Published Friday, August 27, 2010 @ 10:00 am

The job market is a tough, ugly and sometimes downright brutal place to have to spend time. Heck, July alone crammed well over one hundred thousand into an already really tight space.

The signs you see to help yourself out—job postings—are all over the place it seems. But who’s landing them? Well, maybe this post can help you be the next person who finds their way back into the world of the employed.

According to an article on CNN.com, employment experts agree that one of the most critical things a person can do when applying for a job is craft their resume to the specifications asked for on the job posting. Consider the position’s description as a proposal for a service needed. Your resume then, should become your answer to that need. And because all needs are different, you need to make sure you are not sending your square peg to fit their round hole.

In many instances, you may simply not have what it is they are looking for. Sure, some of it sounds familiar but in the end, it’s either work you haven’t done in years or are not at all qualified to do. So applying to these types of postings can become a serious time drag.

We understand that a current financial situation could have you pressed for time or that your Chapter 13 payment plan is starting to become a problem. Be confident that your time is best spend focusing on potential jobs for which you are a good fit. Do not use a shotgun approach. The time you spend researching an employer, discovering if you know anyone in the company and writing your materials to suit the need should be considered an investment. In time, it will pay off.

When working on your resume, re-use words that appear in the job ad. Do not go overboard. Connect the job’s keywords with responsibilities in your background. These words and terms are how human resource professionals scan through the hundreds of resumes they often receive for a single availability.

Do the same thing in your cover letter. You can use a common introductory paragraph format most of the time but make certain you address the job title. Consider:

“Please consider the enclosed resume for the available JOB TITLE position. I am a tenured industry professional with NUMBER OF YEARS IN INDUSTRY of experience and feel certain that I could provide a quick and positive impact to your organization.”

Your cover letter should be only a summary of your resume. The point of the cover letter is to get them to open your resume. So again, include related job terms, cite specific years of experience and lace it with persuasive language.

Most job needs today are being communicated online and asking for a resume to be attached. It is absolutely key that you use the e-mail itself as a marketing tool. Do not just type “resume attached” and hit send. Use the subject line to include the job title being applied for and unless specifically asked not to, consider inserting a quick one-liner. For example:

“Web site copywriter position – 8 years of experience.”

The body of your e-mail should be the same type of cover letter you would write if submitting on paper. This may sound like common sense to some people but you would be surprised at how many examples hiring professionals could cite where this is not the case. Candidates are in the screening process the moment their e-mail appears in the recipients inbox. Make it count.

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Published Thursday, August 12, 2010 @ 10:40 am

Realizing we are in debt is a lot easier than figuring how it happened. Unless you can pinpoint one central reason, like the loss of a job or long-term medical issue, it can be hard to retrace your steps to financial crisis. Plus, who even wants to? The more important exercise is to figure out how to not let it happen again. And that means determining why you overspend so you can change your habits in your life after bankruptcy.

Countless consumer studies have been done about why we spend. From psychological influences to marketing, music and social pressure, there are far too many things impacting our spending decisions. But, you don’t have to go that deep to keep yourself above water. All it takes is the ability to recognize a situation and take control. It’s really pretty simple.

It’s pretty obvious that if you have access to money, you’re going to have an impulse to buy something. Why do you think credit cards are so often at the root of a family’s financial problems? Credit cards grant us access to a spending club into which we would normally never have received an invite. Credit card approvals have become a standard for social acceptance and its chic to have a wallet bursting with different colors of plastic. Yet, here you are, in debt and unable to pay them back. So do you really have a lot of money?

We probably don’t need to remind you, but: don’t use the credit card if you don’t really need to. After your first year or two out of bankruptcy, just use them for an emergency, like a roadside breakdown or major home repair.

Another reason we overspend is music. Odd, right? Well, music plays into the psychology of spending. The right song can make us feel positive, relaxed and okay about spending some money. The next time you stop into a Best Buy or appliance store, stop and listen to what’s booming through the speakers. It’s not as random as you may think. And, even more surprising is the fact that instrumental and classical music have been demonstrated to have more impact on impulse buys than heavy or upbeat music. And in restaurants, music is often used to make you eat faster, which leads to you leaving sooner and thus, another table gets open for another customer. And so on.

Here’s one the folks at Sam’s Club won’t like to hear: buying in bulk can lead to overspending. Yeah, we know: “But I thought buying in bulk was a way to save money?” The facts are there, bulk shopping does indeed lower your per unit cost. So yes, you get more Twix bars per dollar in the warehouse club than you do at Food Lion. However, the mentality of bulk purchasing leads us to buy that extra box of Twix bars, which then pushes the grocery budget much higher than you planned. Sure, you have more, but now you have less. Get it? And once you’re home, you have a lot of candy to eat. And that’s never a good thing.

Want another hint on grocery shopping? Always do it with a list. Going to the store without knowing exactly what you need can lead to guessing, random selections and impulse buys. A list keeps you on track, providing you with a sense of purpose; in turn, allowing you to watch your items accumulate and your list grow smaller. Thus, something as simple as a trip to the store becomes an accomplishment. Just like moving on from bankruptcy.

The experienced attorneys at the Law Offices of John T. Orcutt can help you get a fresh start with bankruptcy so that you can move on to a new chapter of financial responsibility.  Call 1-800-899-1414 to schedule your FREE consultation now.

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Published Friday, July 30, 2010 @ 8:42 pm

It seems that in today’s difficult economic weather, just about everyone is a risk for a lender.

Earlier this month, FICO, Inc. (the company that develops credit risk metrics) reported that America’s collective credit score is at an all-time low. Close to 43.4 million consumers have a credit score at or below 599, which is the risk benchmark for the majority of lenders. This means that more than 25 percent of us are likely to not get a car loan, new credit card (really?) or a mortgage.

FICO arrived at their conclusion through an analysis of April’s consumer credit reports. Historically, only 15 percent of all “credit-active” consumers fell below the 599 mark. That statistic alone should demonstrate the impact of what is currently happening with our economy. In other words, it’s been a long time since our country has been in this type of situation.

One of the reasons for today’s poor credit scores is the widespread availability of credit in the last few years. Quite literally, credit spread like a virus. Neighbors saw neighbors move into bigger houses, buy faster cars and take extended trips and wanted the same. Financial conservation became a virtue of past generations, like butterfly collars and 57 Chevys. In 2007, that’s just how you lived. Equity lines. Sub-prime mortgages. Rewards programs.

In response, personal bankruptcies are continuing to climb, and probably will for quite some time. As we have said in previous posts, often those most in need of bankruptcy code protections don’t file, perpetuating their issues. Our hope is that many of our clients will be in an ideal position to reclaim their financial livelihood when our country gets to a point where economic recovery can be legitimately proven and not just faintly derived from confusing figures talked about on business stations.

In light of this news, we are reminded that we tend to put a lot of pressure on a number. This becomes a recurring topic on the blog because we have been taught that a solid credit report is a sign of success, a mark of “making it.” We’re told we can’t have things and can’t go places. None of which is really true. As we have said numerous times in this space, wealth is relative. Pursue only what you need, and try to need very little. And if your obligations are forcing you to choose between paying back an aggressive creditor and putting food on your family’s table, it’s time to think about bankruptcy. Call the experienced bankruptcy attorneys at the Law Offices of John T. Orcutt for your free consultation. 1-800-899-1414. Call today. Offices in Raleigh, Durham, Wilson, Fayetteville and Lumberton North Carolina.

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Published Friday, July 23, 2010 @ 8:00 am

Life after bankruptcy can be a challenge. It will take commitment, a new mindset and an entirely fresh set of budgeting habits.

People are surprised to find that when they look around, there really are countless ways for you to save, establish credit and rebuild the economic life you once had.

For a some filers, bankruptcy meant giving up a car payment you could no longer afford. With the new change, getting around town to run errands or schedule job interviews can be pretty frustrating. However, alternative modes of transportation are becoming more abundant. One example is the WeCar program, an idea already popular in larger cities and on college campuses.

The membership program allows people to rent a car on a short-term basis for an hourly rate. You can register online at www.wecar.com to get your membership started. After you get a card, you can reserve your car online when you need it and then use a “swipe card” to activate the car via a computer built into the vehicle. The keys are stored in the glove box.

The costs associated with WeCar are pretty reasonable, especially when compared to the cost of owning a car. And public transportation, while an even more affordable option, does have its drawbacks in some instances, especially if you need to be somewhere in a timely manner and don’t have the time it often takes to travel by bus. And, WeCars are available at all hours, unlike mass transit. Plus, Raleigh doesn’t exactly have a large population of taxis darting around its streets and avenues.

The annual membership is $50; the application fee is $20. After that, it’s $10/hour, which includes gas, insurance and mileage. So, in total, you can have access to a nice, dependable car for $70 in year one, and $50/year after that. If your transportation needs are minimal, or you generally have a short commute, this can be a good option.

Granted, this program isn’t as helpful for you readers in the suburbs or in Durham. However, rest assured that it will not be long before an hourly car rental program is within your reach. Hertz has launched its own version of a car share program in Manhattan.

ZipCar, which was started a few years ago, is another hourly car rental company that has been expanding quite rapidly but primarily targets the college crowd. It already has college locations in Chapel Hill, Elon and at Wake Forest University.

Raleigh is one of only three cities to have a non-college version of WeCar, making it stand out as an area that could attract additional car sharing businesses. Currently, WeCar has two Honda Civics but will add more as demand grows. One car is located at Enterprise’s office on South McDowell Street and the other at the West Condo building on Harrington.

So as we mentioned, it can be easier than you might think to save when you are coming out of bankruptcy, thanks to programs like WeCar. Keep coming back to this blog for more consumer and money management tips for life before, during and after bankruptcy.

Durham bankruptcy. Cary bankruptcy attorneys. Raleigh bankruptcy.

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Published Wednesday, July 7, 2010 @ 8:48 am

For most recent college and post-college graduates, the hot summer months are a chilly reminder that student loan repayment deadlines are mere months away. These impending debts arrive at some of the toughest economic times ever for the newest round of job seekers, as the nation, and especially its youngest workers, continue to face record unemployment and mounting consumer debt. So what happens when poor economic conditions coincide with mandatory payback timelines for budget-busting student loans? Two words: loan defaults. Now, the countdown is on as many recent grads will soon exceed the 270-day window for paying back their educational debts, beginning a bad precedent for staying current in an economy that may or may not be heading into another recession.

As a result, many student loan borrowers are left wondering: can bankruptcy help?

Normally big debts, high interest rates and no job would be the perfect equation for making a new financial start using bankruptcy. Unfortunately, in most cases, student loans debts are exempted from the list of debts absolved during the bankruptcy process. In fact, student loans must be found to create an “undue hardship” in order to be eliminated or reduced in bankruptcy court—creating a high standard for making a dent in a debtor’s often most astronomical debts.

Well, now there’s a little more bankruptcy light at the end of the student loan tunnel. In a recent case, the 8th Circuit Federal Bankruptcy Appellate Panel upheld a bankruptcy court’s decision to discharge $300,000 in student loans. The court in In re Walker found that the debtor’s inability to work due to family circumstances justified a discharge of her student loans. In this particular scenario, the debtor had taken on a large amount of student loans pursuing a bachelor’s degree and several postgraduate degrees while raising five children, two of them with autism. As a result, the student-mom was unable to maintain high-paying employment that would allow her to repay her massive student loan debts.

Ironically, in most bankruptcy cases, the same $300,000, if placed on a credit card or wrapped up in a bad mortgage, could be easily discharged in bankruptcy—automatically expunged under Chapter 7 and significantly reduced in case of Chapter 13 bankruptcy.

However, the liberal decision in In re Walker to forgive the debtor’s student loan debt due to her family circumstances should hearten many recent grads struggling to balance family, low-paying jobs and whopping educational debts. In addition, the tide also seems to be turning at the legislative and executive levels, as the Obama administration and Congress consider making it easier for debtors to discharge private student loan debt.

In short, relieving financial burdens early in your adult life and career can pay dividends later: allowing you to rebuild credit as you build your career and repay your educational loans earlier in the game. As a result, if you too have been affected by the economy and are wondering how to reduce student loan debt—and stress— knowing a qualified bankruptcy attorney can also help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure future beyond our own “Great Recession.”  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.

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Published Friday, July 2, 2010 @ 8:14 am

Bankruptcy Myth #1: You won’t receive credit offers after your bankruptcy.

Don’t be surprised to receive many credit offers following your bankruptcy. Car lenders, mortgage financiers, credit card companies and more, often line up for the chance to provide post-bankruptcy debtors with all types of consumer spending opportunities.

Bankruptcy Myth #2: Taking creditors up on all of their offers is a good thing.

These same lenders and card companies are also coming forward to capitalize on the clean financial slate your bankruptcy provided.  Unfortunately, many of these so-called “helpful” creditors are actually subprime lenders targeting average Americans just like you who are attempting to improve their credit and get back on their financial feet.

As a result, post-bankruptcy beware quick credit offers and avoid subprime lenders by following a few easy tips to stop the cycle of debt and get back on a better budgetary track:

Remain Vigilant About Your Credit Report
It may sound obvious, but in the months following your bankruptcy, your credit report should accurately show that the debts you discharged in bankruptcy are fully discharged. If discrepancies appear in your report, rectify them by contacting your credit bureau and calling attention to the errors. The power of an accurate credit report post-bankruptcy cannot be understated: fewer debts; higher credit scores; attracting higher quality lenders for better credit offers.

Pay Your Bills
Improving your credit post bankruptcy is as easy as paying all of your bills, all of the time, on time. From house notes to car loans to utility bills and more; anything that you kept and continue paying for, on time, post bankruptcy reflects a positive payment history and a better credit report. These small fiscal steps can improve your credit rating and provide more wiggle room to work with better lenders in the long-run.

Be Choosy With Your Credit Cards
In many cases, credit cards are the culprit in necessitating a bankruptcy filing in the first place. Don’t make the same mistakes twice. Seek out a secured credit card that can reflect positively on your payment history and show early signs of responsible credit use. In addition, keep up your credit card payments and keep in mind that credit does not equal cash, but merely a way to keep up appearances that you are an accountable consumer and worth lending to. As such, use credit cards infrequently.

Read Everything
Even infrequent use of credit cards can cause serious financial woes if you don’t read the fine print. To avoid unwieldy interest rates and fees, carefully read all terms and conditions when applying for credit.  While new credit card legislation was enacted to minimize the amount of surprises and confusion when dealing with creditors, it’s important to be your own best watchdog when warding off predatory lenders.

Even if you haven’t been through a bankruptcy yet, , understanding the tips listed above can help you avoid bad lenders and bad debt. If you’ve already succumbed to subprime loans, there’s never been a better time to contact a qualified bankruptcy attorney that can help you to conquer your creditors and face your financial fears, yielding the right kinds of support, information and insights—at a low cost— for a viable and secure fiscal 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.

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Published Thursday, July 1, 2010 @ 1:54 pm

Despite the rumors, stigmas and innuendo, there are a number of things you can keep after filing bankruptcy. Your car, for example, is something that you may be able to keep, provided your debt issues running up to your bankruptcy did not result in a repossession and the equity in your car can be protected with available exemptions.

If you were financing (purchasing) a car when you filed Chapter 7 but did not plan to surrender the vehicle in your bankruptcy, and you continued to keep current on the debt through filing your case and afterwards, you will need to fill out and sign something called a “reaffirmation agreement.” This legal document certifies that you will agree to repay all or a portion of that particular auto loan debt since it would otherwise be discharged along with your other debt. Confusing? A little.

Basically, the reaffirmation says that you agree to re-assume the balance still owed on your vehicle.  The reaffirmation is necessary because most auto financing contracts have a clause that enables the creditor to repossess the vehicle because filing for bankruptcy is considered a default on your loan.  Reaffirmation stops the creditor from asking the court to lift the automatic stay in order to repossess your vehicle prior to your discharge in bankruptcy.

Granted, it seems odd that in the midst of filing bankruptcy that you would want to keep some of your debt, but there are a few good reasons, especially when it comes to you car. Primarily, you may need it to get to your job. Sure, public transportation is cheaper but what if you drive a lot for your job? Sales professionals, consultants and real estate agents often need a personal vehicle as much as an accountant needs a calculator. Construction professionals often conduct all of their business out of their truck and need it to visit sites and haul equipment. So, the affirmation agreement allows you to keep the collateral that secures the specific debt you want to keep.

However, reaffirmation is not always a beneficial process. Some lenders get pretty huffy about it. It’s possible that even though you move forward with your payments, they won’t be reported to the credit agencies. Plus, you walk quite a tight rope with the lender.  Fail to make a payment, and that car may end up repossessed before you can get your favorite CD out of the player.  In addition, the creditor almost always has the upper hand in proposing the terms of the reaffirmation agreement.  There is no real negotiation of the terms between the creditor and the debtor, and often creditors demand payment at the original contract terms when the loan balance may far exceed the present value of the vehicle.  The debtor often feels they have no choice but to agree to the creditor’s terms.

One reason to reaffirm a car loan or lease is to help your credit standing with that particular lender. It demonstrates a tremendous amount of good faith on your part to move forward with your obligations with a particular lender who down the road may be much more willing to extend you another loan. Keep in mind that this doesn’t mean you should jump at the first chance to get a new car or accept credit from that particular lender. The fact is you filed bankruptcy. Thus, you are still not going to get the same type of loan terms as someone who hasn’t, despite your reaffirmation.

Ultimately, after your complete and sign the reaffirmation agreement, the court must also decide if the reaffirmation would result in an undue hardship and that it’s in your best interest to reaffirm the debt.

In the Bankruptcy Court in the Eastern District of North Carolina, which includes the cities of Raleigh, Wilson and Fayetteville, the court sometimes will disapprove reaffirmation agreements on the basis that reaffirming the debt would impose an undue hardship on the debtor.  Often, even though the debtor has remained current up to the point of the reaffirmation hearing in court, the debtor really can barely afford to maintain the monthly vehicle payment, and has often squeezed his/her budget to great extremes just to make the car payment.  Under these circumstances, if the debtor and the debtor’s attorney can demonstrate undue hardship to the court, the judge will often allow the debtor to keep the car and continue to pay for it as long as they can afford to do so, and allow the underlying balance of the loan to be discharged with the rest of their debt.  Under this scenario, if something unfortunate were to befall the debtor or the debtor’s vehicle, they would be able to surrender the car to the lender with no consequences.  However, if the court approves the reaffirmation agreement, based upon a finding that the reaffirmation is NOT an undue hardship – that the debtor can afford the liability on the full balance of the auto loan, the debtor will be able to keep the vehicle and continue to make payments, but would owe a deficiency to the creditor if the car were repossessed, damaged, or otherwise surrendered to the creditor.  This is because the creditor sells the vehicle, usually at auction, for a price that is less than what is owed on it.  Whatever the difference between the balance owed on your auto loan and the amount the creditor gets when they sell your repossessed vehicle is called the deficiency. 

Navigating the reaffirmation process requires a skilled bankruptcy attorney.  The Law Offices of John T. Orcutt offers FREE initial consultations to North Carolinians living in the Raleigh, Durham, Wilson, Rocky Mount, Fayetteville and Lumberton areas.  Call 1-800-899-1414 to schedule your free consultation now.  One of their experienced bankruptcy attorneys will review your information to decide whether bankruptcy is the right option for  you.

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Published Thursday, May 6, 2010 @ 6:06 pm

It was easy to spend money a few years ago, somewhere around late 2005 and into 2006, when the economy was flying, anyone could get a loan and every house in the zip code was appreciating at eight percent a year.

Those who managed to avoid subprime loans and the desire to keep up with whatever the other side of the cul-de-sac was spending turned out to make it through the recession in decent shape, provided the unemployment crisis didn’t catch up with them.

Truthfully, the degree of financial difficulty at which someone finds themselves is no measure of intelligence or social wherewithal. In many cases, the difference between staying above water and getting flushed down the financial torrent is simply a matter of luck. Some people step on a hard-to-see loose stone when navigating dangerous waters and others don’t. It’s that simple.

Lifestyle choices do have a great deal to do with bankruptcy. Sure, many people have to file because of things well out of their control. Heck, that’s why the bankruptcy code functions like it does. Nevertheless, you can make decisions that will either prevent you from getting into serious long-term debt or help you rebuild after filing. It’s a matter of discipline, economic cognizance and common sense.

Key to keeping financial order in your life is to avoid the desire “to own”. Instead of accumulating “things,” accumulate experiences. Focus on staying healthy, emotionally and physically. Deep debt can really take a toll on one’s psyche. It can pull at the edges of a marriage, damage relationships with friends and invoke self-doubt and even depression. Once out of the woods, you should be able to only see things that matter, which will help you avoid becoming stressed over the next bill that arrives. Now you know how to handle it. The money is there and the bill gets paid. Bankruptcy helps you separate money from emotion. Thus, you can focus your well-being on rebuilding not only your credit record but the holes that appeared in your circle of friends and family.

Many studies have demonstrated that eating well impacts mental states and yes, the state of your bank account. It’s no secret that healthy food often costs more. However, the savings show up in reduced health care spending.

We know these tips are easier typed than done. But we’ve been in the bankruptcy business for a long time and hopefully you only have to go through it once. Give it some thought. Stay healthy, and stay wealthy.

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Published Sunday, April 25, 2010 @ 8:08 am

With rising foreclosure rates, escalating health care costs, recent credit card company schemes and unprecedented unemployment, most people would think they’ve seen it all in this unprecedented economic downturn.

But wait, there’s more.

In these tough financial times, scam artists are coming out of the woodwork to prey on the most hard hit by this decade’s Great Recession: persons needing the benefits of, or having already filed for, bankruptcy.

First and foremost, scam artists are in the habit of targeting debtors who are willing to do whatever it takes to avoid bankruptcy.  According to the Center for Responsible Lending, common predators prior to your bankruptcy include even legal payday lenders and debt settlement agencies. Most experts agree, even in a financial meltdown, the fastest way to go broke is through payday loans. For example, if you’re like many Americans, you may be facing the economic crisis head-on, and whether that looks like a missed mortgage payment or hovering health care costs, a payday loan might seem like an easy way to weather the storm. But the opposite is true and the reason is simple: exorbitant interest. With interest rates equaling as much as 400%, these types of loans are a recipe for disaster, leaving desperate borrowers unable to repay.

In addition, you also have to mindful of other “credit repair” scams, including debt consolidation scams, mortgage modification scams, and foreclosure prevention scams in addition to outright identity theft through stolen credit cards and identities. Keep in mind, people who are in financial fix and seeking a commensurate “quick fix”—but who have not sought the advice of a bankruptcy attorney—tend to be most vulnerable to these scams and debt payment plans.

Also, many financial experts warn against “Nigerian 419″ scams (email request to help get money from Nigeria into the United States, by accepting money into your own bank account in exchange for a share of the financial rewards) and common “Chain Letter” scams (a modern re-envisioning of a pyramid scheme).

Next, be wary of offers for a “free” credit report. In order to get these predatory reports, you are required to enter your credit card number, which opens the door to identity theft.  Even in cases where an actually credit report is sent, sometimes charges can begin appearing for things you agreed to in the reporting site’s fine print.  Remember, the only truly free reports come from the credit bureaus themselves and do not require a financial placeholder in the form of your credit card.

Unfortunately, you can find scam artists seeking your business  even after your bankruptcy has been filed and fulfilled. These scam artists are often looking to provide benefits that are more difficult to find for bankrupt people. In addition to predatory “credit rebuilding services,” post-bankruptcy scammers will often offer low-balance credit cards to debtors emerging from bankruptcy, sometimes with activation and membership fees that can push borrowers over their credit limits before they’ve even had a chance to use the new card.

To avoid the pitfalls and pratfalls of scammers, the key is knowing resources that can actually help. A qualified bankruptcy attorney can assist proud, to conquer their fears of losing it all.  Specifically, the bankruptcy attorneys 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. We’re here to help.

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Published Thursday, April 8, 2010 @ 9:18 am

This blog talks at length about savings strategies and offers a great deal of consumer spending advice. Our goal is to create an all-encompassing approach to helping readers, clients and potential clients be financially successful after bankruptcy.

Having a healthy savings account should be the goal of anyone rebuilding after bankruptcy. But after the great bank fallout of the last two years, it’s becoming hard for a lot Americans to trust some of our nation’s largest financial institutions. Not only are the rate of return on these accounts very low, it seems every day banks are surprising account holders with a sudden fee or reduction in service.

If you remain skeptic and trust your tech-savvy, Web-based banks offer a number of attractive reasons to earn your savings account business.

Online banks can limit fees and offer higher interest rates because they do not have expensive overhead to cover, like hundreds of brick-and-mortar branches, thousands of employees and millions in advertising budgets. It also costs them less to service the customer because the means by which they do it—typically e-mail and instant messaging—costs much less than a person standing behind a counter.

Many online banks do offer phone service, so you can speak to someone when necessary. Another way they can limit fees—and this is a good thing—is by limiting access to your cash. No, not in a negative, “you can’t have it” kind of way but more so by not having ATM machines or again, physical branches.

Since everything is set up electronically, you can establish a line of connection between your online savings account and a local branch where you maintain a checking account. So yes, you may still have to deal with the big guys to some extent. In that respect, look around for a regional bank with only a few branches. Many of these institutions still do business like they used to, with neighbors working behind the desk and managers who remember your name.

Many online banks also limit the number of transfers you can arrange in a given month. Again, a good thing. Savings accounts are not meant to be accessed like a checking account. Unless you need it, it’s best to let the money sit. It should be noted though, that the transfer limit is set by federal law, not the banks.

Lastly, these banks are experts in user studies, creating Web sites that are very easy to use, navigate and set up. Thus, you don’t need to be a Web genius to online and start saving. If interested, do some comparisons. A site with current comparisons can be found at: http://moneyning.com/online-savings-accounts/.

Brought to you by the Law Offices of John T. Orcutt. With offices in Raleigh, Durham, Fayetteville, and Wilson, we’re always close to you. Call today for your free debt consultation. 1-800-899-1414.

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Published Wednesday, March 24, 2010 @ 8:00 pm

In this economy, qualifying for a bank loan or line of credit can feel impossible—even for people with perfect credit—and much more so if you’re trying to bounce back from a recent bankruptcy. But a bit of patience (targeting smaller community banks rather than large corporate banks) and a bit of help (getting others to vouch for you) can improve your odds tremendously—even in this uncertain economic climate.

As Robert C. Seiwert, senior vice-president of the Center for Commercial Lending & Business Banking at the American Bankers Association told Businessweek,  “A bankruptcy can hurt your chances of getting new credit for at least seven years. What gets damaged in a bankruptcy is the view of your character. A banker wants to know, even if you have the money to repay a debt, will you? If you get into trouble, will you work with the bank or walk away?”

As a result, the key is doing a bit of little local legwork: finding community banks who will see you for more than just your credit score. “The bulk of community banks evaluate your application by sitting down and talking with you, looking at your specific collateral and your cash flow,” Seiwert told Businessweek.

So what do you do when you find a bank community or small regional bank? Rule one when approaching your friendly neighborhood loan officer: be honest. Explain what happened leading up to your bankruptcy; how you’re back on financial track; and exactly what you need to keep moving. “If you can show that you did your best to make good on your obligations after the fact, or that you intend to pay back that loan now that you’re profitable again, that will go a long way to restoring that chink in your character that the bankruptcy suggests,” Seiwert told Businessweek.

Rule two is to play the financial field. Talk to multiple bankers, evaluating which of the local banking bunch seemed most welcoming to you and your business—even if they initially turn you down. “Stay in the loop with those bankers. Contact them occasionally and let them know about your progress,” Seiwert said. “It’s absolutely critical that you keep following up” to improve your chances of getting a line of credit in the future.

Rule three, is to start off small. Gradually work your way up to a larger loan or credit line as you improve your credit score. If you pay your loan on time for a series of years, your local bank will be more inclined to offer you more.

Another rule of the financial road is to seek nontraditional partners. In addition to depending on the kindness of banking strangers, turning to your businesses’ customers or colleagues to make an introduction for you at a bank to help you get your foot in the financial door. If either is willing to co-sign on your loan, or loan money directly to you as well, all the better. And never forget that people with excellent credit make for great business partners in this process, convincing banks to accept your risk to work with them.

So, if you’re bankruptcy bound and seeking solutions for continuing your business, 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 and let these experts smoke out your next best financial steps.

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Published Wednesday, March 24, 2010 @ 12:59 pm

There was very important bill passed this week in Washington.

No, not that one.

Attached to the monumental health care bill was a significant alteration to the way student loans are handled by the government.

We have covered this topic several times here on the blog (use the search tool), which is critical to those considering bankruptcy because as of now, outside of very special and rarely granted conditions, student loans are not allowed to be discharged.

Arguments have mounted recently about the role private banks have in backing federal student loans. The primary issue is that the government guarantees close to 90 percent return for the private lender who funds the loan. Currently, this is the most popular way Americans pay for college. During the current 2009-10 school year, banks loaned $67 billion that is federally-backed.

The new legislation will turn the tables on private lenders, primarily Sallie Mae, and allow the U.S. government to loan directly to students.

Starting this summer, the bill outlines $500 billion in straight-to-student loans within the first 10 years, drastically increasing the current rate of direct loans. The most common federally-backed loans are Stafford Loans.

Naturally, backers of the private companies’ continued role in the student loan business are citing the move as the proverbial decapitation of their business.

An analyst with a spending research firm in Washington, Teddy Downey of Concept Capital Washington Research, made it clear to the government what the new rules would do to private lenders. “This is bad for Sallie Mae, as it will now be out of the origination business … there is zero chance for student lenders to stay in that business.”

The current law allows private lenders to collect billions on the interest collected from the difference between the rate at which the government provides them the capital and the rate at which they lend it. Additionally, the entire process has gone largely unregulated, allowing private lenders to also issue their own loans.

The proposal is estimated to preserve close to $61 billion in the federal budget over the next decade. A large portion of that figure will flow into Pell Grants, the ubiquitous student loan that has sent millions of Americans to post-secondary education. Because of the recession, college classrooms nationwide need more desks than ever before, seriously impacting the fiscal stability of the Pell program.

The Pell Grant is directly targeted at lower-income and middle-class students and thus, they will benefit tremendously from the new measure. This is especially good news for those who have recently come out of bankruptcy, as it helps provide yet another avenue toward personal re-invention through education, job training and career development.

Proponents of the law are citing stats that show a major cut in loan funding if it is not passed. Supporters are saying that eight million students would feel the impact of a 60 percent decrease in Pell funding and that by 2011, 600,000 students would lose their Pell Grant, forcing them to quickly find another source for college money.

The Obama Administration has set goals for college graduation in America and it appears this is firmly placed rung on the ladder toward that accomplishment. Some financial aid experts are not sure it will help the country get much higher though.

“This bill is not as good as it originally was,” said Mark Kantrowitz, who publishes FinAid.org. “It is difficult to see how President Obama will be able to meet his college graduation goals.”

However, isn’t just a few more still a good thing?

If you are in North Carolina and struggling to stay on top of your student loans, contact the Law Offices of John T. Orcutt. Student Loans are non-dischargeable in bankruptcy, but a Chapter 13 will put your loans in deferral status, allowing you to discharge your other unsecured debt and giving much-deserved breathing room while you position yourself to make your next career move. Offices in Raleigh, Fayetteville, Durham and Wilson. Call today. 1-800-899-1414.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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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.

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