Tag Archives: Chapter 7

Using credit cards and boosting your credit score after bankruptcy

 

After a bankruptcy discharge of those pesky debts you don’t miss, your available cash flow is increased and you should have more spending power. Your credit score is a function of several variables, not a mean person sitting in judgment of you. As you have more cash flow and spending ability, the decision to extend credit to you is easier because you are more likely to pay the bills when you can afford to. Once you get new credit cards there are a few things you should do to maximize your opportunity to boost your credit score.

Your credit score is determined by a variety of financial factors:

  • Credit card utilization
  • Payment history
  • Derogatory marks
  • Age of credit history
  • Total accounts
  • Hard inquiries

When you use credit cards and are working on boosting your credit score to qualify for a new home, many credit advisors will tell you to use your credit cards but not more than 30 or 40 percent of the available credit rating. It’s a good idea to pay your fixed expenses such as phone or internet with the credit card. Since you know you must pay that bill anyways, why not build your credit?

The next step with the credit cards is setting up automatic minimum monthly payments to be made by your debit card or checking account so you never have to worry about a late payment. When you pay your bill, which is easy to do now on apps on your phone, do not pay the entire balance. It is better to leave a few dollars on your balance so that it appears you are actively using the card – once a month the credit cards send a report to the credit bureaus and if your balance is zero it may look like you are not using the card and that can damage your credit score.

About us: Joseph Wrobel, Ltd., works with clients to find out if they qualify for Chapter 7 or 13 bankruptcy, and their options and rights under the law. The firm will also advise and assist clients with questions and concerns about the collectors and their rights to pursue you.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

Can my college transcripts really be withheld if I owe the school money?

At various times in life we may be asked to produce our college transcripts for a new job or an application to a program or further education. This issue arose in a question covered in the Chicago Bankruptcy Update podcast series where real questions are asked and answered by Chicago bankruptcy attorney, Joseph Wrobel. The individual seeking guidance needed a copy of their college transcript and the school refused their request, stating that an outstanding amount of $3,000 was still owing for tuition.

In this case the individual seeking their college transcripts filed a Chapter 7 bankruptcy and received a discharge. The short answer to the question as to whether the school may withhold the transcripts is a function of the automatic stay provision in the Bankruptcy Code.

When you file for bankruptcy, the automatic stay provisions protect you from collection activity.

The automatic stay takes effect when the petition for bankruptcy is filed with the bankruptcy court. The automatic stay provision prohibits creditors from engaging in collection activity while a bankruptcy case is active and until the case is over. While Chapter 7 discharge cases can be completed in a matter of months, a Chapter 13 reorganization case, involving payments to the trustee to catch up on debts, can be structured with three to five years of scheduled payments, thus the automatic stay is effective for a longer period of time.

The school’s refusal to tender the college transcripts is a collection activity. If the student does not pay the outstanding tuition, the school may refuse to offer the transcript. If, however, the request for the transcripts is made during a period when the automatic stay is active, the school is prohibited from collection activities and would be required to turn over the transcript.

You may be able to obtain a discharge of your duty to pay a debt, but the creditor may still want payment and in this case, can continue withholding the transcript, even after bankruptcy.

As soon as the bankruptcy case were to end and the automatic stay naturally terminates, the school could resume the position that they will not tender the transcripts until payment is made. Understand that the bankruptcy discharge may have the effect of terminating the school’s legal right to collect the debt, the debt still exists insofar as the school may still want the debt repaid before they tender the transcript.

A word to the wise: it is a good idea to keep copies of academic transcripts just in case a situation like this were to happen to you. While most people never plan to file for bankruptcy protection, financial emergencies and other bad things can happen to good people.

Joseph Wrobel, Ltd., works with clients to find out if they qualify for Chapter 7 or 13 bankruptcy, and their options and rights under the law. The firm will also advise and assist clients with questions and concerns about the collectors and their rights to pursue you.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

 

Aging parents and questions about bankruptcy and finances

Many of us have aging parents and as adult children we find ourselves in the position to advise and assist our parents when they have financial troubles they might not be able to handle on their own. For purposes of this article we are focusing on the scenario involving a question we received and addressed on our recent monthly Bankruptcy FAQ podcast show – click/tap here to listen to the program.

Our hypothetical parent is your widowed mother who does not work but collects Social Security. She has some cash savings but not so much a creditor is likely to sue her to collect and try to enforce a money judgment. Mother obtained a reverse mortgage and the current equity in the home is less than its fair market value in the real estate market. Over time mother has almost $25,000 in credit card debt and fell behind on payments after she had an unexpected and expensive car repair. Mother was researching bankruptcy online and learned that filing for bankruptcy can stop the annoying creditors from calling during her favorite programs. Mother does not have cable recording or DVR so she cannot pause her favorite programs when the phone rings. What can we do to help her?

Note that you have some concerns about mother’s capacity to handle a bankruptcy case own her own and you are afraid she is going to need your help if she decides to file for bankruptcy.

You may need to be a court-appointed guardian if you want to help mother.

Most of us on a good day are nervous hiring lawyers or appearing in court for something like a bankruptcy case. The good news is that unlike some other types of court actions, a bankruptcy does not require the petitioner to attend frequent court appearances. Once you meet with your bankruptcy lawyer and they file the case, you must appear at one court appearance and that is all. Of course there could be more required appearances if the case ends up in contested litigation; not a concern for most people.

If mother cannot sign the documents or appear in court, you may be appointed by the court as a guardian to represent your mother’s interests as the bankruptcy petitioner. The guardianship appointment is an additional step, but it is not a difficult process.

Mother might be considered judgement proof and may not need to file for bankruptcy.

Creditors take action against debtors, suing and collecting money judgments when there is a likelihood of successful collection. The amount of resources necessary to sue and collect a judgement from someone who does not have money to collect simply does not make sense for most creditors. If mother does not have wages to garnish or significant assets, it is unlikely mother will ever get sued on the outstanding credit card debt; more likely the creditor may write it off as a loss.

With the reverse mortgage and mother’s house being worth less than the fair market value there is nothing for a creditor to pursue. Also, in many instances it may be difficult for a creditor to sue to foreclose on a property to collect a debt, especially with a reverse mortgage in place to be repaid before any following creditors.

Even if mother qualifies for a Chapter 7 bankruptcy, it might not be necessary, although it can stop those annoying phone calls.

Depending on the equity in the home, mother may or may not qualify for a Chapter 7 discharge – the means income testing might show that she only qualifies for a Chapter 13 reorganization bankruptcy where she repays the credit card debt over a three to five-year payment plan. Even based on the facts set forth in this situation, the bankruptcy attorney may need additional information to determine which chapter, 7 or 13, would be available to mother.

Mother is probably judgment proof and does not need to file a bankruptcy. She may tell you she wants to file one anyways, simply to stop the credit card companies from calling during her shows. At her age, you might just want to indulge her wishes and help however you can.

Joseph Wrobel, Ltd., works with clients to find out if they qualify for Chapter 7 or 13 bankruptcy, and their options and rights under the law. The firm will also advise and assist clients with questions and concerns about their aging parents.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

 

Taking the sting out of bankruptcy: You may be surprised how liberating it can be

There are many people who consider filing for bankruptcy for a while before they finally decide it is time to go ahead. Some of the common fears people have is that everyone will find out about the bankruptcy and shun them or talk behind their back. In all likelihood, the people you think may be doing so well may also be considering a Chapter 7 or Chapter 13. It is important to remember that a bankruptcy does not mean failure – a bankruptcy means you are smart enough to take advantage of the law to protect you and give you a fresh start. People may be hesitant to file for bankruptcy because a friend told them incorrect information about the trustee coming to take and sell everything they own; this is a false myth. Credit scores are another concern many have, and they fear they will never get credit again, when in reality many lenders may look more favorably on you after you no longer are buried under a mountain of debt. While it is not the most common topic of conversation, many will tell you the relief they experienced after they filed for bankruptcy and got the mountain of debt and creditors off their back.

People are not likely to find out about your bankruptcy unless you tell them.

In years past, there may have been a more negative stigma to bankruptcy and small town newspapers published names and cases, possibly for the benefit of any creditors and providing them notice. In reality today, there are so many bankruptcy filings, especially in major cities like Chicago, that the newspaper would be massive if bankruptcy filings were posted. Unless you decide to tell people, your friends and neighbors will never know you filed for bankruptcy protection. There is a federal bankruptcy website where you can look up your own bankruptcy information and it will appear on your credit report and on background checks. Do now worry however, as more people have bankruptcies than you may realize and they still find new jobs, buy homes and cars.

It is not an immoral or unethical decision to take advantage of financial laws like bankruptcy.

Say you are sued by a creditor and they obtain a court judgement against you for $50,000. Yes, you can list that money judgment in your bankruptcy and wave goodbye to paying that off. For many people, the threat of a judgment being collected by wage garnishments and asset seizures is enough for people to decide to file for bankruptcy. Some people worry that the judge or court may be mad at you, but that is of no concern. A money judgment is just a court order to pay someone. The obligation to pay a debt can be discharged in bankruptcy – the whole point is to eliminate debts you cannot afford to pay so you can have a fresh financial start.

You can keep your car, house and belongings despite filing for bankruptcy.

There is a qualifying financial test called the Means Test and a bankruptcy lawyer can review your financials and advise you whether you qualify for a Chapter 7 discharge, the traditional bankruptcy most of us think about, or a Chapter 13 reorganization, in which you can make payments to catch up on your debts over a three to five-year period. If your vehicle is financed, you can sign a reaffirmation agreement and keep making payments despite the bankruptcy. You are allowed to keep a certain amount of equity in your home and personal belongings and assets up to a certain exemption value, despite filing for bankruptcy.

One of the best things about a bankruptcy filing is that by law, the automatic stay provision of the bankruptcy laws kicks in when you file your petition for bankruptcy – creditors and collectors must stop all collection activity and they can no longer call you while you are in bankruptcy. The stress relief of the automatic stay provision alone may bring you to a major sigh of relief.

Joseph Wrobel, Ltd., works with clients to find out if they qualify for Chapter 7 or 13 bankruptcy, and their options and rights under the law. The firm will also advise and assist clients with best credit repair options.      

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

 

 

 

How many ways can credit scores cost me money? What can I do about it?

The Consumer Federation of America “(CFA) is an association of non-profit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization’s Board of Directors.[i]” The CFA studies consumer behavior and uses focus groups to follow economic trends and how public policy can affect consumers. The use of credit and the cost to consumers when they have low credit scores is a particular area of inquiry for the CFA. Creating pro-consumer policies and increasing communication and awareness about credit issues is a focus of this service organization.

The recent survey and release of findings on credit scores and the costs to consumers

The CFAs sixth annual survey of credit scores today, was released June 13, 2016. The survey findings indicate that over 80 percent of consumers do not understand some basic facts about their credit scores. The following are highlights of the survey as reported in the CFA press release:

  • Credit scores are used by mortgage lenders (88%) and credit card issuers (87%).
  • Key factors used to calculate credit scores are missed payments (91%), personal bankruptcy (86%), and high credit card balances (85%).
  • Ethnic origin is not used to calculate these scores (believed by only 12%).
  • 700 is a good credit score (81%).[ii]

The findings show that the Millennial generation have less an understanding of the credit scoring system when compared to Generation X.

What consumers do not know, can cost them money

A low credit score can affect many aspects of a consumer’s day to day life. Not only is your credit score used to determine the percentage rate you would pay on a car or home loan. The insurance rates you pay can be significantly higher than your neighbor with the higher credit score. When the insurance companies consider a consumer with a low credit score (something under 620) they figure that individual is more likely to file multiple insurance claims, and the statistics back it up.

Many people with low credit scores have more difficulty financing a home and renting is their only option. More bad news for renters with low credit scores – expect to pay a higher security deposit when renting a home or apartment. The assumption is that people with low credit scores have a hard time paying their bills, so the rental owner wants more money on deposit in case the renter with the low credit score cannot pay their rent.

Today is the day you can start learning more about credit and how to maximize yours

By reading this article and the CFA press release, you will know more about credit than many others out there. Here’s something else to be aware of, advocates for reform want more protection for consumers so their lives are not determined by credit scores. If you do some research on the Internet, you can learn how to write your local legislative representatives and tell them you want them to take better care of consumers with protection laws that prevent big companies from charging you more money due to your credit score.

Next steps in repairing, boosting and making your credit score bulletproof

Well, we can’t really make your credit rating bulletproof, but there are several ways you can improve your score and keep it there. If you are underwater on all your payments and your scores suffer every month with negative reports, a Chapter 7 or 13 bankruptcy can help you wipe out the debts you cannot pay and give you a fresh start. Rebuilding your credit is much easier when you are not behind the eight ball. We can connect you with credit repair companies who use advanced systems to wipe out negative debt and “zombie” debts that may be hurting your score. When you also consider secured credit cards, credit unions and more, you can really take control of your credit, save money and live the way you deserve!

 Joseph Wrobel, Ltd., works with clients on consumer issues including bankruptcy and they can offer additional information to find out if you qualify for Chapter 7 or 13 bankruptcy, and your options and rights under the law. The firm will also advise and assist clients with best credit repair options.   

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

 

 

 

[i] Consumer Federation of America, website, About CFA

[ii] Consumer Federation of America, 6th Annual Credit Score Survey Reveals Large Majority Know Credit Score Basics But Don’t Understand Important Details, Jun. 13, 2016 press release.

Memorial Day 2016 Chicago Bankruptcy Question and Answer Podcast with Joseph Wrobel

Chicago bankruptcy and consumer credit attorney Joseph Wrobel shares news and updates in bankruptcy law as well as business and consumer financial matters. It has been documented that financial troubles can cause all sorts of ailments, the most common of which is sleeplessness. Joseph Wrobel helps clients alleviate their anxiety created by the inability to pay bills and the embarrassment of financial distress.

Click/tap here to listen to the podcast

Sample questions answered in this 30-minute show:

  • Can I convert from a Chapter 7 to a Chapter 13 bankruptcy if I made the wrong filing?
  • Is there a way to stop a garnishment and get a payment plan without filing bankruptcy?
  • Will the bankruptcy trustee sell my house in order to pay off any of my debts?
  • How can I file for Chapter 7 with damaged credit and little or no student income?

Joseph Wrobel has been a practicing attorney since 1973 and has experience in a wide variety of law relating to legal matters for individuals and families. Wrobel helps clients get out of debt and get a fresh start. He is an active member in several bar associations and the Bankruptcy Panel of Pro Bono Program of the Chicago Volunteer Legal Services. After serving the U.S. Army Reserve 363rd Civil Affairs Unit, Wrobel earned a B.A. in Psychology from Northwestern University and in 1973, he earned a JD from DePaul University Law School.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

Visit our Chicago Bankruptcy website online for more about the firm or call for more information at (312) 781-0996 or e-mail at JosephWrobel@ChicagoBankruptcy.com.

May 2016 Chicago Bankruptcy Question and Answer Podcast with Joseph Wrobel

Chicago bankruptcy and consumer credit attorney Joseph Wrobel shares news and updates in bankruptcy law as well as business and consumer financial matters. It has been documented that financial troubles can cause all sorts of ailments, the most common of which is sleeplessness. Joseph Wrobel helps clients alleviate their anxiety created by the inability to pay bills and the embarrassment of financial distress. CLICK/TAP HERE TO LISTEN ANYTIME

Sample questions answered in this 30-minute show:

  • My real estate taxes are going to be sold, would Chapter 7 or Chapter 13 help me?
  • What can I do if I need to file for bankruptcy but cannot afford to hire a lawyer?
  • Can someone still sue me to get a judgment if I file for bankruptcy?
  • My husband lost his job, we are on disability, and have medical debt, what can we do?

Joseph Wrobel has been a practicing attorney since 1973 and has experience in a wide variety of law relating to legal matters for individuals and families. Wrobel helps clients get out of debt and get a fresh start. He is an active member in several bar associations and the Bankruptcy Panel of Pro Bono Program of the Chicago Volunteer Legal Services. After serving the U.S. Army Reserve 363rd Civil Affairs Unit, Wrobel earned a B.A. in Psychology from Northwestern University and in 1973, he earned a JD from DePaul University Law School.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

Visit our Chicago Bankruptcy website online for more about the firm or call for more information at (312) 781-0996 or e-mail at JosephWrobel@ChicagoBankruptcy.com.

February 2016 Chicago Bankruptcy Question and Answer Podcast with Joseph Wrobel

Chicago bankruptcy and consumer credit attorney Joseph Wrobel shares news and updates in bankruptcy law as well as business and consumer financial matters. It has been documented that financial troubles can cause all sorts of ailments, the most common of which is sleeplessness. Joseph Wrobel helps clients alleviate their anxiety created by the inability to pay bills and the embarrassment of financial distress.

CLICK/TAP HERE TO LISTEN ANYTIME

Sample questions answered in this 30-minute show:

  • What is the minimum amount of debt required to file for bankruptcy?
  • Will my fiancée’s student loan debt become my debt once we are married?
  • Can my spouse be sued for debts, or her assets seized I owe if I file for bankruptcy alone?
  • Can a chapter 13 bankruptcy help me reduce my monthly student loan payments?

 

Joseph Wrobel has been a practicing attorney since 1973 and has experience in a wide variety of law relating to legal matters for individuals and families. Wrobel helps clients get out of debt and get a fresh start. He is an active member in several bar associations and the Bankruptcy Panel of Pro Bono Program of the Chicago Volunteer Legal Services. After serving the U.S. Army Reserve 363rd Civil Affairs Unit, Wrobel earned a B.A. in Psychology from Northwestern University and in 1973, he earned a JD from DePaul University Law School.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

Visit our Chicago Bankruptcy website online for more about the firm or call for more information at (312) 781-0996 or e-mail at JosephWrobel@ChicagoBankruptcy.com.

Beware of credit repair scams

Credit repair scams are unfortunately common and it is important to do your homework and research a company who makes claims they can repair and rebuild your credit score and reputation. Many people worry that filing for bankruptcy and taking advantage of the laws to help get a fresh financial start will cripple their credit forever. In many cases, bankruptcy filers are pleasantly surprised how easy it is to get a loan for a home or car, or get a new credit card within a number of months after a bankruptcy. When you have fewer active debt and collection liabilities, you are likely better able to pay your bills and be approved for credit. You might pay a higher interest rate on a loan, but the amount of debt discharged in a Chapter 7 or 13 bankruptcy makes the trade off worthwhile.

The Federal Trade Commission offers free information to help consumers spot and report credit repair scams. You’ll know you’re encountering credit repair fraud if a company:

  • insists you pay them before they do any work on your behalf
  • tells you not to contact the credit reporting companies directly
  • tells you to dispute information in your credit report — even if you know it’s accurate
  • tells you to give false information on your applications for credit or a loan
  • doesn’t explain your legal rights when they tell you what they can do for you

Examples of recent credit scams and alerts to consumers to beware:

A court responded to the Federal Trade Commission request to stop the operations of First Time Credit Solutions, a credit repair company allegedly posing as an affiliate of the FTC when marketing to Spanish-speaking consumers. The complaint alleges marketing as “FTC Credit Solutions” and used a false affiliation with the federal agency to sell fraudulent credit repair services. The company guaranteed a 700 or higher credit score to its customers within six months or less.[i]

In another credit repair scam, a Florida company was fined $7.4 million by the FTC and ignored court orders to cease and desist from selling their illegal credit repair system. The owners of the company operated under several names: BFS Empowerment Financial Services, Inc., Help My Credit Now Credit Services, Inc., and Kevtrese Enterprises, Inc. These companies claimed they could permanently remove negative information on credit reports, even when the negative information was actually true and correct.

Joseph Wrobel, Ltd., can refer clients to reputable credit repair companies that do not make outrageous claims and make false or illegal promises.

A general rule applies to credit repair as it does in any business, if it seems too good to be true, it probably is. We have relationships with reputable credit repair companies who are especially helpful when you may have lingering negative information on your credit report about debts that were discharged in bankruptcy.

Joseph Wrobel, Ltd. helps people get control of their finances and a fresh start at financial freedom. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start.

Don’t forget to keep up with us on FacebookTwitterLinkedIn and Avvo, where you can read client and peer reviews!

 

[i] New America Media, Court Shuts Down Credit Repair “Scam” that Targeted Latinos, by George White, Apr. 114,2015.

Chicago Bankruptcy Questions and Answers with Joseph Wrobel, December 2015

Chicago bankruptcy and consumer credit attorney Joseph Wrobel shares news and updates in bankruptcy law as well as business and consumer financial matters. It has been documented that financial troubles can cause all sorts of ailments, the most common of which is sleeplessness. Joseph Wrobel helps clients alleviate their anxiety created by the inability to pay bills and the embarrassment of financial distress.

Sample questions answered in this 30-minute show – click here and listen anytime

  • Can I still file for Chapter 7 bankruptcy, even after I was served with a foreclosure complaint?
  • What is the pre-bankruptcy course, and why and when do I have to complete it?
  • Are there limits to the interest fees and charges I have to pay on credit card debt in Chapter 13?
  • How does reaffirmation work with loans for homes and vehicles when we want to keep them?
  • How will I be affected by my spouse’s bankruptcy filing, and do I also need to file with them?

Joseph Wrobel has been a practicing attorney since 1973 and has experience in a wide variety of law relating to legal matters for individuals and families. Wrobel helps clients get out of debt and get a fresh start. He is an active member in several bar associations and the Bankruptcy Panel of Pro Bono Program of the Chicago Volunteer Legal Services. After serving the U.S. Army Reserve 363rd Civil Affairs Unit, Wrobel earned a B.A. in Psychology from Northwestern University and in 1973, he earned a JD from DePaul University Law School.

Don’t forget to keep up with us on Facebook, Twitter, LinkedIn and Avvo, where you can read client and peer reviews!

Visit our Chicago Bankruptcy website online for more about the firm or call for more information at (312) 781-0996 or e-mail at JosephWrobel@ChicagoBankruptcy.com.