Tag Archives: secured credit cards

7 bankruptcy repercussions are myths not to worry about

While some people take advantage of bankruptcy laws to improve their lives and finances, others have a long list of excuses why they refuse to file for bankruptcy protection. While some of the concerns people have are reasonable, they are often blown way out of proportion by the people who do not want you to get a bankruptcy. Who are these naysayers? Largely the people who work in the business of debt consolidation will try to scare you with misconceptions about bankruptcy.

Here is a list of bankruptcy repercussions you were told about but will probably never experience:

  1. The bankruptcy trustee will take everything you own. Not true: There are state exemptions allowing you to keep your personal belongings, vehicle and equity in your home up to a certain dollar amount.
  1. Everyone in town will know about your bankruptcy. Not unless you tell them: Where in the past years bankruptcies were more difficult or less common they may have appeared in the newspaper. Nowadays and especially in a big city like Chicago, nobody will ever know unless you tell them.
  1. Your wife will leave you and take the kids. While it’s possible, it’s unlikely: The negative stigma that used to follow a bankruptcy many years ago is no longer an issue for so many people who likely know people who got a bankruptcy and are doing well and are financially successful after their bankruptcy.
  1. You won’t be able to keep your home or car. You have options: You may keep your car if its value falls within exemption limits or you can sign a reaffirmation agreement to keep the car and make payments on it despite the bankruptcy. Keeping your home may be equally feasible through a Chapter 7 discharge or Chapter 13 reorganization bankruptcy case.
  1. The boss will surely fire you when they find out. Your boss has no reason to know: Unless you tell your boss that you need a day off work to attend your initial bankruptcy hearing, they have no reason to know about it. In fact, many people file for bankruptcy to prevent their boss from knowing about a wage garnishment, something they can avoid if they file bankruptcy.
  1. You won’t be able to rent an apartment. Not true: Even people with the most concerning financial track records are able to rent an apartment, and the only difference may be an extra month’s worth of a security deposit required by the landlord.
  1. You will never be able to get credit again. Biggest misconception: The moment your former debts are wiped away in bankruptcy, you have more spending power and a better ability to pay your bills. Not long after a bankruptcy you can get a secured credit card and start rebuilding your credit, focusing on your current and future credit while forgetting about the past.

If you want to learn the real expectations you should have when considering a bankruptcy filing, contact Joseph Wrobel, Limited to learn bankruptcy is like in the present day.

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!

 

Credit repair tips: Secured credit cards, limited balances and OptOutPrescreen.com

There are many misconceptions out there about which path is the right one to financial freedom and success. One thing to always ask yourself is, “Who has something to gain by the decision I make?” If you are researching whether bankruptcy or a debt repayment plan is going to work, you will likely hear a variety of things from people with a wide range of opinions regarding the best route to a good credit score. If you have bad credit because you fell on hard times, it can be fixed. People who file bankruptcies typically qualify for conventional home loans with competitive rates within four years of filing bankruptcy. In a bankruptcy, you can discharge some or all debt you cannot repay. After the bankruptcy, when you are not suffering from all that debt, it is easy to get a secured credit card or two and follow a few credit building rules if you want to qualify for a good mortgage.

How does credit scoring work, generally?

Your credit scores all vary slightly among the three major credit reporting bureaus, TransUnion, Innovis, Equifax and Experian. While it may seem like a mystery calculation behind the magic curtain, there are a few basic rules that make logical sense. Your credit scores reflect the amount of risk a lender is taking by giving you a loan, mortgage or credit card. The better the score, the more likely you are to pay your bills and loan payments on time. If you owe less debt and don’t have a dozen minimum monthly credit card payments, you likely have the money to pay your bills – this is your DTI – debt to income ratio. You want your income to be enough that after you pay your bills you have extra spending money to save for a rainy day. If that is you, you are less likely to default on your bills and loans.

Regarding credit cards, there is a similar calculation of how much credit you have and how much you use. The information on your credit report indicates how high your balance may be and the amount of your credit limit you use. A significant portion of your credit score is an equation of how much credit you have available and how much you use. People looking to get into a new mortgage are often told to never use more than 20 percent of the available balance on a credit card. So, if you get a credit card with a $300 limit, don’t charge more than $60 a month. Always make the payment on time but do carry a small balance instead of paying it off in full – because if the credit card company is reporting zero balances it looks like you have credit cards you are not using and that can hurt your score.

You can always get a secured credit card even if you don’t qualify for a regular credit card yet.

Secured credit cards are easy to obtain. Most local banks offer them. You pay a $200 deposit, for example and your secured card will have a $200 limit. You can use it to pay a small monthly bill or two, like Netflix, every month, and you are now boosting your credit score. If you fail to pay the credit card bill, the company cancels the card and you forfeit the deposit. If there are more charges you can be on the hook for them as well and a collector will hurt your credit score and call and harass you until you pay up. If you are working on credit to apply for a mortgage, use the same rules that apply to conventional credit cards, and always keep your balance due somewhere between 10 and 20 percent of the available balance on the card. Again, avoid maxing out the card, even if you pay it off every month in full or always make the minimum payments on time. Just like the debt to income ratio, your available to used credit is important to monitor.

The easiest thing to boost your credit may take only five minutes on OptOutPrescreen.com.

The credit bureaus encourage consumers to be educated about credit offers and opportunities with good interest rates. As your credit score starts rising you will start receiving pre-approval letters in the mail. The credit reporting companies share your improving credit information with these companies. The Fair Credit Reporting Act (FCRA) is the federal law that imposes rules and restrictions on credit companies. The law gives you the right to “Opt Out” of receiving credit offers. Did you know that taking advantage of your opportunity to opt out can raise your credit score, by 25 points in many cases?

Why does Joseph Wrobel Ltd. care about your credit score?

Our Chicago bankruptcy law firm has been around for decades and we have a solid reputation. We don’t put people into bankruptcies simply to earn a fee and move clients through a big law factory like some of the big bankruptcy firms. Instead, we focus on teaching potential clients about the options they have and how they can best fix their finances. We know that the bankruptcy will show up on your credit score and it may take a little while to be approved. What matters is not the bankruptcy or what lead to it, what matters is what you do after the bankruptcy. Following simple credit use tips and maintaining control over your finances can help you get back to a very good credit score much quicker than you realize. While we are not a credit score repair business, we do know a few things and have credit repair professionals who can help.

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!

Understanding and improving your credit score before or after bankruptcy

Understanding how your credit score works requires knowledge about how the credit system works and how lenders use your credit score. There are three companies, Experian, Equifax and Trans Union, and they collect your credit use and payment history and calculate your credit scores. Based on several elements of your credit patterns, your scores from each agency will range from an extreme low of 200 to an extreme high of 850. The average credit score among most people is 711. When your score is 740 and higher, you will likely receive the best interest rates on credit cards and consumer loans. If however, your score is 620 and lower, approval is less likely, and when approved for a credit card or consumer loan, your interest rate will likely be much higher. The interest on a credit card or loan can vary from five to 20 percent based solely on your credit score.

Your frequency of credit use and amount of credit allowed versus used is important to your score.

There are several activities and factors that affect your credit score. The amount of open credit card and loan accounts is a factor in your score. If you have several open credit accounts you are not using, or you have not opened a new credit account in many years, your credit score can suffer. The loan balance to loan amount is another factor in your credit rating. The more you pay down a loan, the better you can affect your score. A ratio of credit offered and credit used is important, especially with credit cards. If you have a credit limit of $1,000 you should keep your monthly spending around 30 percent ($300), which is a general rule, not using your credit limit and using up all your available credit are both harmful.

Get the free copy of your credit report and challenge the errors, or use a credit repair company.

Order a free copy of your credit report and decide how to take action or hire a credit repair company to do it for you. There is a free credit-reporting website (www.AnnualCreditReport.com) you can use to generate your full credit report. Most people have some inaccuracies or wrong information on their credit report. Reviewing all the information and challenging anything that looks like an error is a quick way to increase your credit score. Additionally, there are credit repair agencies you can hire to fix your credit for you, using all their tools and knowledge.

Obtaining secured credit cards is easy, use several and pay the fixed monthly bills.

Using credit cards and loans is a great way to improve your credit score when you follow a few basic rules. Paying your credit card on time every month is imperative to demonstrating credit responsibility. The more credit cards you have in current responsible, the better your score should be. It is a good practice to pay your fixed monthly bills with a few credit cards and pay them off every month. If you recently filed for bankruptcy or do not have a credit card, the secured credit card can help you start repairing your credit immediately. When you go to a local major bank, bring $300-600, deposited into a savings account connected to a normally functioning secured credit card. You receive and pay your bill on time every month and your credit improves. The bank may refund some or all of your deposit money once you demonstrate a positive payment history. If you never pay the bill, the bank will use your deposit to pay the bill.

Joseph Wrobel Ltd., can get your debts partially or fully wiped out and help you with credit rebuilding.

If you take advantage of the bankruptcy laws and discharge some or all of your debt, your credit card companies adjust the status of those debts and should reflect the new amount owed, if anything, but the credit reporting agencies do not always reflect the discharge. Joseph Wrobel, Ltd. has relationships with credit repair experts who can help challenge credit errors, assist in the clean up, and credit rate increase process. It is important to remember that good credit has less to do with what happened before the bankruptcy and everything to do with how you use and build credit afterwards.

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.

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

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.

Credit Unions: Offering members opportunities to easily and affordably earn positive credit scores

Many are turning to credit unions to take advantage of their credit rebuilding programs and features. Americans are working hard to rebuild their credit scores after enduring financial challenges like the great recession. Many are turning to credit unions to take advantage of their credit rebuilding programs and features. Credit unions are different from banks in several ways. While banks are largely publically owned and designed to generate profit for owners and shareholders, credit unions are not-for-profit and their purpose is to serve their member-owners, as opposed to maximizing profits. Members of credit unions all have a vote in how the credit union will operate to best serve its member’s needs. A currently compelling need is the ability to rebuild credit.

A recent Fox Business article highlights four ways credit unions help raise credit scores[i].

1.  Credit Builder Loans. Members who want to rebuild their credit over time with little cash outlay can take advantage of credit builder loans. These loan amounts can range from a few hundred to a few thousand dollars. When a credit union member applies for a credit builder loan, they agree to make payments on the loan against the full loan amount that is held by the credit union in a secured savings account the member cannot touch. As the member makes monthly loan payments, which are reported to the credit bureaus, the member’s credit score can improve.  Once the loan payments are all made on time and in full,[ii] the loan amount is transferred to the member. Credit builder loans are new types of credit repair options and are growing in popularity as more credit unions adopt the model.

2.  Free Credit Counseling. Unlike most banks, credit unions make credit counseling services available to their members without additional charge. The better educated credit union member should be able to borrow and repay more small loans to increase their credit score and purchasing power. The more successful loans the credit union has, the more it can lend to members who need new homes, vehicles and cash to cover out of budget expenses or investments. Managing member finances may not be widely advertised so it is smart to ask your local credit union relationship manager about their counseling services to help manage cash flow, pay debts and build savings.

3.  Online Tools. Enhancing credit counseling, the credit building tools and features of a credit union’s website can assist a member who doesn’t have time to visit the credit union in person, or who wants to crunch numbers at home. Online financial management and educational programs help members increase their financial health with the education and strategy tools it takes to create and work at the right financial plan that produces the best results. As members benefit from these tools, they can often see their finances improving and are encouraged to maintain better money management habits.

4.  Secured Credit Cards. When credit union members deposit a few hundred dollars into a secured savings account they cannot access, they can get a real credit card, guaranteed by the amount on deposit. If a member’s secured deposit is $300, that will be the credit limit on the card. As the bills come due and are paid, the reporting bureaus are notified and credit scores can be improved. Since there is no real risk of loss, credit unions can more liberally issue secured credit cards, despite a member’s challenged credit history.

To join a credit union, an interested customer must become a member. Unlike many other groups, credit unions allow new members to join at nominal rates. It is relatively inexpensive to become a credit union member. Some people keep their main account at a traditional bank with whom they have a relationship but also hold member accounts at the local credit union to take advantage of member benefits and opportunities to keep building credit and buying power.

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 dialing (312) 781-0996 to talk to an attorney.


[i] Fox Business: 4 Ways Credit Unions Help Raise Credit Scores. By Constance Gustke, Mar. 4, 2014.

[ii] Terms of credit union loans vary by institution and are determined by individual credit union policies.