community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.) This means that if your spouse takes on a financial responsibility without you, you will not be legally liable for it, and vice versa. But it also means that good financial behavior on the part of your spouse won’t necessarily reflect on your credit report, even if you share in the actual payments. Here are a few tips to help you create and maintain your personal credit identity, apart from your spouse’s.

• Keep separate checking accounts. When people get married, they often choose to combine their checking accounts into one account both can access. This is certainly easier, logistically speaking, for maintaining a household. However, this exposes you to trouble if your spouse should turn out to have less than great habits with ATM withdrawals and checks. A better idea is to keep separate accounts, and also open a joint account for household use.

• Don’t take out joint credit card accounts or personal loans. This is another step many people take when they get married, but it’s a bad idea for some of the same reasons separate checking accounts are a bad idea. Besides, remember that in a bankruptcy filing, credit card debt can be fully discharged, and with separate credit card accounts, one spouse can file for bankruptcy without involving the other. In states which recognize tenancy by the entirety or similar forms of marital ownership, a judgment obtained by a creditor against one spouse will not become a lien against jointly owned property. However, if the credit card is a joint one, a judgment will attach to the property, possibly enabling the creditor to sell your home by sheriff’s execution sale! Talk to your bankruptcy attorney to determine how your spouse’s assets will be affected during bankruptcy.

• Understand how creditors are permitted to consider your spouse’s credit. When applying for credit in the non-community property states, a lender is not allowed to make a determination based on your marital status. Thus, he cannot ask to see your spouse’s information, unless her income will be  a basis for repayment of the debt.

• Make sure joint accounts with good records are reported on both credit reports. If you’ve been building good credit together on joint accounts like your mortgage or car loan, you want to make sure that the information is being reported under both names. If you find out it isn’t, you can write to the creditor and request that they report to the credit bureaus about both of you.

With tightening credit markets, having a separate credit identity is crucial to maintaining your family’s financial viability. If you or your spouse are overwhelmed with debt, talk to a bankruptcy attorney today to find out how a properly planned bankruptcy can help your marriage and your finances.

+ Continue reading this article

Published Sunday, August 2, 2009 @ 10:02 am

You know it and we know it: There’s a lot of stigma behind the word bankruptcy. We’re here to tell you: If you’re considering bankruptcy, there is nothing to be ashamed of and don’t let anyone tell you differently. Bankruptcy has helped millions of families and businesses emerge stronger, especially in tough economic times.

The federal bankruptcy code has long been a carefully negotiated, well-thought out safety net to catch the financial pratfalls so many Americans take on occasion. It’s an outstanding testament to the state of cooperation, foresight and spirit of assistance that characterizes our country. Despite the pervasive stigmas, there is very little collective impact to the nation’s economic well-being as a result of individual bankruptcy filings outside of a number of Americans becoming once again financially stable and viable contributors to society. The collective impact of bankruptcy is a positive.

There is no doubt that America has poor communities. There are people struggling today–and there always will be. But the bankruptcy code helps to significantly prevent more Americans from ending up on the street. And no, that comment is not a stretch. With careful planning, you can emerge from bankruptcy in relatively good shape emotionally and financially.

Think about it for a moment: bankruptcy allows you to keep the things you really need: your home, retirement accounts, life insurance assets, college funds, and even your car. If you have those items intact after a bankruptcy, you remain in far better financial condition than the large population of indebted Americans who never file for bankruptcy. Why keep taking the hits on your credit when bankruptcy can immediately stop the hemorrhaging?

A quick search of the blog will produce a number of posts about life after bankruptcy. There is a reason for that: studies show that, without careful guidance, those who file for bankruptcy can end up in the same situation again in the future. Our goal is to help you before, during and after your bankruptcy so that you emerge from your bankruptcy with a solid financial footing.

It is interesting that people still feel a certain amount of discomfort about the idea of bankruptcy. One should wonder if that sort of stigma wasn’t fostered, or at least perpetuated, by the credit industry. Given the practices of collection agencies and credit card phone reps, it’s easy to understand how miserable they can make a person feel about missing a payment. Despite all of the misinformation you’ve heard from the credit industry about bankruptcy, it is still the best financial safety net for you and your family. If you’re struggling to pay the monthly minimums or getting behind on your mortgage payments, don’t wait another day. Call an experienced bankruptcy attorney and learn about your options. In North Carolina, call the Law Offices of John T. Orcutt at 1-800-899-1414 to set up your free initial debt consultation. Offices conveniently located in Raleigh, Durham, Fayetteville & Wilson.

+ Continue reading this article

Published Sunday, July 26, 2009 @ 9:46 pm

It’s a couple of years after your debts were discharged in a Chapter 7 bankruptcy, you’re on track with your payments and expenses, and you’ve been working steadily to rebuild your credit. Now you’re ready to buy a new home: you’ve done all the homework, you’ve looked for good lenders and you’ve found your dream house. All you need now is to borrow what the house is worth, right? Well, not quite. If you have had some negative history on your credit report since your bankruptcy, you may need to come up with as much as 30% of the value as a down payment in order convince a lender to extend a loan to you. That’s why it’s important to work diligently on repairing and maintaining your credit after bankruptcy. And if you’ve got a clean record since bankruptcy? Even with great credit, most lenders will only allow you to borrow somewhere between 80% and 90% of the cost of your new house. This means that you will generally have to come up with up to 20% of the value of the new house as a down payment. Ouch.

Good news: you may be able to get a loan with a lower down payment if you purchase your home with an FHA or Veteran’s Assistant home loan. An FHA loan is a loan issued by a federally qualified lender which is insured by the Federal Housing Authority; thus, the Federal Housing Authority doesn’t actually provide the loans. The purpose of the FHA lending program is to help people who can’t afford a conventional home loan process, including the down payment, thus aiding low-income buyers and people who have struggled with financial problems to attain their dreams of home ownership. With an FHA loan, your down payment could be as low as 3% of the selling price of your new home, or even less. FHA loans are great for first time buyers and for people who haven’t owned a home for over three years. FHA loans are also excellent for people who have a bankruptcy on their record as recent as two years―FHA lenders are more likely to extend a loan to these aspiring home owners. An FHA loan will also allow you to roll closing costs into the loan, which will make buying your home even easier. The only sum you’ll need up-front will be the down payment. There are some drawbacks to the FHA program: a prominent one is that in order to qualify, the house’s value is subject to a cap.

If you have money in a 401(k), you are permitted by law to withdraw up to 80% of the account’s value to pay for a house that will be your primary residence. In order to avoid an unsavory surprise later, you should ask the 401(k) plan administrator to take taxes not paid out of the amount you are to receive.

If you don’t have the money for a down payment on hand or in an account such as a 401(k),  what then?  Fear not, there are other steps you can take to come up with the down payment. Each state has a housing authority, and these agencies frequently run programs to help people who are struggling to come up with the down payment for a new home. A housing authority may be able to provide you with a grant, a bridge loan, or other means to help you drum up that down payment. You will generally need to meet certain requirements, so you should check out the housing authority in your state to see what these are and what you can do to qualify. A directory of state housing authorities can be found at: http://www.ncsha.org/section.cfm/4/39/187.

Brought to you by the Law Offices of John T. Orcutt. Call 1-800-899-1414 for a free initial debt consultation.

+ Continue reading this article

Published Friday, July 24, 2009 @ 3:27 pm

Few of us learned much about balancing a checkbook, let alone managing our finances during high school. And for many years credit card companies have been trolling college campuses for fresh bodies to press into servitude. So it comes as no surprise that so many young adults are overloaded with debt. Young people, in their early to mid 20’s, are finding out how easy it is to get into debt, and how backbreakingly hard it is to get out of it. Add the present economy and virtual impossibility of securing a decent paying job, and you’ve got the recipe for a disillusioned, frustrated, and eventually hopeless generation.

It’s hard to imagine just starting out in life and being ‘in the hole’. Many of these debt-laden young people are still struggling through college, but many have given up on it. The stress of juggling classes, homework, limited job availability, and staving off the debt monster proves to be too much. They end up working two or three low paying jobs just to keep a roof over their heads and to service their debts.

It’s a catch 22: they can’t go back to school because they have to work to keep up their debt payments; but they can’t get ahead on repaying their debts because they can’t go back to school to get a better job and earn more money to be able to pay more than just the minimum payments and the usurious interest and fees added on. That’s no way to live.

Enter the concept of bankruptcy. Bankruptcy could help many of these young people get off the debt treadmill and get on with their lives. Now, bankruptcy will not be able to get any student loans discharged, (unless the person can show ‘undue hardship’), but it could remove the unsecured debt, thereby freeing up money that be used to pay back the student loan debt. Also, the Department of Education has launched a program, passed in 2007, which will reduce student loan payments to a lower percentage of income, or remove them altogether in the case of very low income. Better yet, if the person returns to school, their student loans can be deferred for as long as they remain a full time student.

But what about getting access to more money to pay college tuition and expenses after filing bankruptcy? Many people are under the impression that filing bankruptcy cuts off your ability to borrow money for a very long time. That’s partially true, but unlike most credit, government guaranteed educational loans are not based upon credit history or income. They are called Title IV loans, and they must be extended if you meet the statutory and administrative criteria. As long as there are no other eligibility issues, such as a student loan in default or drug conviction, the government is restricted from discriminating against those who have filed bankruptcy under § 525 of the Bankruptcy code , however, there are limits to the amount of government loans you can receive each year.

Although default on an existing educational loan may effect your ability to get a subsequent loan, the filing of a bankruptcy in itself should not. To be sure, filing bankruptcy will affect your ability to secure loans from private entities. But then again, those opportunities wouldn’t have been available regardless of whether or not bankruptcy was filed because negative reporting on a credit report would have caused the private loan application to be rejected regardless.

For many young people, filing bankruptcy is a necessary, if unexpected, step toward improving their future. But so is a college education. It is the only long-term solution to their financial woes. And government backed student loans can not be withheld because of a bankruptcy.

If you’re having trouble paying your student loans and other debt, consider bankruptcy as an option. Call the Law Offices of John T. Orcutt today to discuss your options. Offices in Raleigh, Wilson, Fayetteville, and Durham.

+ Continue reading this article

Published Thursday, July 23, 2009 @ 8:44 am

The link between the recession and credit cards is undeniable. While credit card use by itself is a number of links down the chain from the one that broke Wall Street’s hold on the economy, the underlying theme of easy credit and its impact on the American consumer remains a prevalent factor in our ongoing financial struggle.

In the majority of the posts about credit cards here on “Bankruptcy & Your Passage Into & Out of Debt,” you will read about how substantial a role credit cards play in bankruptcy. There is simply no denying it. Thankfully, the era of easy credit now seems to be fading into the sunset, evidenced by the approach global banks are starting to adapt relative to issuing credit cards.

In light of a rapid increase in account charge-offs and missed payments, banks will start factoring credit decisions based on your level of current business with them. In other words, if you already have a savings or checking account and how much you keep in each.

This approach to issuing credit was at one time the primary factor for many banks, especially local community banks. After all, it simply made sense. If you are a good customer and demonstrated a track record of fiscal responsibility, your banker, not a computer, could make the determination on whether or not to issue you a loan or line of credit. Often, a handshake and a word of promise was more important than a credit score and a business-school derived mathematical model.

Unfortunately, the small-town banker, whom you may know from your church pew or the little league baseball sideline, has been pushed aside by call center operators and glossy direct mail pieces with attractive credit card offers boasting “hurry-up and join” headlines just sure to offer all the rewards and prestige your credit rating says you deserve. Until you miss a payment. Then you get kicked out of the club.

But the club rules are changing for the better. In a USA Today article, an executive with an investment bank that advises the credit card industry said, “In today’s environment, not all the risk models are working…” In support, the leader of a small community institution in Upstate New York, Cattaraugus County Bank, said his bank has never used a “cookie-cutter” method of determining credit worthiness.

For those looking to rebuild after bankruptcy, your very physical presence can make a big difference in the eyes of your local banker. Literally, many small banks want to know where you live and how they can reach you if there is a problem with an account. If you have a job, a similar zip code and a working phone, it can help you become a better customer to a local bank. Keep in mind, your credit history will play a role. However, you are not going to feel like another person on hold or the source of another potential commission.

To a local bank, your deposits are looked upon as a sign of trust in their ability to protect and build your money. In return, they are willing to hear your explanations for why you need credit and how you plan to use it. Additionally, you’ll find answers to your questions quickly, without the need for a vexing automated option tree that routes calls about account balances to India and problems with billing statements to Argentina. Instead, local banks offer comfort, understanding and a solid business model.

For rebuilding credit after bankruptcy, start with a bank in your own neighborhood.

Drowning in credit card debt? Call the Law Offices of John T. Orcutt to set up a free initial debt consultation. 1-800-899-1414.

+ Continue reading this article

Published Monday, July 20, 2009 @ 8:35 am

It started about 15 years ago with the promise of an untold number of deposits into your bank account, supposedly from Bill Gates, for just sending an e-mail. Little did we know that with the click of the “forward” button, we pushed the proverbial SPAM boulder over the crest and created a perpetual avalanche of dangerous, credit-crushing e-mail based nonsense.

E-mail based crime is responsible for a great deal of debt for people that have done nothing more than react to a message from a friend. And once we identify ourselves formally or agree to a “balance transfer” offer, it is quite often too late to go back. Very slick and apparently authentic e-mails can come from your bank, your current credit card company or a “friendly” debt counselor. The odds are very good that if the message made it into your inbox, it does not contain any sort of overly-aggressive virus that will shut down the neighborhood grid just because you looked at it curiously, so don’t be afraid about reading the content of message you are unsure about to learn more about it. In fact, after scanning only a couple of lines, you should be able to tell right away how much of your money its sender is trying to steal. (Usually, as much as they possibly can.)

Remember that no credit card company or legitimate bank will ask you for personal information or account number verification via e-mail. If you are still unsure, call the company and inquire about the e-mail. Do not, however, call any number that is included in the e-mail. Yes, these scam artists are sophisticated enough to set up bogus phone numbers. You may literally be calling an extra line in their mother’s basement established to sound just friendly enough to help you verify your credit card number and it’s three-digit verification code.

Most bank and credit card company Web sites contain pages of information about privacy and might also have examples of bogus e-mails just like the one you are concerned about.

Once you’ve determined that the message is an attempt at theft, don’t respond to it. Regardless of how angry you are or how clever you think your insult, responding only verifies your e-mail address as real, and that means it goes on another list for another scam. Simply mark the message as SPAM using the appropriate software and move on. Plus, you are not going to tell them anything they have not heard before.

Watch for e-mails that appear to be from people with very common names that sound like someone you know. This technique farms the names in your inbox and creates conglomerate sender identities. For example, your friends Sara Jones and Matt Smith can become Sara Smith from Jones National Bank touting a new, lower rate for all balance transfers of more than $5,000. Wow, thanks for the update Sara!

Basically, good e-mail management should be considered a major component of a sound financial management strategy. Exercise extreme caution whenever an email or website asks for personal information, and remember: If it sounds too good to be true, it probably is.

From the Law Offices of John T. Orcutt. Call today to set up your free initial debt consultation. 1-800-899-1414.

+ Continue reading this article

Published Sunday, July 19, 2009 @ 5:13 pm

There are many reasons for filing bankruptcy. From sudden medical expenses to layoffs, We already know medical bills are a substantial reason people file and that even smart consumers have faced serious challenges as a result of uncertain mortgages.

Regardless of your reasons, life after bankruptcy offers you the chance to start in a new direction. So here are some important tips to help you become an economically-conscience consumer.

• Like buying shoes, don’t purchase cable channels unless they are on sale or part of a long-term promotion. Remember that cable companies rely on customers forgetting about the incentive’s termination to lock you into paying the increased rates. Mark your calendar on the day it ends and cancel. More than likely, they’ll continue to offer it to you. Don’t forget about the pay-per-view channels, which allow you to buy only one show or movie at a time.
• Like going to movies? So does most of America, which explains the $100 million opening weekends for just about any half-way decent film. Before even sitting down in your seat, provided a contingent of un-supervised pre-teens haven’t “saved” them for the rest of their sordid lot, it’s easy to spend $25.00 on the ticket and a trough of popcorn. You can see the same thing everyone else does for $5.50 by going on a weekend afternoon and not buying any of what’s lurking behind the counter. Not only will you avoid the calories, matinees are also the best way to avoid the swarms of irksome youth that pay more attention to the next incoming text message than what’s happening on the screen.
• Try to avoid any sort of club that charges a monthly a fee unless you can reasonably justify that your use of its service will cover the fee. Fitness clubs, for example, literally bank on the fact that members will not use the facility. Most gym members cease attendance after six weeks. Instead, check with your employer about wellness discounts or reimbursements, as many companies today offer these incentives to promote employee health (and to avoid paying medical claims). If fitness is important to you, then find a gym that does not require long-term contracts. A good deal of Web sites charge monthly fees as well. Truthfully, there is very little content on the Internet that will not become public in very little time. Premium memberships and site subscriptions are rarely worth it. This goes for magazines, too. Use their respective Web sites for the articles.
• People find a surprising amount of money to be saved by curbing random food purchases. Snacks while getting gas, vending machine walk-bys and quick pit stops can really add up. Prepackaged food is extremely expensive by volume and rarely healthy. Avoid it whenever possible. Try to remind yourself that you paid for the food that’s at home. Just because it’s in your kitchen doesn’t mean it was free. Don’t waste your money or jeopardize your health.

This brief list is only a random selection of ways to save money. Remember though, every little bit helps, especially when you are trying to rebuild your financial wherewithal. There are countless ways to cut back and still live exactly the type of lifestyle that suits you and your family. Give it a shot.

From the Law Offices of John T. Orcutt. Convenient offices in Raleigh, Durham, Fayetteville and Wilson. Call 1-800-899-1414 today to set up your free initial consultation.

+ Continue reading this article

Published Sunday, July 19, 2009 @ 4:08 pm

Gambling, not at all unlike compulsive spending in department stores, can often lead to serious financial pitfalls. Despite the prevalence of gambling addictions in America, debts incurred by too much betting were at one time non-dischargeable in bankruptcy. While the specifics of dischargeability with any type of debt should be explored with a bankruptcy attorney, it is important for you to know that if you count gambling losses as one of your reasons for bankruptcy, the odds are in your favor that it can be discharged.

Bankruptcy research suggests that close to 10 percent of all filings are connected to gambling. If you are already considered a “compulsive” gambler, then you may be one of the 20 percent who eventually file bankruptcy. If that is the case, know that the bankruptcy court is going to view your gambling debts much like it does other debts. That is, was the debt incurred with the intent to repay? For a compulsive gambler, that question is up in the air and where the answer lands depends heavily on how the money to gamble was obtained.

Not surprisingly, credit cards play a role in gambling debt. For those who walk in to a casino with a wallet full of positive cash and leave with it empty, no real debts have been incurred. The problem arises when a person uses a credit card for a cash advance. As you might imagine, the majority of bankruptcy lawsuits relative to gambling involve credit card companies.

Again, like most debt, a judge is going to use other facets of your financial history to determine your intention to repay the credit card company for the cash advance. Prior to filing, your attorney will want to know everything about your gambling habits, including how much of your debt was gambling related, how recent your gambling-related debt was incurred, and whether you reasonably believed you would be able to pay back your creditors. If there is an objection to your bankruptcy discharge, the court will thoroughly examine your gambling history to determine whether you acted with an intent to defraud your creditors.

Las Vegas may still be the world’s gambling mecca but one does not need to go far to find a casino. Whether on a riverboat, Indian reservation or just across our northern border, the opportunities to double down are plentiful. Thus, gambling losses are a common cause of bankruptcy.

Again, it’s important to understand that like the eligibility for discharge of other kinds of debt, a bankruptcy judge is going to weigh a number of factors in your financial history. First and foremost, if gambling is the primary driver of your reason for bankruptcy, it’s possible you have a problem. Your first stop then, should be getting help to put the brakes on your gambling.

Next, contact a good bankruptcy attorney. In North Carolina, call the Law Offices of John T. Orcutt at 1-800-899-1414. We can help you put into perspective your gambling debts and get you on the road to a more healthy financial future. You can bet on it.

+ Continue reading this article

Published Saturday, July 18, 2009 @ 3:56 pm

As we’ve discussed here several times, there is a very good chance you can keep your home when filing bankruptcy. However, those of you who rent may find reason to worry about that ubiquitous “credit check” that shows up on every new rental application.

Whether a faceless, multi-billion dollar property management company or a private duplex owner down the street, landlords need to know they can collect rent. It’s normal to be nervous about the process. But just like all other sorts of transactions and business relationships, your best first step is to be open about your financial history.

When seeking an apartment after bankruptcy, the smoothest route may be to seek out a private landlord. In other words, a local owner who is either in the apartment business full-time with a small operation or who just has a couple of places around the city. One of the disadvantages inherent to many Class-A apartment communities operated by national real estate firms is that they may not have flexibility in negotiating lease terms. While an amenity-rich, intricately landscaped apartment community is an attractive option, the leasing representatives are limited in their ability to negotiate. Even if you can afford the rent, the company may have a credit report policy that is simply too stringent.

If you run in to this, ask to see a manager. Not unlike a car dealership, the “salesman” rarely makes the final decision. It is worth your time to be face-to-face with someone with decision-making power for the benefit of learning to better vocalize your financial history and demonstrate that paying your bills is a serious priority. Clearly, a good job and proven steps toward a new credit history will help your case.

That being said, higher-end apartment homes come with a cost. How else are they going to pay for the pool, theater, gym, basketball courts and arborists? Ask yourself, “Will I even use all these amenities?” If you can save the money for a gym membership by working out at your apartment complex, great. Can you exercise in the pool? Is parking a hassle? Financial decisions, especially after bankruptcy, demand looking at the specifics; so weigh your considerations carefully.

Private landlords will rarely have the type of amenities available that a commercial apartment complexes do but that doesn’t mean that they are less desirable options. For the smaller landlord who values his properties, keeping a nice, well-maintained unit is critical to attracting solid tenants.

Perhaps the best advantage to working with a private landlord is their ability to be flexible with the rent amount or payment schedule. You may find some landlords are open to you paying twice a month or just in cash. They will still seek market rates for number of bedrooms and location, but for good tenants, they are more likely to have some flexibility. Additionally, you may not be subject to strict credit rules printed in bold on the tenth page of a complicated lease. Most individual landlords have simplified leases that clearly describe the most important rules and fees, and are more likely to be understanding about your financial situation.

In whichever direction you head for an apartment, always be prepared with knowledge of your credit history. Be alert to its status, knowing exactly what appears on it and in fact, have a copy of it with you when looking at an apartment. In addition, bring a recent pay stub, tax returns and even a reference letter if possible. The more prepared you are about your financial situation, the more apt you are get find a comfortable, affordable place to call home.

+ Continue reading this article

Published Friday, July 17, 2009 @ 4:58 pm

Most of us go on vacation to get away from the things that are causing us stress. Well, that might not be so easy anymore. Travelers across the country are reporting an increase in collection agency contact for even nominal amounts of money because of a dispute they raised with airlines, hotels and rental car companies–even after the company has acknowledged its own mistake. A few examples:

A gentleman traveling through Pennsylvania was pulled over for an expired registration on his Hertz rental car. Despite repeated attempts to reconcile the issue with Hertz, he was notified by the company that collections activity was underway because of the unpaid ticket. After several automated phone trees and countless customer service agent assurances the matter would be handled, he feared his credit report was in jeopardy. It took months to clear up the issue.

A woman in California was not notified when her flight changed, resulting in her missing a plane to Los Angeles. After buying a new ticket, she disputed the charge with her credit card company, which agreed to alleviate the cost. Delta Airlines was not so accommodating. They are starting collections activity.

A woman using Travelocity faced technical problems on the site and called the company to finalize the travel plans and place deposits. However, the original booking was processed and a month after she returned, she found out she had been charged twice. Once again, despite customer service assurance all would be handled correctly, she was notified of collections activity. She ended up paying an agreed upon settlement with the collections agency under protest and was eventually able to be refunded thanks to her repeated efforts to convince Travelocity and the cruise line of the mistake.

If you have recently emerged from bankruptcy or are in any stage of trying to improve your credit, be aware that traveling now poses a risk to your financial credibility. Adding complication to the matter is the fact that traveling involves spending money in far away places, which can translate into having to deal with money problems and disputes over the phone or e-mail, adding substantial frustration to an already tedious process.

Just because an expenditure happened in another state or country doesn’t mean your rights change. Under the Fair Debt Collection Practices Act, a collections representative must follow-up in writing within five business days of phone contact in regard to a debt. After that notice, you can dispute it within 30 days. It’s best to do so in writing by certified letter, not by e-mail, to ensure its delivery.

Also, be able to determine a collections threat from the real thing. Many collections industry experts agree that most first contact is just a hard-nosed tactic to influence someone they believe owes money. Most often, it works; especially when someone has just returned from a trip and feels that the nature of the spending alters the playing field. If you owe less than a $1,000, the first contact is typically just a threat. Use that time to understand your rights and if needed, engage the services of an attorney.

One of the most surprising aspects of these examples is the speed at which the collection efforts get underway. If you are planning a trip this summer, be aware that if a financial complication occurs along the way, it is best to try to solve the matter as soon as possible. Also, don’t wait or rest on assurances from the companies you are dealing with. Speak to managers and get things in writing. A vacation is supposed to be relaxing, not a financial nightmare.

+ Continue reading this article

Published Monday, July 13, 2009 @ 2:59 pm

If you have declared under Chapter 13, you may be eager to refinance your home. In doing so, you should pay close attention to what the mortgage companies are proposing and whether you will actually benefit from refinancing.  It is a good idea to research companies offering refinancing during Chapter 13 and analyzing their track records with consumers. You can do this through debt advocacy organizations and state agencies that act as business watchdogs.

If you are finished with repayment under your Chapter 13 and have received your discharge, the refinancing process will resemble the process following a Chapter 7. You should work patiently to rebuild your credit with tried and true strategies and patience so you can get the best possible rate. It may pay off to take some time and slowly rebuild your credit before submitting any loan applications.

If you are still making payments under a Chapter 13 plan, refinancing a home is a bit more involved. First, there are three main categories of mortgage companies and financial services companies that will work to refinance homes for people still making payments under Chapter 13. The first kind of company works in the Chapter 13 process. The second type of company specializes in loans for “buying out” Chapter 13 bankruptcies. The way these buy-out specialists operate is by refinancing your current mortgage to pay the balance owed under your bankruptcy. The third kind of company operates by having your bankruptcy under Chapter 13 dismissed. Once that happens, the debt remaining is rolled into a new amount for a mortgage loan.

Generally speaking, all three types of company will require at least one year completed under the Chapter 13 plan, with only timely payments for all accounts. They will also take into account your financial situation at the moment, the amount of debt included in your bankruptcy, and the amount of equity available in the property. As a guideline, you should expect that a good company will only propose to buy out your Chapter 13 bankruptcy if your payment history has been good since the Chapter 13 repayment plan began, if the buyout will yield considerably lower monthly payments for you, and if you have at least 25% to 35% equity in your home.

It’s important to proceed carefully when seeking refinancing in the middle of a Chapter 13 bankruptcy. Make sure you know what the mortgage company is actually proposing to do; are they going to work around your Chapter 13 bankruptcy? Or will they be dissolving that bankruptcy? Do you understand what that will entail? Ask the mortgage company to spell out, in writing, how the refinance will work with your Chapter 13 plan- get it in writing.

Generally the companies will most closely scrutinize the 12 months prior to your refinance application to calculate your rate of interest. In order to get the best rates, try to wait until you have a good 12 month period where your mortgage payments are as current as possible. If your credit is not good enough to allow for favorable loan terms, wait some time and take steps to rebuild your credit. With a little time and effort, you can put yourself back in position to get a great refinance loan.

From: The Law Offices of John T. Orcutt. Call 1-800-899-1414 today to set up your free initial consultation.

+ Continue reading this article

Published Friday, July 10, 2009 @ 5:34 pm

While bankruptcy can provide you a haven from financial insecurity, it will not automatically change for you the habits that may have led to your decision to file.

It’s important for you to understand that you are not the only person who has ever overspent. Money was good, credit was easy and why shouldn’t you live the lifestyle you deserve? Well, no one is telling you that you can’t. However, it is important that you gain that lifestyle using reasonable financial judgment and the discipline to spend within your means. To do that, especially after bankruptcy, taking time to assess your spending habits is a critical exercise. You never know, a simple look at the numbers may reveal some recurring trends of which you were not aware that could lead right back down the spiral.

First and foremost, accept the fact that a in-depth look at your spending practices will reveal that you are probably wasting money unintentionally. And again, everyone is. Even those who you may believe are “rich” are wasting money. So, when perusing the monthly expenditures, keep an eye out for the little things. For example, the amounts spent on a lunch out here and there, the extravagant coffee, trendy soft drinks, packaged snacks or check-out aisle impulse buys. (Did you really need extra batteries just to put in the kitchen drawer?)

What about the extra channel cable package that you agreed to a few months back? At the time, the incentives were great. More channels! Less money! Well, the three-month promotion is long over and the only thing you are watching are dollars fly out of your checking account. Not exactly “appointment television”, huh?

How many other promotional time periods have expired you may have forgotten about? Try looking at your credit cards. Credit card issuers make their profits on surprise interest rate adjustments. Even if you think you are still paying 6%, the odds are pretty good that some random expenditure or momentary spending milestone has triggered a double-digit spike in your interest rate or added a monthly fee. Be wary.

In this exercise, mindset is everything. Remember that wealth is relative. A salary of $100,000 per year is outstanding for some and paltry for others. The idea is to create a lifestyle around what you earn. And yes, there are a lot of societal pressures to have more, to buy this, to be seen in that. Take time to consider the real importance of material things. Seriously think about the value or benefit you get from buying a new car for $25,000, financed for seven years, versus the benefits of a buying a solid used car for $8,000 that you saved for or could pay off in under a year?

Think of buying cars as an investment. The point of investing in something is to receive a return on your asset. Well, cars are depreciating assets. And there is nothing worse than debt on a depreciating asset. In other words, you lose money on a new car. From that perspective, buying a reasonably priced, dependable used car for less money makes you a smarter investor.

Like your over-priced car, seek other things around the house that you could sell or replace to not only relieve debt but to alleviate your lifestyle from the need for “stuff.” While it sounds a little bohemian, learn to be happy with less. And a good, in-depth analysis of where your monthly dollars are heading is the best start.

From the Law Offices of John T. Orcutt. Call today for your free initial consultation. 1-800-899-1414.

Cary bankruptcy. Apex bankruptcy. Greenville bankruptcy. Rocky Mount bankruptcy. Angier bankruptcy.

+ Continue reading this article

Published Friday, July 10, 2009 @ 8:10 am

While details of super-sized corporate failures, like GM and Chrysler, are being splashed across front pages of newspapers and websites, grabbing our attention and garnering an inordinate amount of debate, the reality is that the vast majority of commercial bankruptcies are filed by entrepreneurs and small-business owners. The first five months of this year have shown a 52% increase in the total number of commercial bankruptcy filings. On average, during the first six months of 2009, some 350 commercial enterprises file for bankruptcy daily — an increase of 240% from 2006, the first year after the bankruptcy law was changed.

Today’s economic landscape has proven to be especially toxic to small business owners. Factors such as higher gas prices, lower consumer discretionary spending, and the credit squeeze have all put a strain on small businesses. Ironically, the bankruptcies of the very large companies can also contribute to the pain. “When you have the GMs of the world filing for bankruptcy, they are canceling contracts and discharging debts that they owe to their suppliers,” says B. William Ginsler, a bankruptcy lawyer in Portland, Ore. “And those are small businesses that are less solvent than larger corporations.”

The decline of the transportation industry, which includes the auto and airline businesses, has been the biggest trigger in small-business bankruptcy filings, according to new data from an Equifax bankruptcy study. Downturns in the construction, manufacturing and retail industries are also contributing to the increase in filings.

These days, small businesses are working harder than ever to stay viable. But more and more are finding that the economy is an obstacle too onerous to overcome. Many small businesses owe so much money to creditors that there is no future. Bankruptcy is still the only option for many small-business owners who are hanging by a thread.

Bankruptcy doesn’t always necessarily mean that the company must stop operating. In many cases, the business may continue or be sold as a going concern after a Chapter 11 filing. Larger bankrupt companies, such as Six Flags, use Chapter 11 of the Bankruptcy Code to “reorganize” its business and try to become profitable again. Management continues to run the day-to-day business operations but all significant business decisions must be approved by a bankruptcy court. But bankruptcy reorganization under Chapter 11 requires significant time on the part of the owners and managers, and expert legal counsel.

Other small business owners may choose to file for Chapter 7 bankruptcy and shut their businesses for good. Under Chapter 7, a trustee is appointed to “liquidate” (sell) the company’s assets and the money is used to pay off the debt, which may include debts to creditors and investors. Often, a small business owner’s personal finances are so intertwined with those of the business that he would be left open to personal liability under Chapter 7. In fact, in most small business cases, the owner has personally guaranteed most of the business debt. In these cases, it makes more sense to shut the business down and file for personal bankruptcy under Chapter 7 or Chapter 13.

If you are concerned about your business in these tough economic times, it’s time to speak to a bankruptcy attorney. In North Carolina, contact the Law Offices of John T. Orcutt. Call 1-800-899-1414 today.

+ Continue reading this article

Published Thursday, July 9, 2009 @ 2:48 pm

Coming out of bankruptcy is a great milestone. It renews confidence, offers comfort and provides you with a sense of accomplishment from meeting a tough challenge head on and surmounting it.

Like most people who have experienced these emotions, you have comprehensive understanding of how to better control your spending and look out for your financial well-being. One component of that is learning to identify common credit report problems that arise after bankruptcy.

Look for a record of credit agency activity that is listed separately from the debt they tried to collect. This makes it appear as if you had two outstanding debts. The original debt should have been discharged as a result of your bankruptcy and thus, the agency should not appear on the report. This is a very frustrating component of a post-bankruptcy credit report because a bankruptcy eliminates debts with organizations to which you owe money but does not eradicate the record of the debts. In other words, it’s a two-step process: removing the debts and reporting that they were removed. Parts of the second step often fall through the cracks.

Another common reporting error involves accounts that were reported closed by the creditor instead of it being closed by you. This would indicate that a creditor shut down the account instead of it being done as a result of a bankruptcy, intimating that it was done outside of your control because of your inability to pay. If a closed account appears open and the payment history demonstrates a clean record, leave that one alone because it will help.

We’ve said on the blog many times but it bears repeating: make sure your credit report looks good at all reporting agencies. It’s very possible that one bureau reports a solid history and the other still shows bad debts. It is also crucial to ensure any existing debt is correctly reported by all agencies.

One technique for proving credit report accuracy after a bankruptcy is to compare your report with your bankruptcy paperwork. Look at discharged debts and then what is listed on your credit report. This is bare-bones way to rest comfortably that your information is being handled the right way and won’t derail any future loan plans, such as a mortgage or student loan.

One last bit of advice: Do not turn to a credit repair business to repair mistakes in your credit report. These are businesses that charge a hefty up front fee, promising to improve your credit score quickly. As someone who took the initiative to contact an attorney, gather your wits and decide that bankruptcy was the best option, you can repair your credit on your own. With some time and a little bit of effort, you can rebuild your credit.

From: The Law Offices of John T. Orcutt. Helping thousands of families with the power of bankruptcy. Call 1-800-899-1414 to set up a free initial debt consultation.

+ Continue reading this article

Published Thursday, July 9, 2009 @ 9:22 am

Bankruptcy and personal money management are tightly intertwined. As you read through the blog you will probably notice that a lot of our posts will offer advice and tips on saving, how to avoid scams and general philosophies about preserving financial stability.

Here is another post about how to hang on to more of your money, which is especially useful for anyone coming out of bankruptcy or performing some initial research. These tips involve banks, which many people believe want to help you with saving money. However, that is not always the case. In fact, it’s becoming quite the opposite.

Banks (and credit card companies) are in attack mode. Surprise fees and quick interest jumps are now an everyday occurrence and customer service operators are busy as ever routing the complaints. Here are a number of examples:

• Checking accounts: This is basically a fee to use your own money. Many banks will give it to you for free if you have other accounts or a loan. Once that loan is paid off (isn’t that the idea?) they will add a fee for your checking. Most likely without notice. Some will charge you now if you don’t carry a specific balance or use enough checks each month. Don’t assume your checking account is free.
• ATM fees are very unreasonable, across the board, if you don’t use your own bank’s ATM. Some surcharges are reaching toward $4.00/transaction. The only way to make this affordable is to take out more money, thus lowering your cost of getting the money. Still, you probably only need $20, not $400. Use your own bank but if there is still a fee, go inside to a teller.
• But wait … many banks now charge to use tellers! Complaints are piling up about the reinstatement of teller fees. As hard as it is to believe, it was once quite common but drew significant flack from national consumer advocates. Looks like we’ll need their help again.
• Overdraft charges are also becoming steep. While many banks began to offer accounts with no overdraft fee as an incentive, watch for it to kick-in unexpectedly. Also, it does not help that a bank allows you to take more than you have from an ATM and then has the nerve to hit you with an overdraft penalty.
• If you deposit a check that bounces, you get slapped with the penalty. Ouch. How were you supposed to know?
• You get charged for the ATM, charged for speaking with someone, so how about the phone? Nope. Fees are popping up for calling the bank, too.
• Visiting a brother in Canada? Well, you should now expect to pay to get currency converted. Expect to get lopped off at the knees on the front end, when exchanging the money and at the end when converting back to dollars whatever foreign currency you have left over.

As most of us try to avoid using credit cards and the fees they are implementing before new laws kick-in to prevent that very thing, it seems that even working in cash will cost us. Basically, it’s become a tough world in which to try to stay debt-free. For those teetering on the brink of a major financial setback, don’t let a surprise fee push you into the abyss.

+ Continue reading this article

Published Tuesday, July 7, 2009 @ 11:22 am

If you have made your way through bankruptcy and the old clunker is starting to make noises that you more associate with an exhausted yak than an internal combustion engine, maybe it’s time for you to consider buying a new car. Or, should you lease? It’s a tough call.

Before you think about either option though, remember to consider the ancillary costs of car ownership, like insurance. If you have a few vehicle types in mind, contact your insurance agent to determine what it will take to cover them. You may be surprised at the little things that can add up to a steep insurance policy.

Cost of repair should be in the picture too. Thankfully, many of the promotions out there today include comprehensive service plans for sometimes up to 100,000 miles. It pays to know what a tune-up will cost you or if that sporty convertible you have your eye on requires expensive performance tires that need to be replaced after 30,000 miles.

Once you understand some of the ancillary costs, it’s time to get down to the lease versus buy debate. And it’s an extensive one.

Leasing attracts car buyers because the monthly payments are typically lower. This is because in total, you are not paying back the entire cost of the car. In essence, you are only buying a portion of it. Lease payments are figured according to the loss in value of the vehicle during the lease term. Most leases also incorporate all the added fess and taxes.

Many people consider re-sale value when choosing a new vehicle. With leases, that concern is eliminated because at the end of the term, you simply turn-in the vehicle. In that respect, leases are great for people who get bored with a particular vehicle after a couple of years. Or, should something in the car become an annoyance, it’s only something you have to live with for a limited amount of time. Leasing also eliminates the hassle of having to sell your vehicle privately or back to a dealer when it’s time for another one.

Perhaps the most attractive component of a lease is that it simply costs less to get into a nicer vehicle. For people watching their wallets, that can be an easy sell. And in this recession, leases are being marketed heavily.

On the contrary, vehicle leases do present some drawbacks. For most people, especially in light of how far America commutes today, the mileage limits on leases are rarely realistic. If you go over the allotted limit, upon turn-in you should be prepared to pay some additional fees for the excess.

While the monthly payments on a lease may be less than a car loan, you are actually paying more for the car over time. Should you decide to purchase the car at the end of the lease term, you’ll find you owe substantially more on it than you would have if you originally purchased it. Of course, a lot of that has to do with the price the dealer will charge you. Finance charges are also higher with a lease, which means more money going to interest.

Lastly, be wary of the commitment factor. Leases are extremely difficult to get out from under without paying substantial penalties. If you were to die, your estate is still on the hook for the lease payment. There are a couple of Web sites out there to help you get out of a lease based on vehicle swaps but make sure your agreement allows you to do that. Yes, they have even invented penalties for that.

The Law Offices of John T. Orcutt have provided solid bankruptcy advice to thousands of North Carolina families. If you need to file for bankruptcy, you deserve the experience of John T. Orcutt. Call today to set up you free initial consultation. 1-800-899-1414.

+ Continue reading this article

Published Sunday, July 5, 2009 @ 8:05 am

Buying a home after bankruptcy is a smart move. And yes, it is possible! If you don’t own a home already, buying a house is an excellent step toward rebuilding your financial life. A home can be a great investment because it is one of the few major assets you will own that will hopefully appreciate over time. Home ownership also demonstrates stability, which can reflect positively on your credit profile.

The good news is, as soon as a year after your debts are discharged in a Chapter 7 bankruptcy, you may be eligible for a good car loan, and just two years after completing a bankruptcy, you may become eligible for a home mortgage with a good interest rate. If you are still making payments in a Chapter 13 bankruptcy, buying a new home could be trickier, though it will not necessarily be out of the question. Generally, your trustee will have to grant permission for you to buy a new home if your are still in your plan. One situation where you may be allowed to buy a home before the end of your repayment plan is if you already own a home which you would like to sell. If you have equity in the home, you may be able to use some of the sale proceeds to pay back debts, and then use the rest to make a down payment on a new property. The payments for the new mortgage may or may not be included in your repayment plan.

The key to owning a home after bankruptcy is rebuilding your credit. Be proactive. Post-bankruptcy, you need to know your credit score and be familiar with your credit report. If there are discharged debts with balances still showing on your credit report post-bankruptcy, contact the credit bureaus to have the negative reporting removed. Fixing mistakes on your credit reports will improve your FICO scores.

Of course, another good way to improve your score is to make timely and steady payments on your debt. Take out a low line of credit, and make small purchases, paying off the balance on time at the end of each month. If you own a home or car, set up an auto pay with your bank so you will never be late on a payment again. Utilize your bank’s online notification systems to alert you to upcoming payment due dates. Don’t ever have an excuse for a late or missed payment.

After one or two years of proactively rebuilding your credit, you will be ready to evaluate your home-buying options. Carefully consider your budget, and what you can afford. Here, a good rule of thumb is that you should pay slightly below a third of your income for housing. A lender will usually pre-approve you for loans with payments equal to about 28% of your income, but 20% is a better, safer bet. That sum should include all of your housing related expenditures, including principal, interest, insurance and taxes. Don’t take chances by buying the most expensive house you can afford in terms of monthly payments, counting on the market to increase housing prices; like all markets, the housing market is subject to dips and even (as lately) plummets. Instead, buy a nice house that will fit your needs and try to pay it back as quickly as you can.

Your prudence and careful work post-bankruptcy will be well worth it: in a matter of months, you can go from bankruptcy to home ownership, setting up a solid base for long lasting financial success.

The Law Offices of John T. Orcutt have helped thousands of North Carolina families recover from financial uncertainty. If you are considering bankruptcy, call 1-800-899-1414 to set a free initial debt consultation. Visit the website billsbills.com and fill out our confidential debt questionnaire to help decide if bankruptcy is right for you. Take charge, file bankruptcy.

+ Continue reading this article

Published Saturday, July 4, 2009 @ 8:03 am

Okay, so you made the decision to file for bankruptcy some time ago and things are moving along smoothly. In fact, you’re sleeping better, getting along with your spouse and you wake up confident that the world is indeed, still spinning on its axis.

It’s a good feeling, to be back in control, to be out from under the thumb of creditors who don’t understand the human side of financial management. And now, for the first time since emerging from bankruptcy, it’s time to go away for the weekend. However, you’re still re-building your credit history and have been getting by without credit cards. But wait, don’t hotels require VISA or Mastercard? How can you book something ahead of time?

Actually, traveling without credit is pretty easy. And even when you have credit, it can be the smarter thing to do. All it takes is some planning. You’ve come this far with your economic standing, so there is no sense in letting it deny you a couple of days away from home.

Most of the popular hotel chains with allow you to reserve and pay without using a credit card. The key is simply to prepay your stay or just the first night’s deposit, which is typically the most important component of reserving a room. Remember that Travelers Cheques are an option as well. Your local bank or AAA office can issue them to you. Understandably, they can be a tedious way to pay for things and sometimes carry restrictions. Cash is always best when possible.

All hotel chains have a centralized 1-800 number you can call to inquire about their “creditless” policy. But here is a policy rundown on some of the more popular chains:

• Best Western (1-800/528.1238): You can visit your local Best Western hotel to prepay for one night’s stay to reserve a room at any of their locations nationwide. You must do it 14 days ahead of your intended arrival. Once there, you will need to pay taxes on that night and the remaining stay can be paid by personal check or cash.
• Choice Hotels, Quality Inn, Comfort Inn, Sleep Inn, Roadway Inn, Econolodge, Friendship Inn (Choice Hotels International) (1-800/221.2222): Similar to Best Western, you can pay a deposit at a local entity for any location and be given a voucher to present upon arrival. With a money order, you can pay your room deposit the day before you arrive, if that’s feasible for you. Still, call the individual location to ask about their policy, as that is set at each branch.
• Hilton (1-800/445.8667): Hilton allows a personal check to be used for the first night’s deposit if received within seven days after you make your reservation. Some individual locations do allow you to pay for your entire stay ahead of time. Be sure to call. Hampton Inn is also part of the Hilton chain.
• Motel 6 (1-800/466.8356): This hotel makes it easy for someone to travel without credit, which might explain why its one of the oldest “highway hotel” chains. The company allows you to prepay with cash at the nearest location regardless of where you are ultimately staying. Unlike theaforementioned hotels, you can send a personal check to the actual location 14 days before you arrive. The remainder of your stay will need to be paid with cash or money order.

Essentially, the key to traveling without credit is to use good judgment about planning. While sometimes the best trips are of the simultaneous sort, you can nevertheless enjoy a great weekend away to visit family or reward yourself for getting your financial life back on track. When traveling with cash, remember to be extra careful about where you keep it and always divide it into different “pockets” so all is not lost should a purse or wallet be left somewhere. And most importantly, have fun. You’ve earned it.

Apex bankruptcy attorney. Angier bankruptcy attorney. Sanford bankruptcy attorney.

+ Continue reading this article

Published Tuesday, June 16, 2009 @ 10:22 pm

Despite the fact that credit reports are widely acknowledged to contain inaccuracies― for example, wrongly listed accounts, computer errors showing delinquencies where there were none, or discharged debts still showing up after bankruptcy―more and more of our interactions are touched by the huge industry that is credit reporting. Virtually every kind of loan will hinge on the information in your report, and even landlords will now require you to sign your consent to have your credit history checked along with the more standard criminal background checks.

If you are a renter and have declared bankruptcy, or are thinking about it, you may be concerned about how a bankruptcy on your record will affect your ability to find a new rental situation, or even to keep your current one. Before considering strategies for success in your rental search, keep in mind that lots of missed payments and delinquent accounts look worse on your credit report than a bankruptcy. A bankruptcy is your chance to start over and get control of your financial situation.

If you are not planning on moving, declaring bankruptcy will almost certainly not affect your living situation, since your landlord is very unlikely to find out about your bankruptcy unless you tell him about it.  On the other hand, you may encounter some trouble with finding a new situation if you listed your current landlord in your bankruptcy. However, these difficulties are far from insurmountable.

The best strategy for finding a new rental situation after bankruptcy is to deal with private landlords or connections you have made through personal networking. Private landlords are less likely to be uncompromising in their credit check policies, more likely to deal with you fairly and listen to your side of things, and more likely not to bother with a credit check at all. The classified section of the local paper is a good place to look for apartments or houses for rent from private landlords. Another great place to look is on-line: classified services such as Craig’s List will often provide pictures of the property and more details than will be included in newspaper classifieds. The website for Craig’s List is www.craigslist.org.

Another good strategy is to ask your friends and relatives if they know about rental situations, if they can recommend you to renters, or if they themselves are renting and can introduce you to their landlord. That personal touch is often what you need to get someone to consider you beyond what it says in your credit report.

Rental applications generally ask if you have declared bankruptcy, so it is a good policy to be open about having filed if it comes up. Many management companies have rules about renting to people with two or more accounts that are past due or habitually paid late. Again, remember that declaring bankruptcy actually helps you take care of the negative information in your credit report. Make sure to check your credit report to ensure that derogatory accounts that ought to have been discharged with your bankruptcy are no longer listed as delinquent. After a bankruptcy, you can improve your chances of finding a new rental by working to repair your credit history. One good way to do this is through steady payments to a credit card that reports to the credit bureaus regularly. Another great method is to request a letter of reference from your current landlord that testifies to your timely payments. This shows your new landlord that you will take your responsibilities as a tenant seriously.

Renting after bankruptcy is not so hard after all, so there’s no need to be cowed by the prospect of a landlord’s credit check.

From: The Law Offices of John T. Orcutt, with convenient office locations in Raleigh, Durham, Fayetteville, and Wilson. Call (toll free) 1-800-899-1414, to set up a free, confidential debt consultation. Visit www.billsbills.com for more information.

+ Continue reading this article

Published Saturday, June 13, 2009 @ 2:25 pm

Once your bankruptcy is behind you, your credit will begin to improve faster than you may expect―as soon as a year after filing, you may be eligible to receive a loan to finance the purchase of a new car.  Armed with a few tips, you can locate a good loan.

First things first: for the period immediately after your bankruptcy, as you prepare to move on with your life and before you undertake steps like financing a car, make sure you are laying a good foundation. Everything you do as you repair your finances will go to building a good case for why you will make a good credit risk. Make sure you are making your payments, in full and on time, religiously. In addition, make sure to request a credit report and carefully review it to make sure that there are no mistakes or debts lingering from before your bankruptcy which ought to have been wiped from your report. Sometimes a request for a loan will be denied over a mistake in your record, but you will not find out the reason. Better to avoid this kind of uncertainty or surprise.

Before approaching a lender, it’s a good idea to figure out what kind of car you’re going to buy and how much it will cost. As you’re making this decision, keep in mind some important facts: a brand new car will be much more expensive than a car of the same make that’s even two or three years older. A really expensive car will mean years of payments―is that really what you want to sign up for? Make sure the car you buy will be reliable, will not entail expensive repairs and will meet your needs.

Next, you should consider whom to approach for the loan. You could approach a dealership, but there are better loans out there. One of the best places to get a loan is a credit union. Put this choice at the top of the list and seek out a credit union you are eligible to join. When your bankruptcy is at least one year old and you have a clean payment record, your credit union may offer you a great interest rate on a loan to finance your new car.

If you do decide to approach a credit union for a car loan, keep on your toes: some credit unions offer what’s called “indirect lending.” This kind of loan is actually a kind of dealer financing. The downside is that you may end up paying a commission to the dealership for originating the loan. One good giveaway that your loan is “indirect lending” is if the credit union doesn’t require you to actually go in to the credit union. If you’re not sure, you should call the credit union and ask them who pays for the “dealer fee.” If it’s you, or the credit union employee doesn’t know, go in to the credit union so you can fill out the paperwork yourself. This could actually save you hundreds of dollars. Once you’re at the credit union and talking to a loan officer, be honest about your bankruptcy and explain how you’ve worked since then to improve your credit.

If the credit union doesn’t work out for one reason or another, don’t despair. You may still be able to get a loan through another kind of bank, or perhaps from a dealership. But do make sure to try a credit union before looking at these other options.  Before long, you could be in your brand new wheels!

Serving North Carolina residents, John T. Orcutt has helped thousands of families get real relief from debt. Call today to set up your free initial consultation. 1-800-899-1414.

+ Continue reading this article

Published Friday, June 12, 2009 @ 4:14 pm

It’s been a trying week for defamed NFL quarterback Michael Vick. He has been officially released from the team that drafted him, the Atlanta Falcons, and on Tuesday, a United States bankruptcy judge gave him a deadline of July 2 to submit a revised Chapter 11 plan. Vick has been ordered to repay a multitude of creditors that he owed prior to his confinement in federal prison for backing a multi-state dog fighting ring.

Chapter 11 is a common form of bankruptcy that allows an individual court protection in conjunction with an organized payment plan or financial restructuring.

In April of this year, US Judge Frank Santoro rejected Vick’s first reorganization plan, calling it unrealistic and not nearly ambitious enough, as it called for Vick to keep several homes and other valuable assets. Like the first attempt, this version is expected to rely heavily on his ability to be reinstated to the NFL. League commissioner Roger Goodell has made no such commitment, however. In fact, Goodell has remained quite stern on his stance that he must see “real remorse” on the part of Vick before he will allow him to wear a uniform with an NFL logo.

If the new plan fails, Santoro will appoint an independent trustee to oversee Vick’s finances. As of right now, Vick is working with a team of attorneys and advisers to formulate the plan. The judge set a hearing date of August 27 to determine the new plan’s legitimacy. Goodell’s decision will come only after Vick’s sentence is formally completed on July 20.

Unfortunately for Vick, some of the dates conflict. If his new plan, due July 2, depends on him being able to play professional football again but he won’t know that until after July 20, he will be submitting it with a fair amount of risk. However, should Goodell feel Vick deserves a second shot, August 27 may be a great day for Vick.

The former Virginia Tech scrambler owes more than $20 million, $6.5 million of which is a bonus from the Falcons he has agreed to repay. His initial bankruptcy petition cited assets of only $16 million. Like most well-recognized athletes, Vick had several lucrative endorsement deals. Given his crime and subsequent reputation, there is little chance he will be hired to promote anything, further challenging his ability to repay what’s owed.

In a telling court moment, Vick uttered a surprising bit of financial wisdom, saying, “I did a lot of big spending. I tried to take care of a lot of people. And it backfired on me.”

Vick’s crime, operating an illegal dog fighting operation, has been subject to increased vigilance. Laws are being passed quickly and since his incarceration, 22 new state and federal laws about dog fighting have been passed.

Currently completing his sentence on home confinement, Vick is working a $10/hour construction job. He is also allowed to go to church, court appointments and the doctor.

+ Continue reading this article

Published Tuesday, June 9, 2009 @ 2:08 pm

As a result of General Motors and Chrysler filing bankruptcy, thousands of dealerships across the country will be shutting the garage doors and deflating their obnoxious balloon animals and banners. But first, many of them will be liquidating cars at prices that, even for a car dealer, can be considered “Out of this World!”

So if you are on your way out of bankruptcy and the time has come to for a new ride, will you be able to get a car from a dealer? Of course. Let’s discuss it.

Keep in mind that dealers are now in the business of financing cars, not selling them. The industry has done a great job over the years in convincing consumers that affording a car is all about the monthly payment. However, you’re a smarter consumer than you once were, so you need to focus on price, not monthly payment.

The financing structure of car sales can be quite vexing. The key thing to remember is that while you may be able to afford $300/month for a car, there is a big difference between paying that much for two years and paying it for five or six years. If you let the dealer know what you can afford per month, their aim will be to get you in a higher priced car that can simply be financed at $300/month over a longer period. You need to remember that more expensive cars are also much more expensive to maintain, insure and repair.

Determine the top number you can afford to pay for a car, new or used, and start $1,000 lower. This cushion will provide you some nice negotiating room and help pay for the fees that get tacked on to the cost of buying a car.

A down payment helps immensely. It gives you more bargaining room and “buys down” your interest rate because you will be financing less money. If you don’t have at least $1,000 to put down, wait. Make whatever minor repairs may be needed on your current car or use mass transit for a short time.

Reliable, well-conditioned used cars are easy to find today. They are also lasting substantially longer. Older generations often retired cars after 100,000 miles. Today, 200,000 is not at all uncommon. Thus, don’t get caught up in the idea of a “new” car. After only a little bit of searching, you should be able to find a vehicle to match your needs and price range within the $7,000 to $10,000 dollar range.

The Internet has made car buying a nationwide exercise. While it’s not wise to buy without a test drive and mechanical check-up, you can use the price of a car in at least another county as leverage against the price of a local car. Basically, your net of comparison vehicles can be cast much wider. Also, write down what you want in a car ahead of time and bring it into the dealership. This checklist will help you stay honest with yourself and once again demonstrate to the dealer that you are serious about your self-imposed buying rules.

The best part of this whole process is the fact that you will be creating another great benchmark in the establishment of your new credit history. Car payments are a very common occurrence on a credit reports because they are typically a set amount for a number of years. Therefore, they are easily tracked and when paid on time over a number of years, your report will look better every month.

+ Continue reading this article

Published Monday, June 8, 2009 @ 11:50 am

Many people own a home before they file for bankruptcy protection, and once they are ready to start over and lay down that solid financial future, they will want to refinance their home loans. Refinancing a home can result in excellent benefits for a home owner.  By refinancing, you may be able to improve your cash flow by lowering monthly payments and reduce future risk associated with variable rates. The steps toward this process will differ depending on the type of bankruptcy filed and certain other factors. For both Chapter 7 and Chapter 13 bankruptcies, a common and crucial first step after bankruptcy is to carefully rebuild credit. Home refinancing is one area of your financial life that will benefit from undertaking this important task, and it is one where the benefits can be appreciated tangibly and relatively quickly.

If you have filed for bankruptcy under Chapter 7 and want to refinance your home, you want to allow some time to elapse after filing before pursuing refinancing. If you try to refinance too soon, before you’ve had a chance to rebuild some credit, your interest rate will probably be too high, and refinancing will be of little help. Depending on your credit rating prior to filing, it is preferable to wait at least six months, but a year is better, and two years better still.

Two years after your debts are discharged under Chapter 7, you will be considered an excellent risk by lenders for refinancing if you have no negative reports since your debts were discharged and you have positive information from three or more good references. Opt for a major credit card that reports regularly, as well as loans like car loans or creditors for medical services that will provide steady references while helping you take care of life essentials. Student loans are not discharged in a Chapter 7 bankruptcy, so these can also serve as a good credit reference. For revolving credit, keep your balances low, or even pay in full every month when you can. For all kinds of credit, remember to always pay in full and on time.

Once you’ve put in the work of building good credit post bankruptcy, and you are ready to refinance, make sure to shop around by calling several mortgage brokers. Let them compete for your business―you’ve earned this privilege through your hard work. Don’t opt for those brokers who specialize in mortgage refinancing for bad credit; with strategy and patience you should be able to get a decent broker to work with, and you shouldn’t settle. And remember not to let any brokers charge you for a consultation; a mortgage broker should get paid from the loan. Brokers specializing in  “bad credit refinancing” are especially likely to try to pull this trick.

The lesson here is to be patient and methodical about refinancing your mortgage loan. After a Chapter 7 bankruptcy, your immediate focus should be on rebuilding your credit so that you are in the best possible position to refinance as soon as possible. Talk to a bankruptcy attorney today to get the honest truth about bankruptcy and your credit. Serving North Carolina residents, the Law Offices of John T. Orcutt provides a free initial debt consultation. Call (toll free) 1-800-899-1414, to set up your appointment. Visit www.billsbills.com for more information.

Durham bankruptcy attorney. Raleigh bankruptcy attorney. Wilson bankruptcy attorney. Fayetteville bankruptcy attorney.

+ Continue reading this article

Published Sunday, June 7, 2009 @ 8:59 am

As any experienced bankruptcy attorney will tell you, knowing your rights and defenses against creditors is key to leaving behind a troubled financial past and making a fresh start. There are a host of things you should know. One of them is that there are specific limits to how long your creditors can chase after you trying to claim an unpaid debt.

Every state has a “statute of limitations,” which is a law that prohibits a creditor from suing you on an unpaid debt after a certain period of time has elapsed. Evidence gets lost or destroyed, and memories tend to fade, over time. This makes it more difficult to prove or defend against a claim, which ultimately makes it harder for the legal system to reach the right result. So, the statute of limitations is designed to encourage creditors to act within a reasonable period of time, by barring their claims if they fail to do so.

The amount of time a creditor has to act depends upon the nature of the claim and the state where you live. In North Carolina, for instance, the statute of limitations to sue is: three years for contracts (written or oral) and “open-ended” accounts (a revolving line of credit with a varying balance); four years for sales of goods; five years for promissory notes (e.g., loans); and ten years for judgments.

On open-ended accounts, the statute of limitations starts running from the date of the last activity on the account. This means the clock starts over with each new payment on the account. For contracts and promissory notes, the statute generally begins to run from the date of the breach or default. The distinction can be important when dealing with credit card debt. In some states, like North Carolina, credit card accounts are considered open-ended accounts. In others, they’re considered contracts. Where credit card accounts are considered contracts, the clock usually starts running from the date of the last payment.

Certain events can “toll” (stop) the clock on the statute of limitations. Filing bankruptcy is one of them. In the event of your death, disability, or incompetence, the clock stops running until such time as a personal representative or guardian is appointed.

The key point to remember is that if the statute of limitations has run, the creditor has no right to sue on the debt. This an absolute defense to any lawsuit filed against you. And, threatening to sue on time-barred debts violates the Fair Debt Collection Act.

Nevertheless, you may still get hounded about the debt. In fact, some companies thrive on buying up old debts and trying to collect from unwary debtors. This is why it’s so important to seek legal advice before responding to these types of claims. By entering into repayment agreement on a time barred debt, you may have re-started the statute of limitations for that claim, bringing the debt “back to life”.

So, if you continue to be hounded about debts from years ago, or if you’re contacted out of the blue about a debt you had long since forgotten, don’t admit liability and don’t agree to any payments. Talk to an experienced consumer rights or bankruptcy attorney today, and learn how federal law can stop debt collectors in their tracks.

+ Continue reading this article

Published Thursday, June 4, 2009 @ 2:55 pm

A very troubling trend that potentially affects millions of Americas is going unnoticed. Don’t make the mistake too many people make when it comes to arbitration. There’s a good chance that you have conceded to arbitration already, probably unwittingly. That’s because more and more of the big companies that touch our lives on a daily basis, such as software developers, banks, web based services and of course, credit card companies, are writing arbitration clauses into their terms.

You know about those, right? The masses of tiny print below the box you check so you can get to the download screen, or the pages and pages of tiny print that accompany your shiny new credit card? Did you read them carefully? Probably not! Who has the time, legal expertise or eyesight for that? Not many consumers―big companies are counting on it.

Arbitration is an alternative form of dispute resolution, and it is often touted by its supporters as a welcome alternative to an over-clogged court system.

Don’t buy the hype; arbitration appeals to big companies because it allows them to call the shots. Instead of resolving disputes before the courts, which balance the needs and interests of all parties, arbitration allows one party to a contractual relationship to potentially take a decisive advantage. (Kudos to you if you guessed that it’s the party that writes the contract.)

A common example concerns what’s called forum selection; ordinarily, if you have a dispute with someone, the place where the dispute will be settled legally must have some connection to the parties at odds or the disputed events. Arbitration and forum selection clauses allow companies to select the forum―and it’s not going to be your local courthouse. If you don’t respond to an arbitration notice or attend the meeting, which could be thousands of miles away, the company essentially wins by default.

And it gets worse: the courts have consistently enforced arbitration judgments. When you accept the terms of a contract with an arbitration clause, which you do when you activate your credit card, install a computer program or even open the box it comes in, you agree to be bound by the findings and judgments of the arbitrator.

Why would courts enforce such seemingly unfair provisions? The answer is that the “freedom to contract” means that two parties to a contract are presumed to be walking in with open eyes and equal bargaining power.

This is absurd, of course. Usually a consumer has much less bargaining power than a big company with a legal department and a near monopoly on the market.

Many credit card companies are now working with an organization called National Arbitration Forum instead of going through the court system. Settling through arbitration allows these companies to get expedited judgments against consumers, often totally unchallenged.

If you get a notice of an arbitration proceeding against you, DO NOT ignore it. Read the notice very carefully and make sure that they are not claiming a bigger debt than you owe them. Study the stipulated procedures for disputing claims. In addition, require that they prove even those debts that you believe to be accurate.

If you’re already working with a bankruptcy lawyer, show him or her the arbitration notice so your attorney can help you understand your options. Make sure to dig up any notices you received and ignored in the past; these can affect your bankruptcy proceedings.

And in the future, watch out for arbitration clauses in contracts; if you are choosing between two companies that are in all other aspects equal, treat an arbitration clause as a deal breaker.

+ Continue reading this article

Published Wednesday, June 3, 2009 @ 9:46 am

There is no questioning how critical a role the state of our economy has played in the debt problems Americans are experiencing today. From lost jobs to increased consumer costs, the economy has caused a lot of pain for all Americans.

It’s clear that our economy will continue to be a source of worry for much of America. If you’re thinking about filing for bankruptcy, you may be worried that the economy has gotten so bad, bankruptcy relief may not be enough to help. In these troubled times, it’s best to reflect on your individual financial situation and to look a little into the future, as clearly as possible, to hopefully get some insight into where we’re all headed.

Despite recent signs of improvement, unemployment numbers continue to mount, with little evidence that employers are ready to start re-hiring. The odds are very good that you, or someone close to you, is out of work. If have you ever thought about additional training, more education or a new career, now might very well be the time to pursue those goals. Your aim should be to make yourself as marketable as possible in a very competitive environment.

It is hoped that banks have learned a lesson from years of irresponsible lending. With tighter lending guidelines, expect much tighter restrictions on loans in the next several years. This leaner lending environment may keep growth at a minimum in the near term, but hopefully will prevent any future financial catastrophes. Over time, like building back from bankruptcy, our economy will strengthen and lending will return to more balanced practices.

Wages will likely continue to decline, all while the dollar decreases in value. The government has flooded the market with trillions of dollars in the last half-year, which will set us up for very measurable inflation, meaning your dollar will not be worth nearly what it once was. The decline in the value of the dollar will continue

The secondary financial market will most likely have to correct itself as well. This may mean that we’ll see a big drop in the number of esoteric, behind-the-scenes investment practices that led to so many of our problems today. While it’s tough to point out the one broken bolt in a machine the size of our national economy, it’s safe to say that Wall Street’s malfunction was responsible for a lot of down time. More than likely, the repairs needed will come from Washington as well. That may or may not be a good thing. Only time will tell.

Our nation is certainly in a rough spot. The events of the last several months are a nice, collective example of how financial issues quickly ramp up into emotional and social dilemmas, adding even more sinkholes to the recession morass.

It’s very important in these times to what you can to take care of your family’s economic position. If you’re struggling, consider bankruptcy as a strategic option to stay above water in tough economic times. When the economy begins to rebound, you and your family will be best situated to rebound with it. With offices in Raleigh, Durham, Wilson and Fayetteville, the Law Offices of John T. Orcutt can help you get rid of debt. Call today to set up your free initial consultation: 1-800-899-1414.

+ Continue reading this article

Published Monday, June 1, 2009 @ 3:00 pm

You’ve probably seen ads for companies that claim they can repair your credit. Sounds great, right? Who wouldn’t pay a few hundred dollars in exchange for a better credit score? Resist the temptation to believe in easy fixes. If it sounds too good to be true…well, you know the adage.

Most of these companies are scams, preying on people in vulnerable positions. Many claim to be non-profit, with the implication that they’re here to help you, but a tax category does not a social service make. Credit repair companies are not selflessly working to help people like you; quite the opposite. Although there are some legitimate companies out there, they are few and far between. In fact, these companies have become such a problem that Congress passed the Credit Repair Organizations Act to help vulnerable consumers. The purpose of the law is, in the words of the act, “to protect the public from unfair or deceptive advertising and business practices.” Guess what these companies are notorious for?

There is no legal way to stop negative information from appearing in your credit report for seven years. A company that tells you they can make information vanish from your report is lying, so you should immediately take that as a warning sign. Another important warning sign is if a company asks you for a large sum of money up-front. Think about it: if you call a plumber to repair a leak, do you pay him a large sum of money up front? Of course not―you wait until he’s done the work to your satisfaction. A legitimate credit repair company will not ask for money until after you’re satisfied with their efforts and they will also probably not ask you for a lot of money. There are no quick-fixes here, so don’t believe anybody promising a miracle.

That’s not to say that a credit repair company can’t fix your credit–for a while, anyway. These companies employ tricks like disputing negative information; by law, a disputed item will be removed from your report until it is investigated. Don’t think that the company is going to remove it and then forget about it; they will investigate, receive confirmation from the creditor, and put it right back on your report. Another trick is telling clients to apply for new credit under a new Social Security number, perhaps one that is close to your real number so the credit bureau won’t catch on. The illegality of this one should be obvious.
In sum, watch out for these warning signs that a credit repair company may be a scam:

• They tell you they can remove negative information from your credit score
• They try to loan you money
• They ask for a lot of money upfront
• They advise you to employ fraudulent means
• They share your information with other companies

If you watch out for these signs, you should be able to identify which companies are out to defraud you and which ones are more likely to help you. If you’ve already dealt with a company that has engaged in any of these practices, or which has done anything else you suspect is illegal or unethical, you can help fellow consumers by reporting the company to the Federal Trade Commission. If you’re in the market for one, chances are the benefits of a properly filed bankruptcy would far outweigh any benefit you might receive from a credit repair company. Bankruptcy will wipe the slate clean and allow you to rebuild your credit by putting you back in control. Serving North Carolina residents, the Law Offices of John T. Orcutt can help you get back on your financial feet. Call today for your free consultation: 1-800-899-1414.

+ Continue reading this article

Published Monday, June 1, 2009 @ 10:42 am

Filing bankruptcy is all about getting back to your feet, socially and financially. When it’s time to start rebuilding your credit history, one of the best ways to do so is through the use of a secured credit card.

A secured credit card is just like a regular credit card. The only difference is that instead of the bank granting you credit, your credit line is based on an actual cash deposit you put into a savings account. This way, you have all the benefits of a traditional credit card and reap the benefits of a new, maturing credit history.

While it’s important to select a card that has what you need and will overlap with your spending habits, for a person looking to rebuild their credit worthiness, it is critical that your first card have:

A 25-day grace period

It was typical at one time for creditors to offer 30-day grace periods, which meant you would receive one bill every month. Recently, the grace period was reduced to 25 days, translating into 14 bills per year. Many now have gone a step further to a 20-day grace period, meaning 18 bills per year. Since so many of us plan our credit card payment based on a monthly cycle, like all other bills, it is very understandable that when faced with 18 bills a year, a person can get behind on payments.

The best possible interest rate

It helps to understand how credit cards calculate their interest rates.

A flat interest rate is as straightforward as it sounds but they can be fairly high, like 17 to 21 percent. Sometimes, a flat rate is only temporary or can increase after a specified time period so make sure to read the small type. The federal discount rate plus a set flat rate means that the card is based on the “primary credit rate,” which is the rate at which the Federal Reserve charges your bank and can be found in the Wall Street Journal online or in the paper’s “C” section. The added set flat rate is just that, a flat rate added to the primary credit rate.

Prime rate plus a set flat rate adds a flat rate to the rate that the nation’s 30 largest banks charge corporations when they borrow money. The “bank prime rate” can also be found in the Wall Street Journal. These rates can get high because the bank rate is often a bit higher than the primary credit rate.

LIBOR, or The London Interbank Offered Rate plus a flat rate is a term you’ve probably seen a bunch of times but never understood. Don’t worry, few people do. This method of charging interest is based on the average rate that the five largest London banks charge other banks. There are a number of different LIBOR rates to make things even more confusing. More often than not, the three month rate is used. You can monitor LIBOR at www.bankrate.com.

So while the terms and acronyms can be confusing and very often misleading, the important lesson in this blog post is that when rebuilding your credit, it is best to select a credit card that has at least a 25-day grace period and the lowest possible interest rate. Keep in mind also, you will receive plenty of unsecured credit offers post-bankruptcy. Be extremely careful with these new lines of credit. Your post-bankruptcy credit habits should be narrowly tailored to safely rebuild your credit- This means keeping a low balance, and paying it off at the end of the month. You can rebuild your credit after a bankruptcy. Talk to an experienced bankruptcy attorney today to find out how.

+ Continue reading this article

Published Sunday, May 31, 2009 @ 9:03 pm

“Identity theft won’t happen to me, I don’t buy anything off of the Internet.”

Sounds familiar, right?

Well, last year, there were millions of Americans who said that and turned out to be dead wrong.

Identity thieves do not need to access your computer hard drive to run up debt in your name. Many of them just need an unattended garbage can, an over-trusting relative on your end of the phone or just the United State Postal Service. Whether it happens electronically, through the mail or in the county dump, identity theft is all about getting access to your money. And when your money is in the hands of someone else, so is your credit.

Thousands and thousands of identity theft victims have found themselves facing the decision to declare bankruptcy as a way to start fresh after identity theft has cost them too much to handle. In fact, many victims of identity theft discover that the perpetrators have filed bankruptcy for them when the official notices show up in the mail, which further hampers the victim’s ability to pursue the case and creates greater legal distance between themselves and the crime.

Identity thieves are filing bankruptcy in their victims’ names at an alarming rate. Apparently, the lure of the “automatic stay” is what prompts them to take their crime to the next level. The automatic stay is an injunction that automatically stops lawsuits, foreclosures, garnishments, and all collection activity against a debtor the moment a bankruptcy petition is filed. When the individual filing bankruptcy, in this case, the victim of fraud, fails to appear for the bankruptcy hearing, the case is then dismissed. However, the bankruptcy filing remains on the victim’s credit report.

Those to whom this has happened will only find out about the bankruptcy when they, under innocent pretenses, apply for a loan or other form of credit. This not only significantly harms the credit and financial wherewithal of the victim but severely damages the positive intentions of a legitimate bankruptcy process, associating it with crime and wrongdoing.

A large number of bankruptcy cases are associated with identity theft. Some examples include:

• Filing for bankruptcy under the name or identification (SSN#) of another person. This often entails ex-spouses, estranged family members or former business partners.
• Getting into debt under a false name, filing for bankruptcy and then discharging the debt.
• Transferring the deed, or ownership, of property to another and then filing for bankruptcy with that person’s name to avoid foreclosure. In today’s discouraging housing market, this is becoming more common.
• Putting property under the name of a random person who is in the middle of a pending bankruptcy case, which will stop the foreclosure on the criminal’s property once the victim is recognized as an owner.
• Using a created or existing social security number to petition for bankruptcy.

This type of identity theft, like all forms, can be severely damaging to a person’s credit and in many cases, can lead to the victim having to file a legitimate bankruptcy. In today’s information age, and even more so in an economy that can perpetuate desperation, it is more critical than ever that we all monitor our credit and finances as closely as possible.

+ Continue reading this article

Published Sunday, May 31, 2009 @ 8:55 pm

By the time you realize that bankruptcy is the best option for you, it’s probably safe to say that you’ve been dealing with creditors for a long time.

Even worse than creditors are the collection companies, who are trained to bully you into agreeing to make payments even when you don’t have a cent to spare. 

Eventually you begin to feel that these companies have all the power and you have none. What’s more, part of the reason bankruptcy carries a stigma is that creditors make you feel that without them, you won’t be able to do anything. With a bankruptcy on your credit history, aren’t you effectively ruined for years? The answer is an emphatic “no”. Rebuilding your credit after bankruptcy is not impossible.

The truth is that filing bankruptcy is actually the first step in rebuilding credit. By filing bankruptcy, you get rid of the burden of debts you cannot pay. That frees up your income, and freeing up income gives you the money to start rebuilding your credit.

Think of bankruptcy as a beginning of the process, not an end.

After you declare bankruptcy, you can put your mistakes behind you and start fresh. Mistakes are human; that’s how we learn. Don’t beat yourself up about having made some. We all make mistakes, lots of them.

Arguably, your time would be better spent working to correct the habits and behaviors that caused your life to spin out of control in the first place. With a few pointers and a sound plan in place, you will hit the ground running.

Then, with your income freed up, you will be on your way, taking the steps needed to rebuild your credit as fast as possible.

One basic, initial step you can take after declaring bankruptcy is getting a copy of your credit report. You should wait some time–three months or so– after declaring to order the report. This will ensure that the information on your report is up to date. Getting the report will help you assess your creditworthiness, since that is what creditors will look at first. You should also take the opportunity to correct any mistakes you find on it.

Once you’ve done what you can to make your credit report as positive and accurate as possible, continue to take affirmative steps toward a brighter financial future. You declared bankruptcy–this was brave and decisive. You can handle what comes next with a good plan in place.

As you prepare your plan, identify what got you into trouble and your role in the situation. Look back over your past and be totally honest with yourself. Figure out where you can improve. For instance, you can need to control your spending, start a savings account, make financial decisions that will benefit you over the long term, seek financial advice from people in the know, and keep positive.

Once you’ve discharged unmanageable debt you can start fresh, but with the added benefit of the experience and the knowledge you have gained. You will be in control…but this time…you will know what to do…and more importantly…what not to do.

+ Continue reading this article

Published Sunday, May 31, 2009 @ 8:27 pm

You may be worried that bankruptcy will have a negative effect on your employment. How can you take back control of your financial life if, for example, you get fired and can’t earn any money? Lots of people worry about this. You are not alone. This is a completely understandable fear. Fortunately, that’s all it is…just a fear. The truth is that it is illegal for your employer to fire you or anyone else for filing bankruptcy.

Besides, you’re a good employee, right? Why would an employer fire a good employee? That hurts the employer. Simply put, not only is it illegal, but it’s just not in the employer’s best interest. Generally, speaking, employers do not fire their good, dependable workers. Think about it.

The good news is that, more likely, filing bankruptcy will actually improve your status with your employer. Why? Because, once you don’t have to worry about your bills or having bill collectors call your job, you can focus all of your energies on being your employer’s star employee.

Keeping your job:

As mentioned, it is against the law for an employer to discriminate (meaning fire, demote, lower salary, etc.) against an employee because he or she has declared bankruptcy. Section 525 of the bankruptcy code  is very clear on this point. This section forbids employers from discriminating against employees on this basis.

As a practical matter, odds are that your employer will never even find out you filed bankruptcy. Why? Because, in most cases, the only way your employer will find out about your bankruptcy is if you slip and tell someone, and that someone tells your employer. Generally, the only other way for your employer to find out is if you file a Chapter 13 bankruptcy case and request that your Chapter 13 payments be made by payroll deduction. Paying your Chapter 13 payments by payroll deduction is a great way to make sure your payments get paid and paid on time, but it is not mandatory. Worried about what your employer might do? Then, decline the pay deduct and, instead, pay your payments directly.

Future employment:

What about future employment?

If you are applying for a job with the government, a bankruptcy on your record may not be considered as a factor in the hiring decision.

For other kinds of jobs, if the application asks if you have ever filed bankruptcy, we suggest you ignore the question. Don’t lie, just don’t answer the question. Why? The fact is that most job application forms are created by simply making a copy if someone else’s form. The problem with simply copying somebody else’s form is that it brings with it a lot of questions that make no sense in terms of the job you are applying for.

Often, one of those “makes no sense” questions is the question as to whether or not you ever filed bankruptcy. This happens all the time. But the truth is, in most situations, whether or not you ever filed a bankruptcy has nothing to do with your performance in the job you are applying for. So, don’t answer it. If the question is not important, not answering it won’t even be noticed.

If the question is important to the prospective employer, that employer will follow up with you about it. Then, you can “fess up” and decide whether you even want to work for a company that would judge you based on whether or not you ever filed bankruptcy.

Remember, filing bankruptcy is not a crime. It’s a legal right all Americans have under the law to help deal with an impossible debt situation, many times one that they had no control over. Unlike stealing or something else that might actually relate to how trustworthy you are, filing bankruptcy is totally legal and, in most cases, completely unrelated to the performance of the job you are applying for.

+ Continue reading this article

Published Sunday, May 31, 2009 @ 6:49 pm

The decision to file bankruptcy is more often than not driven by your willingness to accept the fact that you need help. Chances are, you are fully aware of the practical reasons: late bills, consistent calls by creditors, job loss, unseen medical expenses, stress, denied credit. However, getting over the psychological barriers can be the most difficult corner to turn in a person’s road to financial recovery.

Don’t worry, you are not alone.

Almost everyone has the same fear before going into bankruptcy. The idea that you will never again be able to own a home, buy a car or get reasonable credit can be overwhelming. Unfortunately, there are a lot of creditors out there who encourage customers to think that way. It creates a sense of fear that forces a person to believe that credit is everything, that you can’t have the lifestyle you want without it. That fear is what attracts people to applying for credit, the fear of a “below-average” lifestyle.

Having credit is a powerful thing. Personally and socially, it can make you feel confident, successful and financially comfortable. And clearly, having available credit is something everyone should strive for. But only to an extent. It’s not something you should ever use to define yourself.

When dealing with your credit after bankruptcy, do all you can to remind yourself of your old spending habits. Or, if it wasn’t bad spending decisions that led to bankruptcy, try to instill some lifestyle changes that are contrary to what you did prior to bankruptcy. Whether it was a health-related issue, divorce or other social misfortune, always be honest with yourself and the people around you. Don’t hide from your bankruptcy. After all, the important thing is you made the decision to improve your life, make changes and get yourself back on track. As earlier posts on this blog have stated, bankruptcy is not a scarlet letter, it’s simply a financial management tool.

Once your credit is re-established and you feel confident about your financial wherewithal, be wary of the lure of credit offers. Even your past creditors will happily place you on their direct mail list, sending you offers of low interest rates and annual reward catalogs laden with gifts and trips and discounts. All you have to do is spend. And spend some more.

However, you can outsmart the aggressive credit marketers by creating limits for yourself, playing credit card companies against each other when seeking interest rate reductions and account benefits and by paying your bills on time, in full, every month. And always remember, don’t count available credit as income or available savings. Also, don’t fall into the trap of believing you need a credit card for emergencies. Cash is always king, and once you use it to buy something, you’re paying for it only once, not every month.

Remember that one of the key reasons for filing bankruptcy is to make change in your life. It’s key that you take that change to another level and integrate that discipline into your personal, social and professional life. You made the right choice to file bankruptcy when you did, now make that change permanent.

Think you need to file. Find out for sure. In North Carolina, contact the Law Offices of John T. Orcutt. The initial consultation is FREE. Offices in: Raleigh, Durham, Fayetteville and Wilson. Call toll free to 1-800-899-1414 today.

+ Continue reading this article

Published Thursday, May 28, 2009 @ 7:50 pm

So you did it. You came to the difficult realization that you needed bankruptcy protection, you got through the process, and you received your discharge. First off: Congratulations! This is a very good thing. The mountain of bills that had been dragging you down for so long is gone — along with all the stress and anxiety of fending off the creditors who were trying to collect on those bills. You get to start over, free and clear.

Your next step is to take advantage of this unique opportunity. Whatever the reason for your bankruptcy, your immediate focus should be doing what you can to rebuild your credit and maintain your new found financial stability. Here are some ideas on how you can make the most of things after bankruptcy:

The first thing you should do is get a copy of your credit report. Review the report to make sure the debts included in your bankruptcy are listed as discharged. Once you’ve done this, consider getting a secured credit card to start rebuilding your credit. This is a credit card that requires you to put down a cash deposit equivalent to the credit line on the card. Because you have to put down a deposit, there’s usually no problem in qualifying. And most secured card issuers report your payment history to the credit bureaus, but do not report that the card is secured.

Remember, however, that the purpose of obtaining new credit is to rebuild your credit score, not to start carrying debt again. You should pay off any credit card balance every month. The bigger goal, though, is to live on a cash basis as much as possible. Think of adopting the general motto that if you can’t afford to pay for it in cash, don’t buy it. This means you need to create and commit to a realistic budget — one that does not require the use of credit to work. Part of this budget should include a savings plan. If you can create a cash cushion for yourself, you’ll be better positioned to handle unexpected expenses without having to take on debt.

The idea is simple, yet powerful: live within your means as best as possible. This will help you avoid getting drawn back into the debt cycle. And, it’s liberating: when you buy something, it’s yours – period. No doubt, it’s difficult to stick to this kind of lifestyle, but it’s doable. And there are things you can do to make it easier. Reduce your day-to-day spending. Cut out that fancy coffee from Starbucks. Bring your lunch instead of buying out. Eat dinner at home more often. Wait for things to go on sale, or try to find generic brands. Also, look for cheaper forms of entertainment: instead of going to the movies or the amusement part, go to the beach, a public park, or a free outdoor concert.

If you maintain this lifestyle, you’ll find your credit rating will quickly improve. After just a couple of years, you should be able to take out credit for larger purchases, where it’s usually necessary, like for car loans and mortgages – and at competitive rates.

The point of all this is: Enjoy the financial freedom of life after bankruptcy, and do what you can to hold on to that freedom.

The Law Offices of John T. Orcutt, with convenient office locations in Raleigh, Durham, Fayetteville, and Wilson. Call (toll free) 1-800-899-1414, to set up a free, confidential debt consultation. Visit www.billsbills.com for more information.

+ Continue reading this article

Published Thursday, May 28, 2009 @ 12:31 pm

As if we didn’t have enough things to worry about, it seems like every day another TV commercial, pop-up ad or credit card offer is telling you to worry about your credit score and pay someone to look at it.  Unfortunately, these messages, while pesky, are partly right; credit scores are now an important tool in the arsenal of an informed consumer.  Based on the way these offers are phrased, anyone might think that simply looking at your credit score is going to somehow fix it. Your credit score is information–important information, it’s true. But once you have it, what will you do with it?

If you’re considering bankruptcy, chances are your credit score is hurting. You’ve probably heard that your credit score will be negatively affected by declaring bankruptcy, and this may be holding you back from taking an important step to solving your debt problem. In the long term, bankruptcy will actually help your credit score–but before you can understand why, there are some facts you should know about credit scores.

A credit score is essentially a report card on your debt history. Much like a report card, it will not encapsulate you, but companies will use it as short-hand to evaluate your “creditworthiness”– how risky it will be to lend to you. Credit bureaus (companies that collect information about consumers) calculate your score based on information from your debt history. The exact formula they use is a trade secret, but the factors in rough order of importance are:

• Your payment history: missed payments is the top factor 
• Your outstanding debts: the ratio of your debt to your credit card maximums as well as the total amount you owe
• How long you’ve had credit: the longer, the better
• New credit: can hurt you
• Types of credit you already have: certain kinds of credit are more favored than others

Thus, if you are falling behind on payments, you are doing serious damage to your credit score, and companies will be less willing to lend to you, or impose more stringent rules on the debt (for example, higher interest rates).  If you have too many credit accounts, or owe too much on each account relative to the limit, this will also weigh heavily against your score. When you apply for new credit, you generally will authorize the creditor to access your report; if you have too many inquiries, this can also reflect badly on your score.

Americans are entitled to one free credit report every 12 months, but that is different from a credit score–usually the companies that provide the free credit report will offer to sell you the score for a fee. Watch out for this hook; looking at a credit report is important because it may reveal that the companies have incorrect information about you, but you many not gain much more from looking at your credit score. The report is free once a year, but the score will cost you. You’re also entitled to a free report (but not a score) within 60 days of being denied credit or favorable credit terms.

The good news is that a credit score is not set in stone–in fact, it changes all the time. The bad news is that if you’re missing payments or opening new credit to pay for old credit, a good score can quickly become a bad score. The lower your score dips, the higher your interest rates will climb–even on accounts you already have! Thus, the more your debt problems increase the more money you’re paying out in interest, which long term is a terrible bet. Because scores change, bankruptcy can help your credit score in the long term by allowing you to cut off the debt default cycle.

If your debt is unmanageable now, your score is already beyond your ability to repair. Bankruptcy will help by wiping the slate clean and allowing you to rebuild your credit from the ground up. It will take time and effort on your part, but properly rebuilding your credit after a bankruptcy can be the key to future financial success. Contact a local bankruptcy attorney today and find out the truth about bankruptcy and your credit score. Serving North Carolina residents, the Law Offices of John T. Orcutt have convenient offices in Raleigh, Durham, Fayetteville and Wilson.

+ Continue reading this article

Published Wednesday, May 27, 2009 @ 2:28 pm

Future home ownership is a major concern of so many people who have made the decision to file bankruptcy. A previous post on this blog discussed the ins and outs of your ability to buy a house after emerging from bankruptcy. The good news is that it is completely possible and that you can indeed be a very viable mortgage candidate.

However, there are some drawbacks to home ownership in general, many of which are related to costs. For starters, buying a home is not going to be the same rapid-return investment it was five years ago. As you know, the recent real estate boom sent home prices flying because financing was so readily available. That bubble has burst. Folks who have been watching real estate prices understand that in many parts of the country, home values have dropped significantly and in fact, hundreds of thousands of people owe more on their home than it is worth. Thus, don’t consider home ownership just for the investment potential. Unfortunately, in the last several years, a lot of people did just that.

There is a healthy number of hard costs associated with buying a home, especially now that the 100% financing days have faded into the sunset. As a result, you’re going to need a down payment. And that means thousands of dollars. Mortgage rates are very attractive right now but they demand at least a 20 percent down payment. For a $150,000 home, that equals $30,000. Knowing what you now know about preparing for financial emergencies and the power of having cash on hand, that amount of money could also buy a great deal of emotional comfort should medical bills or other surprise expenses occur.

Many lenders have significantly increased their costs relative to approving and processing a home loan. Fannie and Freddie Mac, for example, have pushed fees that in many cases will equal three percent of the mortgage. Again, for a $150,000 home, you’re looking at $4,500 simply for the ability to obtain the mortgage. Still, it should be noted that those fees are the lowest in North Carolina. They are the highest in New York.

Don’t forget about the costs of your inspections prior to closing. While many inspectors have become quite competitive in the face of the down market, many of them have also gone out of business. Thus, don’t just assume that inspections have become cheaper. When you add together a general home inspection, radon testing and pest reports, you could be looking at another $1,000.

In the last several years, apartment homes have become exceptional alternatives to home ownership. Real estate developers have created an almost new sector to the apartment market in the concept of “apartment homes.” Many apartment communities today come with outstanding amenities, furnishings and add-ons that are equivalent to many higher-end homes. Granite counter tops, multiple full bathrooms, three-bedroom options, club houses with elaborate pools and fitness centers and even movie theaters are just some of the features available to renters today. Renting also provides flexibility in lease options, very low maintenance costs and commuting convenience, since so many communities are built around mass transit stops, employment centers and highway access.

Even though home ownership is a viable possibility after bankruptcy, and a worthy goal to shoot for, it may not always be your best option. As with all major financial decisions, weigh the costs and benefits carefully and do what’s best for your family and your finances. And of course, keep reading our Blog!

+ Continue reading this article

Published Tuesday, May 26, 2009 @ 4:00 pm

Despite the defeat of the mortgage cramdown bill that would have allowed bankruptcy judges more power to renegotiate mortgages on behalf of those seeking relief, the Obama administration is realizing some slow success with its heavily touted foreclosure prevention program.

Mortgages eligible for the program started to be serviced last month and to date, 55,000 home loans have been subjected to modification as a way to alleviate the financial pain caused by sub-prime loan interest rate spikes. Based on the early success, the administration announced that the $75 billion dollar program is being expanded and will offer additional incentives for lenders who participate and to homeowners in need of relief.

The incentives involve the government subsidizing interest rate reductions. The idea is to push the amount of the monthly mortgage payment to less than or equal to 31% of a homeowner’s pre-tax income. Before the rise of sub-prime mortgages and abnormally low interest rates, that percentage was a benchmark for mortgage qualification.

Going forward, the program will encourage short sales in conjunction with loan modification. A short sale occurs when a lender agrees to sell a home for less than what is owed (or for less than market value) to avoid foreclosure. Essentially, the parties arrive at a settlement between what is owed on the mortgage and the price of the property. Many real estate agents have jumped into the short sale market of late and it appears that President Obama’s program will do more to encourage the strategy.

Banks and mortgage service providers have been reaching out to homeowners who may qualify for the loan modification program, which is defined by having a loan of not more than $729,750 that was originated before January 1, 2009 and is currently in default or at risk of default. That risk can be attributed a sudden loss of income or drastic jump in expenses. Given the nation’s current unemployment numbers, the number of homeowners who will be able to qualify should continue to climb.

Even though the program was created to help struggling mortgage holders, there has been widespread reporting of bureaucratic headaches associated with the modification efforts. However, many attribute the delays or poor service to the speed at which the rules and process were put in place. It can be argued though, that timing was critical and that if the administration delayed the program, countless families would have lost their homes. Basically, every day help was not available, the crisis would grow worse. Last month alone, 342,000 homes received a foreclosure filing. As job losses continue to mount, the number of at risk homeowners will continue to increase, putting greater and greater pressure on the program.

A reason for the recent announcement about expansion was to also reassure service providers and those seeking help that changes are being made and that those offering help are being incentivized to be keep things moving smoothly. Given the dire economic situation, there simply is not enough manpower to help everyone immediately. Another possibility is that some servicers may simply be dragging their feet until it is too late for the borrower to get help. However, keep in mind, bankruptcy is always a viable option if modification is simply not working out. A properly planned Chapter 13 bankruptcy will immediately halt a foreclosure and allow you and your family to stay in your home to catch up on your mortgage payments. Contact a bankruptcy attorney today to discuss your options. Serving North Carolina residents, John T. Orcutt’s can help your family in these tough times. Call today to set up a free consultation in 4 convenient locations: Raleigh, Wilson, Fayetteville and Durham.

+ Continue reading this article

Published Wednesday, May 20, 2009 @ 11:12 am

After living with the stress of debt for a while, it’s very possible to become accustomed to it. Maybe you think that financially, things are just always going to be that way. “I’ll owe more than I make and somehow, I’ll just manage to get by every month.” Serious debt is an emotionally trying and socially problematic complication of life and unfortunately, almost like an illness, many of us learn to accept the pain and find a way to live.

But it simply doesn’t have to be that way.

Living with the sleepless nights and monthly frustrations of just scraping by is not your lot in life. You deserve to rise above it, and bankruptcy can make that happen. A healthy financial management tool, bankruptcy can cure your financial ailments and offer you the chance to start things over. And when you make that decision, you’ll begin to realize how stable your life can be without creditors being a part of it. You will also learn how to spend wisely and that true wealth is relative.

As you begin to consider the many benefits to bankruptcy, start to reflect on what habits contributed to your financial situation. More importantly, take action to correct those habits. Ask yourself, “What in my life is really necessary?” From people to junk, look around your house and social circle and assign a value to everything and everyone around you, because if it’s in your life now, it had a role in your current situation. Do you have friends that, maybe innocently, convince you to buy things you do not really need? Are there items in the closet that looked great in the store but still have tags? Cleanse yourself of things that equate to your debt, mentally and physically. The process of minimalizing can be a great step toward mental comfort because as the saying goes, “the more you have, the more you have to lose.” Sell, donate or throw away things you don’t use. Be brutal about it.

This de-cluttering process may even mean forgiving debts owed to you. It’s very possible money you have lent is a direct contributor to you filing bankruptcy. If so, let it go. It is only perpetuating your concern about money. Let whom ever owes you out of their obligation. Free yourself of seeking money owed to you and think only about changing your situation. Again, if that money helped create your position, eliminating its role in your life will only help you move forward.

A substantial portion of financial wisdom comes from self-discipline. Thus, try to stop concerning yourself with money; don’t let it be all encompassing. Even years after your bankruptcy, keep your income, financial prosperity and approach to handling money private. Don’t brag about windfalls, a good salary or a successful investment. Always be above it. Understand too, that people who always talk about their money, are usually those who don’t have any.

Consider bankruptcy as a way of finally taking control. All the bills, phone calls, late notices and empty checking accounts are things you think you can’t control. They have power over you. But you can seize that power and be the one to take charge. That is what bankruptcy is all about.

+ Continue reading this article

Published Monday, May 18, 2009 @ 4:30 pm

We see the commercials, hear the clever tag lines and are inundated with information about how to receive our credit report. So while a goofy guy singing catchy tunes about the perils of not knowing what’s on your credit report certainly has its marketing merits, his chorus doesn’t say much about what to do when you find something on your report that doesn’t ring true.

First, make sure that your report is indeed your report, as many of the mistakes found involve the most basic information, such as your name, social security number or birth date.

Look for items that are older than seven years, which signifies that a report item must be removed. Watch for accounts that are reported more than once or any indication that you were part of a lawsuit. Some potential creditors may believe that to be a sign that you owe part of a settlement and therefore may not be a worthy credit risk.

There is a reason why your credit report will arrive with a dispute or investigation request form: you have to take care of reporting any errors. Credit reporting agencies are not at all proactive about investigating mistakes not brought to their attention; it’s simply too tall a task. Therefore, your first step in taking care of any error is to complete and submit the form. It helps a great deal to include a personal letter identifying the particular issues in more detail.

Next, contact each of the organizations involved with an error notifying them of the mistake and asking for an official receipt that includes the account number in question, their reasoning for the dispute and all accompanying information related to the account. Be firm but professional in your letter and demonstrate that you will continue to follow up and pursue the matter indefinitely until it is solved.

Should your efforts return positive results and your report is corrected, don’t just sit back and assume the best. It is not at all uncommon for deleted information to re-appear. Remember that somewhere amidst all the computer-generated data and automated financial reporting, there is a person in front of a computer. Order another report a few months after you believe the errors should have been corrected and if you do spot the same mistake, send yet another letter with the evidence you gathered the first time around, demonstrating their recognition of the error.

Remember that if a creditor believes their dispute is valid, the information will stay on your report. Continue your efforts of paper-based contact with the creditor to create a provable record of your persistence. Should the creditor come around and finally confirm the fault is theirs, you should forward that confirmation to the credit bureaus as soon as possible to ensure the mistake is removed.

Credit report errors can do some real damage if not taken care of quickly. Paperwork, forms and phone calls are all part of it, so be patient but persistent and always remember that it’s your good name on that report. And remember, if you are in over your head in debt, bankruptcy is often the most efficient solution to rebuilding your credit. Talk with a bankruptcy attorney to find out how to take control of the debt collectors now. Serving North Carolina residents, contact the Law Offices of John T. Orcutt today for a free bankruptcy consultation.

+ Continue reading this article

Published Monday, May 4, 2009 @ 12:44 pm

The automated credit score was created in 1959 by the Fair Isaac Corporation. While “Fair Isaac” may not seem so aptly named for those who are struggling with low credit scores, the FICO system is the most commonly used numeric benchmark by which our lending and credit system measures financial wherewithal.

Unfortunately, so few of us really understand how that number is determined. In fact, if the credit rating system took a more open approach to communicating its processes, especially given the impact they can have on our livelihood, perhaps not as many people would be facing economic trouble. It is certainly worthwhile for anyone facing credit issues to understand as much as possible about how that three-digit number comes to pass.

Your FICO score is a comparative number, meant to contrast your ability to pay a lender back as agreed against another borrower’s ability to pay back that lender. So, the FICO score ranks you according to others using “real-time” information from your credit report. Basically, it uses a scale of 350 to 850 to determine how much of a risk you pose to a potential creditor.

There are three different credit reporting agencies that may report a different number to a potential lender. Although, 90% of the largest banks in the United States use the FICO score, so the odds are very good that a lender will use that number.

Fair Isaac uses a number of facets from you financial history to determine your rank, the most important of which is payment history. The list of five factors is broken down accordingly:

• Payment history – 35%
• Amounts owed – 30%
• Length of credit history – 15%
• New credit – 10%
• Types of credit used – 10%

Do you notice a few things missing from the list? How about income? Or savings? It’s important to understand that even though you have a high-paying job, live in a highly-regarded zip code or have a comfortable cushion of cash in a savings account, you can still have a low FICO score. Only the data in your credit report is considered in your FICO score.

You may hear some people recommend that it’s always good to have some credit or to carry a small balance on a credit card to demonstrate you are capable of handling debt. That is not necessarily true. And, you can’t be hurt by not having debt. If you carry a balance, your risk increases. More to the point, your FICO score can take a hit if you carry balances too close to your limit. On everything from gas company cards to retail credit, you will see little benefit from letting a balance carry over each month.

The idea that carrying a balance is a good indicator of financial responsibility probably stemmed from the actual notion that it can benefit you to use credit from time to time. However, you should do so reasonably and when you do, pay the balance in full. A sizeable purchase–that you can pay off–every couple of months will contribute to a high FICO score.

Therefore, the best way to achieve a solid credit score is to be very careful when considering new accounts or loans. Those with the highest credit scores are the same people who are the most conservative when it comes to applying for credit. And your FICO can also be improved by paying your bills on time. Remember the breakdown above? Payment history is the most critical factor. Therefore, paying late is the single most damaging action to your FICO score.

+ Continue reading this article

Published Wednesday, April 29, 2009 @ 9:19 am

Bankruptcy is a form of personal financial protection. Now, more than ever, the protections of bankruptcy can fully blanket your retirement accounts.

While retirement investments classified as employer-backed 401(k)s and 403(b)s have long been under the protection from bankruptcy of the Employee Retirement Income Security Act of 1974, the BAPCPA , or Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 added IRA assets as a protected investment class as well. This should offer those considering bankruptcy an added sense of security that your financial future is still very much intact.

Depending on your place of residence, you will utilize either your state’s protections or the federal protections under BAPCPA. The following discussion focuses on protections under North Carolina exemption law with a brief comparison to the federal protections. Overall, the North Carolina exemptions offer many of the same protections of federal law. However, because of the often subtle differences, it is very important that you disclose to your attorney any place you have resided in the past 3 years. The decision about which protections to utilize is a decision best left to an experienced bankruptcy attorney.

Under North Carolina law, Individual Retirement Accounts and Annuities, as well as IRC 408(c) trust accounts are fully protected in bankruptcy. The amounts which can be protected from creditors is unlimited. Under federal exemption law, the limit of protection from creditors is capped at $1 million. Apparently, research has shown that the majority of IRA accounts are below that benchmark. This is mainly due to the short lifespan of IRAs, which were not a typical retirement vehicle until that last 20 years and because of the relatively low annual contributions that are allowed. Currently, $5,000 is the maximum annual amount that can be contributed for a traditional IRA if you are below 50 years of age.

Under federal law, rollover IRAs are protected beyond the $1 million mark. For example, most people change jobs several times during a career and as a result, have an array of retirement accounts funded and created from different employers. It makes good investment sense to collect those varied accounts under a single IRA, which when conjoined, will return more money and if above $1 million, still be protected from bankruptcy.

Federal law also includes protection from Simplified Employee Plan (SEP) accounts and SIMPLE IRAs, or Savings Incentive Match Plan for Employees, as well as independent 401(k) and Keogh plans. This is especially good news because the 1974 plan did not include exemption for solo and Keogh accounts.

If you have been investing in a college plan for your children, there are some protections afforded to you as well. In North Carolina, section 529 college savings plans are protected with some stipulations: Contributions made more than 1 year prior to filing are fully protected up to $25,000.00. This $25,000.00 cap can also include contributions made in the year prior to bankruptcy, if the contributions are consistent with the debtor’s past pattern of contributions. Under federal law, contributions made more than 2 years prior to filing are fully protected. Contributions made between 1 and 2 years prior to filing are protected up to $5,000.00. Federal law offers no protection for contributions made less than 1 year prior to filing.

When discussing bankruptcy options with your attorney, be sure to tell them about all of your retirement accounts and investments; don’t assume anything. Also, state laws vary on these matters, so make doubly sure you disclose everything.

There are a number of ways to rebuild your credit history and financial confidence after filing bankruptcy. By holding on to your retirement accounts, you can feel confident that things will improve and that all of your long-term life plans, destinations and goals, are still every bit as attainable as they were before filing bankruptcy.

+ Continue reading this article

Published Tuesday, April 21, 2009 @ 7:15 am

Bankruptcy gives you a fresh start; a relief from the stress and uncertainty about your future. Your hope is that things will soon be back to normal. But that hope is often based on the answers to so many questions. For many, one of those questions may be about your ability to buy a home. You may have heard the myth that a bankruptcy is a black mark on your credit, and that you will never be able to buy a home. Don’t believe it for a second! You can buy a home after bankruptcy. With some time and planning, it will be much easier than you think.

First and foremost, you need take what you have learned through the bankruptcy process and apply it to your everyday management of money. Start small with credit cards (secured cards may be your only option at first) or other lines of credit and use them sparingly and pay on time. The point is to establish a healthy payment history, which is the most critical component of your credit score. Remember that when first rebuilding your credit, interest rates will be a bit higher. Nevertheless, it is important to obtain some credit to demonstrate you can maintain your finances and that the risk to grant you credit, like a mortgage or car loan, has diminished.

A mortgage lender is going to want to see at least two years of responsible credit handling as well as a steady job. A reliable source of income will mean a great deal to a bank when deciding whether or not to grant you a mortgage. Be aware that to a bank, sporadic employment, part-time jobs or freelance work will not be an adequate demonstration of steady employment.

Down payments are also important, especially in today’s lending market, but those requirements can vary. You will certainly stand out as a “good” risk if you have cash available as a down payment. Bankers will recognize this as responsible money handling and it will further demonstrate that you have maintained employment. Additionally, a down payment will help keep your monthly mortgage payment at a manageable level. The larger the positive difference between your monthly income and your mortgage, the better chance you have of being qualified.

Today’s volatile financial environment is for many people the most serious recession they’ve experienced. However, in terms of real estate, bad markets often translate into opportunity. Home prices nationwide have fallen substantially and and are unlikely to reach pre-recession levels for quite some time. This means that homes will be more affordable in the next five years. Additionally, the federal government is creating a number of first-time home buyer incentive programs to encourage home ownerhip.

Given the nation’s collective effort to help everyone get back on their feet, a person emerging from bankruptcy will be in a great position to own a home in very little time. With the advice of an experienced bankruptcy attorney and some sound financial planning, you can be rid of your debt and be on the path to owning a home.

+ Continue reading this article

Published Thursday, April 16, 2009 @ 11:03 am

Are you thinking you should pay back – or “reaffirm” — some of the debt that was discharged in your bankruptcy? Don’t fall prey to pressure tactics from creditors; if the debt was discharged, you have no liability for it. You may also think that reaffirming your old debts will allow you to rebuild your credit. That’s true, but only if you can really afford it. If you get behind on your payments, you may end up right back where you started before bankruptcy, or worse. When you reaffirm a debt, you renew your personal liability for the debt; if you fall behind on your payments, not only will your credit suffer, but you could be sued on the debt!

You may also believe you have to reaffirm a debt because you won’t be able to get the same kind of credit again after the bankruptcy, such as a car loan. This is a myth creditors want you to believe. While the bankruptcy can stay on your credit report for up to 10 years, that does not mean you won’t be able to get new credit for 10 years. Wiping out the bulk of your onerous debts through bankruptcy will allow you to quickly reestablish a good payment history and become more attractive to creditors – because now you can afford to pay them. Keep in mind that bankruptcy has given you a unique and powerful opportunity to start over, to get your life back on track, and to avoid ever ending up overly-burdened with debt again.

You shouldn’t let feelings of guilt or shame about having filed bankruptcy drive you to reaffirm old debts either. You filed bankruptcy because you had to; you couldn’t just keep going on drowning in debt. Try to see this as a responsible decision, which was necessary to regain control of your life. Don’t feel like you owe something to your old creditors. Just think of all the interest money you paid them over the years, and you probably won’t feel so bad.

Special caution should be exercised if you are asked to reaffirm a secured debt. If you are intending to keep secured property, such as a car, your creditor may require you to reaffirm the debt. Any request for reaffirmation of a secured debt should be filed with the bankruptcy court and evaluated by your bankruptcy attorney. In many instances, despite the creditors insistence, a secured debt does not need to be reaffirmed. By signing such a reaffirmation without the advisement of an attorney, you are unnecessarily putting yourself back on the hook for the full amount of the debt. That means that after bankruptcy, if you default, the lender can sue you for the full amount of the loan.

The point is, reaffirmation is risky move for most people. It could strip you of the primary benefit of bankruptcy: to put your troubled financial past behind you. So, if you’re thinking about reaffirmation, talk with your bankruptcy attorney first.

+ Continue reading this article

Published Wednesday, April 15, 2009 @ 1:08 pm

It wasn’t easy to come to the realization that filing bankruptcy was the right solution for you. You agonized over the decision, struggled with the shame and embarrassment of not being able to pay all of your monthly bills, worried about eviction, foreclosure, repossession, lawsuits, and exhausted by all of the stress. But after learning the facts about bankruptcy, you made the important decision to hire a lawyer and move forward with your life by seeking the protections of bankruptcy law.

Bankruptcy is designed to give people a new start in life. Filing bankruptcy can be the beginning of a true financial and emotional health success story. Once you’ve made it through the process, a huge weight will seem to be lifted from your shoulders. You can breathe a deep sigh of relief. Life can feel good again. Now you have the opportunity to develop new skills and habits that will make you stronger financially and emotionally. You can learn new ways of managing your money to create a stable and fulfilling life.

The period following bankruptcy is a critical time in which you can take control, and stay in control of your life. But, without proper attention and planning, you could also find yourself slipping back into the familiar patterns that may have gotten you into financial trouble in the first place. It is crucial to your financial recovery that you change the way you think about money. Here are a few steps that will help:

Find at least one person that you can talk to about your finances. It could be your spouse, a friend, or parent. They don’t need to be experts. Just have someone with whom you can be honest and open about your concerns and fears, or to celebrate your successes with. Being able to ‘bounce ideas off’ another person will help you think through your ideas and plans, and possibly help you address issues that you hadn’t thought of.

Choose your social and media influences carefully. If your friendships heavily stress ‘things’ or a lavish lifestyle, it’s time to reassess those relationships. Likewise, don’t watch or listen to television shows that show luxury living you can’t afford. Same goes for your children, if you have them. Unethical marketing tactics are constantly targeting innocent children who are notoriously vulnerable. Even seemingly ‘innocent’ shows teach children that they must have certain things or wear the ‘right’ clothing in order to ‘fit in’. Brainstorm to find new ways to be entertained or spend time together other than in front of the TV or at the mall.

Start saving, even before you’ve paid off all your bills. You may feel anxious about incoming bills after bankruptcy and long to be debt free. But while throwing all of your income at debt might make you feel better today, it may not be such a good idea in the long run. You need to start saving some of your money now, even if there are still some outstanding debts you’re paying on. Having a savings ‘cushion”, will give you a feeling of abundance: you actually get to “keep” some of your earnings. Saving will help you avoid using credit in the event of an emergency. Cars eventually need repairs, appliances give out, dentists are necessary. Having cash on hand in these situations could make all the difference to your post bankruptcy success.

Bankruptcy is a powerful tool to put you on the path to financial freedom. By playing it smart after bankruptcy, you can truly enjoy your fresh start.

+ Continue reading this article

Published Monday, April 6, 2009 @ 12:08 am

Are you buried in debt and trying to figure out what to do about it? Perhaps you’ve toyed with the idea of filing bankruptcy. You’ve heard about it, and the idea of getting rid of most or all of your debt is tempting. But maybe you’re concerned about walking away from your responsibilities, or “ruining” your credit. So, you think you should just do whatever’s necessary to keep paying your bills, even if it means you have struggle to make ends meet, or worry about losing your car or your home. But the reality is, for many people buried in debt, filing bankruptcy may actually be the most responsible thing to do under the circumstances, and the best way to protect your credit in the long run.

Your credit score is based upon an analysis of five factors, each assigned a different weight: (1) Payment History (35%); (2) Amounts Owed (30%); (3) Length of Credit History (10%); (4) New Credit (10%); and (5) Type of Credit Used (10%). So, the two most important factors behind a good credit rating are your history of payments – whether you’ve stayed current or fallen behind on your debts – and how much you actually owe to your creditors. If you’ve regularly been struggling to pay your bills, chances are you’ve racked up high amounts of debt and have already fallen behind on your payments. Your credit has already been damaged, and the longer you continue to carry debts you simply can’t afford, the worse it is likely to get. From a credit perspective, then, you have little or nothing to lose in filing bankruptcy. In fact, your credit is likely of no use to you, because potential creditors probably won’t be willing to issue you new loans or new credit.

If you file a Chapter 7 bankruptcy, you can wipe out many of these burdensome debts, including credit card debt and medical bills. This will not only make your life a lot more manageable, it will make you more attractive to potential creditors, because now you can afford to pay them back. While the bankruptcy will be reported on your credit for up to 10 years and you may have to pay higher interest rates for the first few years, you can start rebuilding your credit immediately.

Most Chapter 7 cases can be completed in as little as six months, and once it’s over, you can make a fresh start. You will have significantly reduced – or completely eliminated – the amount of debt that you owe, and you will be able to re-establish a good track record of payments. This is the purpose behind the bankruptcy laws. And, again, lowering the amount of debt that you owe and making timely payments are the two most important things you can do to establish and maintain good credit.

So, if you’re buried in debt and falling further and further behind, call a bankruptcy attorney and consider filing bankruptcy. It could be the most responsible thing to do in the long run – for yourself and your credit.

+ Continue reading this article