Michigan Bankruptcy Firm - Blog

Ten Easy Steps To Re-Building Credit After Bankruptcy

ryanbmoran — Wed, 16 May 2012 20:10:22 +0000

Most people think it’s difficult to re-build your credit, but that’s just not true.

For the first time in a long time, you won’t owe any money. For many people, that means the need for credit will simply disappear.

Once you are free from you debt, you’ll actually have the money you need to live your life and meet your expenses. It’s a whole new world.

Banks know that, which is why you’ll get a lot of credit card offers in the mail immediately after your case is finished. Banks want to lend you money because they know you have no other debts to pay. They also know you can’t file another Chapter 7 for eight years, so they are almost guaranteed that you’ll pay them back.

The fact that there is a bankruptcy on your credit record does not mean that you will never be able to get new credit. All it means is that you will need to put time and distance between yourself and the bankruptcy filing; remember that the decision to give new credit (including a mortgage or a car loan) is based on what you’ve done lately, not what you did five years ago.

Many of my clients have credit good enough for a mortgage or a car loan in as little at 18 months. I’ll work with you to put together a step-by-step strategy for updating your credit report, re-building your finances and putting you in a better situation.

There are ten easy steps you can take immediately to jump-start your credit after bankruptcy. They are:

1. Open a checking or savings account.

2. Pay your bills automatically from your checking account each month so that you can always be sure to remain current with new obligations.

3. Ask your employer to take 10% of your pay check and deposit it into your savings account. This will help you save for emergency expenses so you don’t need to dip into a credit card.

4. Once you have saved up three (3) month’s worth of salary in your savings account, ask your bank for a secured loan against the account. Pay the entire loan back on time so it is reflected as a positive mark on your credit report.

5. Pay your utility bills and rent on time.

6. Stay away from payday loans.

7. Live within your means. Do not unnecessarily increase your debt to income ratio by taking on credit to purchase luxury items that you DO NOT NEED. Your payments on consumer debt should equal no more than 20% of your expendable income after costs for housing and a vehicle.

8. If you have any debts that survive the bankruptcy, pay them on time every month. This will show new potential lenders that you have the ability to repay your new debts on time.

9. Check your credit reports every six months and make sure that all information is accurate. You should correct credit report inaccuracies so that potential new creditors will know which debts are no longer your responsibility.

10. Minimize the number of inquiries on your credit report. Every time a potential creditor makes an inquiry into your credit, your credit score can go down. To combat this, you should call (888) 5 OPT OUT and follow the voice prompt. Calling this number allows you to opt out of promotional mailing lists sold by credit bureaus.

I’m always amazed when people come to me and tell me that they don’t think they’ll ever get new credit after bankruptcy. I’m never amazed when they call me two years later to let me know they’ve bought a new home and have fantastic credit scores.

If you want to talk about how bankruptcy can actually help you increase your credit score and put you in a better situation, just call my Office toll-free 24 hours a day, 7 days a week at 1-866-473-1996. You’ll be glad you did!

Best regards,

Ryan Moran

Hard Work Isn’t Working for All Americans

ryanbmoran — Mon, 14 May 2012 20:09:21 +0000

Here’s another great article from friends of ours at the North Carolina Bankruptcy Blog on the gap between minimum wage and living costs:

You’ve read the headlines. You’ve heard the network commentators. Despite the reported recent economic recovery, post-recessionary American is marked by a new, and troubling, era of economic inequality.

One of the major reasons for the widening gaps between rich and poor is that minimum wage remains at $7.25, the same rate as it was in 2009, despite dramatic rises in the cost of living.

As a result, those in the lowest income brackets face higher bills while the wage floor remains where it was years ago, leaving millions of Americans squeezed under it. But these facts aren’t lost on the experts—from financial insiders to those most financially impacted.

According to a report from The Huffington Post, “plenty of economists — not to mention low-wage workers — believe the raise is [way past] due. Because the federal rate isn’t adjusted annually for inflation as many state rates are, it tends to lose some of its purchasing power every year. (Eighteen states and the District of Columbia have higher minimum wages that prevail over the federal one.) The federal minimum has been generally declining in real dollars since its high in the late 1960s. If it had kept pace with inflation since 1968, it would now stand at around $10.”

That extra $2.25 an hour could have made a real difference for many in the middle and working classes struggling to get by in the toughest of economic environments, including students struggling to sock money away for college, public employees in a precarious job market for their sector, and older Americans wondering when, (and if), they’ll ever be able to retire in this new era of economic disenfranchisement.

The “raising the minimum wage” argument is particularly compelling when you consider that recent studies have pretty much made the case that modest raises are not major job killers. “Economist Dean Baker has argued that any lost work hours resulting from a minimum wage hike would be more than offset by the gain in pay for workers and higher productivity,” said HuffPost. “Some states have taken their own initiative. This week eight states raised their minimum wages, led by Washington State, which became the first to break the $9-per-hour threshold. All eight states have so-called cost-of-living adjustments that require tweaking the minimum wage each Jan 1. The wage raises will benefit roughly 1.4 million workers. According to an analysis by the Economic Policy Institute, the vast majority of those 1.4 million workers are not teenage part-timers, belying a widespread myth about minimum-wage earners. In fact, about 80 percent of the workers in those states are in their 20s or older, and 78 percent of them work at least 20 hours or more in a week, the institute’s David Cooper wrote.”

Instead of waiting for the federal government to raise the minimum wage, many are taking things into their own hands to address their financial woes and take back their fiscal freedoms to make a fresh start through bankruptcy. In fact, a discharge of personal debt through bankruptcy could now be the only solution for so many jobless Americans, especially unemployed workers facing more time without a steady income.

If you find yourself in debt, with no real income, knowing a qualified bankruptcy attorney is the first best step to help you regain your power, conquer creditors and face your financial fears, yielding—all with the right kinds of support, information and insights—at a low cost— for a viable and secure future.

http://blog.billsbills.com/hard-work-isnt-working-for-all-americans/

Teaching our kids financial responsibility

ryanbmoran — Mon, 14 May 2012 19:54:15 +0000

Below is a great article from The Detroit News by Emily Okaty Wilson. Some real simple steps in teaching your kids financial responsibility:

This week is Michigan Money Smart Week. Several programs are going on around the state providing free advice to help educate families about money matters. In fact, the Bank of Birmingham is meeting with Detroit area fifth-graders this week. They also have provided some tips today to help parents talk with their children about money — from savings and budgeting to investing and why we even have bank accounts.

When it comes to teaching kids about money there are two very important factors. The first is to talk with kids about money and how it works even when they are young. Second, be a good role model to show them how to deal with money. Kids of all ages can understand basics about money; for example, how much a toy costs and if they need it or want it. As they grow, they can understand more complex issues such as saving, budgeting and investing.

Below are tips on how to talk with children about the basics of money. Start the conversation early and show them how money is part of everyday life to help them build a solid foundation for their future.

Needs vs. wants: When children ask to buy something talk with them about if it is a “need” or a “want.” Explain that “needs” are things people must have to live, like food, clothes, or tools for school, and that “wants” are things that are special treats such as toys, going to the movies, and candy.
Earning vs. gifts: From a young age, children can understand that they can earn money from doing chores and can then use those earnings to buy things. Help them realize the difference between working for money and when money is given as a gift. Share what your family does to earn money as a way for them to learn part of why people work and the larger economy.
Saving: Explain how it is important to “pay yourself first.” A good lesson is to work with children to put part of the money they earn or receive as a gift into a savings account so they will have it in the future. They can even keep a tab of how much they have to see how their money grows and when they will have enough money to buy something special.
Budgeting: When discussing needs and wants, you also can work with kids on budgeting for today and the future. Young children may understand if they spend all their money on one item, they won’t have enough money for a treat later. As children grow, sharing the family budget can be helpful especially when talking about paying for camps, a special trip, or college.
Shopping: A trip to the grocery store or mall is a great time to talk about money. Discuss why it is a good idea to make a list of the things you need in advance. Don’t buy the first thing you see unless you have already done your homework. Is it the best deal? Do you have a coupon? With older kids you can also discuss taxes, sales, and credit cards.
Why do people use banks: Take children with you to the bank or show them how you use an online bank. Explain that people use banks to keep their money safe; banks offer interest on different types of accounts so you can get paid to have your money in a bank; and keeping your money in the bank helps avoid impulse spending.

http://blogs.detroitnews.com/parenting/2012/04/24/tuesdays-tips-teaching-our-kids-financial-responsibility/

Keep a close eye on your credit card company

ryanbmoran — Tue, 01 May 2012 18:16:52 +0000

Even with the recent downturn in the housing market, credit card debt may still be the number one reason people file for personal bankruptcy. In fact, in the eyes of many consumer bankruptcy attorneys, credit card debt is the number one way big banks rip off consumers. After all, 29.99% interest rates buried in fine print are a tad high, aren’t they? Consumer attorneys are used to hearing the familiar stories of families who are understandably stressed out and scared after receiving a summons in a credit card lawsuit. They wonder why is my credit card company suing me? What can I do to protect myself?

When a borrower defaults, credit card companies often seek judgments

Usually, the answer is fairly straightforward. Credit card lenders are unsecured creditors. An unsecured creditor, as opposed to a secured creditor such as a mortgage lender, has no recourse against the assets of a debtor in the event the debtor can no longer maintain monthly payments. This means that even if you fall behind on your credit card bills, your lender can continue to tack on fees and interest, but they cannot immediately come after your personal property. Contrast this with a mortgage or car lender who has what is known as a “security interest” in your home or car and does have the right to reclaim their collateral in the event you fall behind on payments.

Once it is clear that a borrower can no longer afford to make payments on credit cards, the credit card companies will try to change their status from that of an unsecured creditor to that of a secured creditor. They do this by filing a lawsuit demanding payment of all outstanding balances and asking that the court grant judgment in their favor for the debts they claim are owed. In the vast majority of cases, consumers fail to file an answer to the complaint and the credit card company wins as a matter of default. This entitles them to record the judgment in the county where the borrower lives and try to collect on the debt by attaching any nonexempt assets that may be available. Often, the debtor has no nonexempt assets (known as being judgment proof) and there is nothing for the credit card company to take. However, the judgment does stay in effect for as long as 10 years, during which time the creditor can attach nonexempt assets if the debtor’s circumstances change.

Doing nothing is not an option

The bottom line is this: when a credit card company sues a borrower, they are taking the first step in a process towards attaching assets in satisfaction of the debt. It is vitally important to contact an attorney right away if you are served with legal documents or creditor correspondence that you do not understand. Most jurisdictions have a 30 day window for responding to a complaint and failure to act can result in the court entering the judgment by default, which is exactly what the credit card companies are banking on. Most people are pleasantly surprised by the affordability of attorney’s fees in bankruptcy and civil litigation, and most firms offer free consultations. A good lawyer may be able to reach settlement with your lender helping you avoid bankruptcy.

John O’Connor is a class action attorney and founder of the National Bankruptcy Forum, a website devoted to providing the public with good information about bankruptcy and debt.

Library lecture series

ryanbmoran — Mon, 14 Nov 2011 17:41:14 +0000