Give Your Credit Report an Annual Check-Up

As much as I’d love for it to be the case, the accuracy of an individual credit report does not fall on the shoulders of the credit bureaus like Experian, TransUnion, and Equifax. They are responsible for reporting the information they are given, but many of us know from experience that the information given to them isn’t always accurate. The old saying applies here: if you want something done right, you have to do it yourself.

Checking your credit report once a year is free, so there’s no reason you shouldn’t be doing it. The site that offers a free report is www.annualcreditreport.com. You won’t get your credit score, that you will have to pay for, but you will be able to check everything that is reported on your report, the positive and the negative, and dispute anything that isn’t accurate.

If you do have a dispute, there is an online form you can fill out to let the bureau know that the information is incorrect and why. You can also telephone them or send them a letter with your dispute. I have personally disputed something on my credit report this year, and it took awhile for the bureau to investigate the problem, but they did fix it and then removed the incorrect item from my report.

It’s a myth that checking your own report can lower your credit score, so this should not stop you from keeping an eye on things. It is true, however, that numerous inquiries from creditors can affect your score. So think twice before you apply for all of those store credit cards at the registers, and those offers you get in the mail. You may think it’s not a big deal, and if they say no it’s nothing serious, but if the inquiries bring your score down, it could turn into a big deal.

The bottom line is, don’t think that just because you pay all of your bills on time that your credit report will be squeaky clean. It’s really up to you to take an active role in making sure your report is correct. Even one inaccurately reported late payment could really damage your score.

Submitted by:
Kerry Hammond, Esq.

Bankruptcy Attorney

Getting a Fresh Start Now May Allow Savings for the Future

This summer, interest rates on federally backed stafford student loans is set to double.  For those now enrolled in colleges and universities, the financial burden of completing their education will now be greater if congress and the president do not act to reverse the increase. 

For people with younger children, now is the time to start thinking about college savings.  With two children under five, I worry a lot about the growing cost of education.  I am still paying for my law degree and, unless I win the lottery, will likely still be paying student loans for another ten years.  I also hope that my children do not wind up with the kind of student loan debt that I have.  I entered law school with no debt at all and came out with monthly student loan payments that look more like mortgage payments, though I am fortunate to have benefited from very low interest rates on my student loans.  If I do not pay off my loans early, my first born will be applying to college just as I am finishing paying off my student loans.  My hope is that she will not be stuck paying student loans until she is 50.

I imagine that many middle class families are similarly concerned with their ability to pay for their children's education, or at least assist their children so that they are not faced with insurmountable debt upon college graduation.  It is important to start thinking about this early.  For families with credit card debt, medical debt, and student loan debt, the idea of being able to save, may be a fantasy. 

When families are stuck in the debt cycle, it may be impossible to save money for college.  Many are more concerned with paying off existing debt because saving money is going to cost them in interest on their credit cards if they carry a balance.

If the "American Dream" of sending your children to college is getting further out of reach due to large amounts of debt, now may be a good time to eliminate all other debt so that savings can become a priority and a reality.  Bankruptcy may be a good way to clear the way for saving for the future.  While there is certainly a lot to consider before filing bankruptcy, it should be understood that in many cases it should not be considered as a last resort.

A brief consultation with a reputable bankruptcy attorney may guide you in the right direction.  When a potential client comes to my office for a free bankruptcy consultation, we offer detailed advice about bankruptcy and whether there are feasible alternatives in each individual case.  For some, budget restructuring may be all that is needed. For others, the sale of burdensome assets may be an answer, and for others, bankruptcy is the best solution.

Many people fear that bankruptcy will destroy their credit.  In most cases, credit is granted shortly after bankruptcy, but the real question is do you really want it?  Obviously the ability to purchase a home and a car typically revolve around credit scores, but where debtors already have a mortgage and vehicle financing, is having multiple credit cards really that important?  The truth is that almost anyone with income, and some without, can obtain a credit card shortly after filing bankruptcy. 

If credit card debt is preventing you from saving for the future, now is the time to change that.  Contact Greenwald & Hammond for a free bankruptcy consultation and learn more about bankruptcy.

Submitted by:
Mindy Greenwald, Esq.
Bankruptcy Attorney

Home Improvements on a Budget

Our blog doesn’t just focus on debt relief and bankruptcy, we also try to include different tips for saving money.  Saving money can benefit anyone.  It can help some stay out of debt and avoid bankruptcy, but it can also help others, who have gone through bankruptcy, by avoiding the temptation to get themselves back into the debt cycle.

Today’s money saving tip deals with home improvements.  When money is tight, it can be tempting to let things go and focus on the essentials.  While this is a good concept, it can end up being frustrating.   Of course it’s best to buy groceries and put gas in the car so that you can eat and get to work.  But sometimes it can boost your mental well being to do a little something around your house to spruce it up.  Spending just a little money to improve your surroundings can go a long way toward mental health.

I read an article pulled from Mainstreet that contains some inexpensive home improvement ideas that you can do yourself.  The concept is that a little goes a long way.  For example, spending a little bit of money on a fresh coat of paint can really give your home a make-over.  If you do it yourself, and get some paint on sale, you can end up with what feels like a new room for very little money. 

If you have a large room and don’t want to spring for the numerous gallons of paint it would take to cover it all, consider just painting one wall.  If you choose a different shade in the same color palette as the rest of the walls, you can create an accent wall that makes it look like the whole room was done.

If it’s the outside of your house that needs a little work, there are even a few tips in the above article to help.  Creating a rock and mulch border around an existing tree can make it look tidier.  Pulling weeds from an unused area and planting a few flower bulbs can bring some color to your lawn.  The best part is that neither of these ideas require a huge amount of landscape ability or manual labor.

Furnishings can get expensive, so redecorating an entire room in your house probably isn’t in your budget.  But a few accent items, like artwork or a decorative pillow, can go a long way to making things look better.  If you’re not in a hurry, you can shop around for sales and you can get these items for very little.

Sometimes if you just spend a little bit to make things look nicer, it can save you in the long run.  Letting things go, and then feeling that you need a complete overhaul, can really add up to an expensive undertaking.

Submitted by:

Kerry Hammond, Esq.

Bankruptcy Attorney

What is Happening With Mortgage Modifications?

In recent years many people experiencing mortgage hardships have set their sights on mortgage modification programs to avoid losing their homes.  As a bankruptcy attorney, I have met with numerous people who have been let down by the modification process.  It is hard to tell whether people are getting any long term benefits from mortgage modification.  It is also apparent that there are many scams to watch out for when seeking professional assistance when dealing with your mortgage lender.

The classic story that I have encountered with respect to mortgage modifications goes something like this:  individual was behind on mortgage so lender said apply for a modification, more and more documentation was requested but few, if any, answers were given.  In the meantime foreclosure notices are received.  Finally an eviction notice informing the individual of the foreclosure sale.  Alternatively individuals are given temporarily reduced mortgage payments which they make for the agreed upon period after which the bank tells them they do not qualify and they can either re-submit everything or face foreclosure.

When Kerry Hammond and I first established Greenwald & Hammond we anticipated providing mortgage modification assistance.  We quickly learned that most people in need of mortgage modification were not getting modifications no matter how many hoops they jumped through.  Most wound up in bankruptcy to save their homes.  It wasn't long before we removed this service from our website and stopped providing or even suggesting such a thing to clients.

I recently posted about the settlement reached between the States Attorneys General and the five largest mortgage servicers.  In that settlement, among other terms, it appears that the banks agreed to make loan modifications a reality, they agreed to stop foreclosure actions while a modification request is pending, provide timely response to requests for assistance and provide a single point of contact for borrowers seeking hardship assistance.

Inspired by the settlement agreement and a client who had previously had difficulty dealing with her mortgage company, I took it upon myself to test the "new system" the banks allegedly are putting into place.  While I have no final results to report yet, I have been dealing with a rather helpful and responsive woman at Bank of America.  The woman assigned to my client's mortgage has been extremely responsive to my inquiries.  She promptly returns my phone calls and always reminds me of her office hours.  I sent her all necessary documents and awaited confirmation of receipt.  I did finally call to verify that the documents were received and determine whether there was any additional information needed. 

When my point of contact returned my call, she had already determined exactly what additional information was needed (it really was not much more).  She actually stated that she is liking her job much better now because she can actually go through the documents and provide a quick request for any additional documents needed (I guess that in the past it moved to someone else in the system or they just let it pile up?).  While these changes are encouraging, I am not getting my hopes up and have conveyed to my client that we need a backup plan if the modification is not granted.  In the meantime we are watching the foreclosure attorneys closely to ensure that they stop the proceedings while the application is pending.   

If you are hoping to modify your mortgage, the process truly is something that you should be able to do yourself.  The application is more straightforward than a loan application (which you must have filled out in order to get the mortgage you are trying to modify), the hardship statement should be to-the-point explaining what has caused your inability to make mortgage payments (if the hardship is medical, you do not need to specify the illness, but rather that you are ill and have missed work due to hospitalization, rehabilitation etc...).  The documentation of expenses, tax returns, income and bank statements are all within your ability to obtain.  It is important to be cautious when accepting help from a third party.

There are many people who would like to capitalize on others' hardships. Many scammers are out there looking to take advantage of those in need.  Here is a link to some of the most common loan modification scams to avoid.  

It is somewhat encouraging to know that modification may be a real option (and I do say this with a bit of skepticism).  I will post an update when the results of the modification application are determinable.  In the meantime, we are not currently in the business of preparing loan modification applications, but we are in the business of helping people save their home through chapter 13 bankruptcy cases where a borrower can pay back arrears over a period of three to five years to bring their mortgage current and avoid foreclosure.

Contact Greenwald & Hammond for a free bankruptcy consultation.

Submitted by:

Mindy Greenwald, Esq.
Bankruptcy Attorney

Be Careful What You Wish For

My last blog dealt with credit scores and how to increase them. Most people want an increased credit score because it helps them get more credit or better credit.  For example, you may want to raise your credit score so that you can qualify for a mortgage, or you want to raise your score so you can get a better interest rate on your next car loan.  The first hurdle, of course, is that you need to have credit to work on your score.

If you have bad credit, or have filed bankruptcy, you know that it can be hard to even get credit.  According to a recent article from CNN Money.com, lenders are starting to give credit to high risk people.  The important thing to remember is that the terms of these offers aren’t always good.  People with great credit may have a Visa card with 10-12% interest, but that same bank may offer someone with a lower credit score the same card, but with a 20-36% interest rate.

If you are trying to build your credit score, the goal should be to pay off the card at the end of each month anyway, which would make the interest rate less important.  Of course, we all know that what we intend to do and what we actually do are sometimes very different.  If an emergency does arise, which prevents you from paying the whole amount, those interest rates can really add up.  It could even snowball so that the added interest could prevent you from paying the card off in future months, or ever, which puts you right back where you started.

If you do in fact pay the card off each month, making the interest rate a moot point, you then have to consider the fees charged by the bank.  Always read the terms, also known as the “fine print,” to make sure you know what you’re getting into.  You have to weigh the cost of the fees with the benefit you feel you will get from having the card.

And once again, consider looking into a secured credit card.  You send in your own money as a deposit and charge off of that, but it reports to the credit agencies and helps you build your credit without risk to the bank, or you.  After you have the card for some time, and can show a responsible payment history, the bank may even offer you an unsecured card.

Submitted by:
Kerry Hammond, Esq.

Bankruptcy Attorney

Tips for rebuilding and Raising Your Credit Score

As a bankruptcy attorney, I come across a lot of people with low credit scores and bad credit. Most of the people I talk to are in a position where they can’t pay their bills and need to file bankruptcy. When this is the case, a bad credit score is the least of their worries and the first step to getting a higher credit score is for them to file bankruptcy to discharge the debt that is dragging them down.

After bankruptcy they can take the time to work on building their credit without constant late payments being added to their report. Post bankruptcy, though, credit card companies won’t immediately give you credit. At this time, my clients may choose a prepaid credit card. This is where you send in a deposit and basically charge and pay against your own money. As silly as this may sound at first, it’s a great way to get yourself back into the game. You have a limit based on the deposit you sent in, and can’t go beyond that amount. By charging small purchases and paying it off at the end of the month, that card (which is a Mastercard or Visa) is reported favorably on your credit report.

I also have a lot of clients who buy a car post bankruptcy. The interest rate will be higher than they might have been used to when they had good credit, and they may not be buying the latest and greatest car built this year, but they are building positive credit. Contrary to what a lot of people assume, many car companies will welcome you as a customer right after you’ve filed bankruptcy. The laws limit you to one chapter 7 filing every 8 years, whereas a car loan is generally a 3 to 5 year payment plan. People who have just filed a chapter 7 are a good risk to these lenders because the car loan will be repaid well before they could file bankruptcy again.

If you don’t need to file bankruptcy, but just want to raise your credit score, there are some things you can consider as well. One of the first things you will want to do, and this goes for bankruptcy filers too, is check your credit report regularly. Make sure that everything is reported accurately. You may find that there is an error on your report that is affecting your score. Getting these things fixed can go a long way to an increased score.

Another easy way to increase your credit score is to stop applying for all of the card offers you get. Just about every store I shop in lately asks me if I’d like to open an account and save 10% today. Ignore these offers, you don’t want too many cards out there with limits that you could theoretically charge up. Keep only 1 or 2 cards and use them and pay them regularly. Once you’re a customer in good standing, you can work to increase your limits on those cards.

Unfortunately, there’s no one answer to every person’s credit woes. Each of us has a different income to debt ratio, payment history, etc. But if you follow a few simple guidelines, you may just find that you can bump up your score little by little.

Submitted by:
Kerry Hammond, Esq.

Bankruptcy Attorney

Repeat Filings - When Can Someone Who Has Received a Bankruptcy Discharge File Again?

Most people who file bankruptcy only file once.  The fresh start received is just what was needed for most people to get back on track.  In some instances, however, debtors find themselves encountering new hardships that for any number of reasons put them into a situation where bankruptcy may be their best option.

A debtor who has filed a chapter 7 bankruptcy and received a discharge cannot receive a discharge under chapter 7 for eight years from the commencement of their prior chapter 7 case. This does not mean that there is no solution for a debtor who has previously filed chapter 7 and now is in dire need of debt relief or assistance.

When a debtor who has previously filed chapter 7 bankruptcy, encounters insurmountable new debt, that debtor may consider the option of filing a chapter 13 bankruptcy.  A chapter 13 bankruptcy may be available to any debtor with income as long as their debt does not exceed certain limits.  A debtor who files a chapter 13 bankruptcy at least four years from the date of their chapter 7 filing, may receive a discharge upon completion of their chapter 13 plan. 

A debtor who files a chapter 13 bankruptcy less than four years after filing a chapter 7 bankruptcy is not entitled to a discharge of their new debts, but can use a chapter 13 to catch up arrears on their mortgage, resolve outstanding tax debt, or pay back their creditors without the threat of garnishments, levies or additional late fees and penalties.  Often called a "chapter 20" amongst bankruptcy professionals, a chapter 13 following closely behind a chapter 7 can allow a debtor to reorganize over time and get back on their feet. 

There has been much debate as to whether a debtor who files chapter 13 but is not entitled to discharge due to a prior chapter 7, can use the chapter 13 to remove a second mortgage lien that is deemed entirely unsecured.  As I have previously posted, one benefit to chapter 13 is that in some cases, a second mortgage lien can be removed.  The courts have made it clear that in cases where a debtor is clearly filing a chapter 13 case for the sole purpose of elimination of a mortgage lien, that it will probably find such a plan was not proposed in good faith and therefore deny confirmation of such a plan, if contested by the trustee or the creditor.  The upside is that in Colorado, the bankruptcy court has determined that since the personal obligation to pay on these mortgages are extinguished with the chapter 7 bankruptcy (unless a reaffirmation agreement or refinancing were obtained) that the removal of the lien requires the debtor to complete their chapter 13 plan and therefore a second mortgage that is determined to be unsecured may be removed in a chapter 13 where the debtor is not entitled to a discharge.

While it is widely believed that there are many people who abuse the bankruptcy system, the truth is that most people who file bankruptcy do so with much hesitation and most never want to do it again.  The bankruptcy code is written to prevent abuses and recent law changes have made it even harder for those who would consider abusing the system. 

If you have previously filed for bankruptcy relief and are finding that circumstances are such that you may need relief from new debt contact Greenwald & Hammond for a free bankruptcy consultation.  We can discuss your options and make a determination as to the best course of action to reduce or eliminate debt.

Submitted by:
Mindy Greenwald, Esq.
Bankruptcy Attorney