Tag Archives: credit cards

Using credit cards and boosting your credit score after bankruptcy

May 12, 2017 J. Wrobel Leave a comment

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.

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

Consumer Finance

Want to get rid of overdraft fees forever? Five steps to success!

May 20, 2016 J. Wrobel

The majority of people who pay the lion share of bank overdraft fees are the people who can least afford those fees! Have you ever needed to buy gas and knew you were low on your checking account balance, but knew the debit card would still work? I hope you filled the tank because a $35 fee on top of a $20 gas purchase makes no sense. Some people tell stories about banks choosing to approve and post your larger purchases first, to help you, of course, and then they post the small stuff last. If your smaller purchases for the day post when your account is in the red, each little purchase might trigger an overdraft fee. That can make for some expensive coffee, even if it was from a gas station.

Think of overdraft fees as a bad habit you can kick if you follow five steps to success!

Ditch the overdraft protection so your card declines and you avoid the fees.

Consumer protection laws designed to protect you, require you to opt-in to the bank’s overdraft protection programs. If you do not opt-in to overdraft protection, your debit card will be declined when you go to make a purchase and there is not enough money in the account to cover it. The upshot is not being able to overdraw your checking account by over swiping your debit card. These days, payment system technologies hold the money on your debit card, and even though it might not post for a day or two, you should not be able to overdraw your account with debit transactions if you do not opt-in to overdraft. Make sure you have some emergency cash or a credit card on hand in case you need it.

Connect a savings account to your debit checking to cover any “oops” charges.

Most banks and credit unions offer the ability to connect your checking account to an emergency or back-up account that will transfer some money into your checking account when it becomes overdrawn. The idea is to use your own money to cover it instead of using the bank’s money to cover your overdrawn purchases and sock you with fees. This is a good way to cover yourself in the event you completely forgot the tollway was going to debit that extra $40 from your account when your tollway balance fell short.

Pay with a credit card or actually use cash, and when it’s gone, you’re done spending.

Credit cards are great when you use them like debit cards. How much do you have in the account? That’s how much you can afford to swipe on the credit card. Now, if you blow a tire and need to buy a new pair of tires, the several hundred dollars might have to ride on the credit card for a paycheck or two, but when you get caught back up, any interest you might pay for carrying a balance is tiny in comparison to overdraft fees. Stashing emergency cash in the car and at home is a good idea. Some people call it “wall money” and more often keep it in a coffee can out of reach in the kitchen or somewhere only you know where it is. If you have to, run to the bank and make a deposit before the end of the business day so there is enough money in the checking account before the bank posts the transactions that could put you under and tack on all the overdraft fees.

Make your mother proud, sit down, and make a budget you can manage.

Go ahead and skip to number five if you want, but consider making a budget, if only for a minute or two. Figure your fixed monthly expenses and determine how much you can really afford for discretionary expenses and fun stuff. Imagine when you get paid, you take a pile of cash and stack it up in the different budget piles – when the money’s gone, you’re done spending it. You might get mad the first few times you learn how it feels to want to go out to dinner and you regret spending your extra budgeted money on baseball tickets. It really takes discipline. If you try and fail, try and try again. You might just end up making some positive spending and saving habits despite your spending habits.

Save money for rainy days or those days you otherwise would have overdrawn your account.

A savings account can be addictive. When people start saving money they are proud of the stash they set aside and want nothing to ever happen to it. As you keep adding a little bit here and there, you feel more pride in your savings. If in the meantime you overdraw your account or run out of money and need that new set of tires, pull some from savings – it’s okay, that’s what it’s there for. Financial success is a function of your wins and losses with money. Think of it like a game you can play. Test yourself and see how strong you may need to be to win the battle. When you win more battles than you lose, you win the war against overdraft fees!

Joseph Wrobel, Ltd., is here to help individuals take advantage of bankruptcy laws to help get a fresh start. However, if we can share smart financial advice to help you avoid a bankruptcy, or keep a clean financial record after a bankruptcy, it’s a good thing for everyone.

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.

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

Bankruptcy Beyond The Basics, Bankruptcy Odds and Ends, Consumer Finance

Credit cards after bankruptcy: Don’t fear the system, use it to your benefit

May 21, 2015 J. Wrobel Leave a comment

You might have heard it before, “What happened before your bankruptcy doesn’t matter, it’s all about what you do afterwards.” This is true with credit cards and your credit scores. Many people are reluctant to get a credit card after a bankruptcy because they are afraid they will fall back in the same trap that put them in a Chapter 7 or 13 in the first place. Qualifying for a credit card might be easier than you thought, and a secured card might be your best friend in rebuilding your credit rating.

Your credit score is an asset and you can and should use it to help you get ahead and build for the future.

Think of your credit rating as an asset you can use to leverage your ability to pay the credit cards back when you are carrying less debt on your shoulders. The ability to earn credit and pay it back is not the same after a bankruptcy discharge. If you owe less money to people, lenders might be more likely to extend that credit you might need to get ahead or keep up if something comes up.

Credit histories and scores are important when you apply to rent a home or apartment, when you look for a new job, and when you want to borrow money from your bank or credit union to buy a new car or something you need around the house, garage or lake. If you can reasonably afford a monthly payment, you should be able to borrow money and make the monthly payments, on time, to help rebuild and boost your credit score.

When should you apply for a credit card or a loan, to make purchases and rebuild credit?

As soon as you are able to obtain a line of credit, secured or unsecured, it makes sense to take these steps to rebuild and earn a better credit score than you thought you could achieve. The key is to spend your credit as if it is cash in your checking or savings account. Some people keep their credit card receipts and toss them in a box, paper-clipped to cash to cover the receipt. Then, when it is time to pay the bill, turn the cash into a proper payment method and pay that credit card in full every month.

If you can otherwise manage your money and not get behind in payments, go forth and charge away. There might be an emergency where you can only pay the minimum from time to time, but recall the spending and payment patterns that caused problems in the first place. If your bankruptcy was a result of a medical emergency or unforeseen event, please do not be offended by these tips, but appreciate that many people fall behind financially through their own doing or with no fault whatsoever. Again, what matters after a bankruptcy is more important than what lead to the filing in the first place.

Go get a secured credit card; you might be able to get one very soon after your bankruptcy discharge.

Many ask, “Who would ever give me credit after a bankruptcy?” The lending decision on extending credit is based on the likelihood that the debt will be repaid or secured in the event the borrower defaults. A secured credit card is one that looks and works just like any conventional credit card, with one exception, you pay a deposit, held by the issuing bank or credit union. If you don’t pay the bill on your secured card, the bank collects your deposit and they are not out the money. It makes sense for them and it makes sense for you.

Credit unions operate using a different set of rules for lending, and they can offer more options to someone in the process of rebuilding their credit. Start by setting up a checking or savings account with a credit union nearby your home or place of employment. If you get to know the people at the credit union when you stop by to make deposits and withdrawals, they can get a better sense of who you are as a person, not just a number on a credit report. Of course there are rules the credit unions follow, and it may be a while, but eventually they might be the best place to go when looking for a (secured or unsecured) credit card, home, boat or auto loan.

Joseph Wrobel, Ltd., wants to help clients get back on their feet and achieve financial success.

Encouraging clients to go forth and be financially successful after a bankruptcy should be the goal of an ethically managed bankruptcy law firm. At Joseph Wrobel, Ltd., we want you to succeed and send us referrals, and hopefully you won’t need to file another bankruptcy of your own in the future. We work to share information and encouragement to those who ended up in a financial bind and really do wish all our clients the best in future financial success.

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. To keep in touch and read about consumer finance news and stories you can Like the firm’s Facebook page and Follow Joseph Wrobel. Ltd. on Twitter. If you need immediate legal assistance, please call Joseph Wrobel, Ltd. by calling (312) 781-0996 to talk to an attorney today.

Bankruptcy Beyond The Basics, Bankruptcy Odds and Ends

Credit scores, cards and reports: What you might not know

January 31, 2014 Joseph Wrobel Leave a comment

Credit cards and our credit scores have become parts of our lives and daily business to the extent that losing them can paralyze people experiencing financial hardship. Financial troubles leading people towards a bankruptcy filing are not always the individual’s fault. A divorce, injury or job loss can happen and leave good people in peril with their credit scores and credit cards. There is a saying among bankruptcy attorneys – what happens after the bankruptcy is more important than what brings the client to seek bankruptcy in the first place. There are plenty of options to restore credit and the ability to make online payments. Do not give up and throw in the towel or go off the grid because creditors suggest that if you file bankruptcy you will never be able to swipe a tank of gas or cover an emergency expense.

Why is credit important and why do we need credit and debit cards to pay?

Fair or unfair as it may seem, the American system of issuing credit is what keeps the economy moving. Do you remember the problems our country experienced at the beginning of the recession? One of the biggest problems was failure and refusal of banks to issue credit for consumer goods, homes, cars, and to businesses with fixed expenses. The method of payment nowadays is plastic. We pay our bills online and over the phone using debit and credit cards. When was the last time you went to a local utility to pay with cash or check? The reality is that it is easier and sometimes only possible to pay using plastic. People considering bankruptcy should know there are easy alternatives to what we often think about when talking about credit and debit cards.

Filing for bankruptcy in most cases will not affect most people’s checking accounts and the debit cards used to pay for bills and daily expenses. If however, the account is overdrawn and no payment is made, the account can be sent to collections and opening a new account could be difficult. An alternative is the pre-paid debit cards now offered by many banks. They work just like a traditional checking account based debit card. A difference can be that the pre-paid cards, just like gift cards, prevent the user from overdrawing the account. Prepaid debit cards holders can access their accounts online, deposit, withdraw funds, and continue despite credit and bank account options.

Pre-paid credit cards, also known as secured credit cards, are similar to prepaid debit cards with the exception that the applicant prepays a certain amount (often under $500) and that money is held in a separate savings account. The card is “secured” by the deposit and the use may proceed to use the card just like a regular credit card and pay the monthly bills. If the bill is not paid, the deposit is forfeited. A major benefit of the pre-paid credit card is the positive effect on the credit score. If the person is in a bankruptcy and some of the immediate financial pressure is off, it is easier to use the pre-paid credit card for common monthly bills. As the credit card is used and paid in a responsible manner the credit score should improve.

Getting back on track can also include challenges to inaccuracies on credit reports.

In cases where damage to credit scores are a provable fault of another, the damage to the credit score can be translated to a specific dollar amount using a credit damage expert who prepares a report for court hearings where the credit damage is at issue. There are also credit repair companies who, for a reasonable fee, help people find and attack inaccurate marks on a credit report including something referred to as “zombie debt,” which often indicates collection amounts that are frequently bundled and sold among collection companies. Note that debt repayment companies offer different services and it is important to get the right answers before making important decisions that can affect the future.

How can Joseph Wrobel help?

Joseph Wrobel and the attorneys at Joseph Wrobel, Ltd. have relationships and can help clients with everything from stopping harassing collector calls to helping clients get new forms of debit and credit cards to keep moving and paying bills as well as attack bad credit report marks and scores.

If you want to learn more about bankruptcy and credit management, contact an attorney at Joseph Wrobel, Ltd. The firm’s website contains informative videos about financial issues as well as bankruptcy protection for families who want a fresh start. To keep in touch and read about consumer finance news and stories you can Like the firm’s Facebook page and Follow Joseph Wrobel. Ltd. on Twitter. If you need legal assistance, please call Joseph Wrobel, Ltd. by dialing (312) 781-0996 to talk to an attorney.