Posts Tagged: ‘Credit Score’

Myths about bankruptcy and your credit score debunked

March 22, 2018 Posted by kingcade

There are many misconceptions surrounding the amount of time it takes to rebuild your credit after bankruptcy.  We are clearing up some of the common misconceptions about how bankruptcy affects your credit score.

Myth #1: All bankruptcy information stays on your credit report for ten years.

The Truth: Only the public record of a Chapter 7 bankruptcy lasts for ten years.   All other bankruptcy references remain on your credit report for seven years, including:  Line items stating “account included in bankruptcy;” Third-party collection debts, judgments and tax liens discharged in bankruptcy and Chapter 13 public record items.  Once these items begin to disappear, you will see a bigger boost to your credit score.

Myth #2: You will have poor credit as long as the bankruptcy information stays on your credit report.

The Truth: This is one of the biggest misconceptions and one that our clients can tell you is a complete myth.

My credit score said on all three reports 775, I couldn’t believe that I had such a great score before 10 years. Tim for me was the best move I have made for my situation. I have no regrets, I am glad the past is the past. – Bill T.

Hi Tim- I just wanted to send a quick note and thank you and your team for handling my bankruptcy case.  It is only a month or two after discharge, and my credit scores are already in the upper 600’s.  I’ve sent a screenshot in the event that you would like to use this to show prospective clients. – C.S.

You can begin to build your credit back with smart credit management.  Within a few years, you can obtain a “good” credit score ranging from 700 – 749 by doing the following:

  • Adding new credit, such as secured credit cards or small installment loans, to offset the negative information on your credit report;
  • Making on-time payments for all debt, new and old;
  • Keeping your credit card balances under 30% utilization.

Myth #3: Bankruptcy affects the credit of all filers equally, regardless of the amount of debt.

The Truth: Your credit score will factor in details such as the amount of debt discharged and the proportion of negative to positive accounts on your credit report. If you have a low amount of debt and only a few accounts included in your bankruptcy, your credit score will be higher than someone with a more severe bankruptcy case.

Myth #4: You cannot get a credit card or loan after filing for bankruptcy.

The Truth: Credit cards are one of the best ways to begin rebuilding your credit and you will be surprised how quickly offers for them will appear in your mailbox after filing for bankruptcy.  Secured credit cards, which require an upfront security deposit, allow you to spend and build credit easily and safely.

Myth #5: Bankruptcy will ruin your credit forever.

The Truth: Bankruptcy will damage your credit in the short term, but practicing good financial habits, can rebuild your credit to be stronger than ever. A report from the Federal Reserve Bank of Philadelphia showed that those who filed for Chapter 7 bankruptcy in 2010 had an average credit score of 538.2 on Equifax’s scale of 280 to 850. But the average score jumped to 620 by the time those bankruptcies were finalized, approximately six to eight months later. There are many ways to rebuild your credit after filing for bankruptcy. There are certain limitations you will face after filing, but taking advantage of the right financial tools can go a long way in helping you get back on the right path for your financial future.

If you have any questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

 

Steps to Take if You Want to Buy a Home after Bankruptcy

March 21, 2018 Posted by kingcade

After filing for bankruptcy, you are going to want to begin rebuilding your credit as soon as possible.  You can start by checking your FREE annual credit report on AnnualCreditReport.com to get reports from the three major credit bureaus: Equifax, TransUnion and Experian.

Your report may show late and missed payments on credit cards, mortgages and credit accounts you may have opened or closed.  Bankruptcy provides you with a clean slate, which means you have a second chance to pay your bills on-time and in full.

If your credit score is in the low 600s, your credit is still too low for most decent loans with good terms, but you can work quickly to get it back up in the mid-700s.

After bankruptcy, when accessing and utilizing credit again, keep your credit card balances relatively low compared to the card’s limit.  For example, less than 30% is typically advised while using just 10% of the available credit is even better.

Once your credit score improves, you can then find the right mortgage lender, real estate agent, and the right attorney to move forward with the purchase of your new home.

Still not convinced?  A testimonial from one of our clients in regards to their credit score after filing for bankruptcy.

My credit score said on all three reports 775, I couldn’t believe that I had such a great score before 10 years. Tim for me was the best move I have made for my situation. I have no regrets, I am glad the past is the past. – Bill T.

If you have any questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Related Resources:  https://www.washingtonpost.com/news/where-we-live/wp/2018/03/05/financial-steps-to-take-if-you-want-to-buy-a-home-after-a-bankruptcy/?utm_term=.83d7fe172cc1

Here’s How Much Debt the Average Consumer Racked Up Over the Holidays

January 9, 2018 Posted by kingcade

A recent survey conducted by MagnifyMoney found consumers who took on debt this holiday season will start the New Year with an average of $1,003 in credit card debt.  Last-minute gifts, entertaining costs, and fewer hours at work, can all add up to additional credit card debt.

What is troubling about this year’s findings is that the majority of consumers who went into debt did not plan on it. The vast majority (65.2%) of consumers who took on the debt did so unexpectedly and did not budget for the added expense.

Nearly half (46%) predict they will need four months or more to pay off their holiday debt, or will only make the minimum monthly payments.

Even a seemingly modest amount of debt can quickly balloon over time if not paid in full timely. A person carrying an average debt load of $1,003 who makes one $25 minimum payment per month would need 58 months (4.8 years) to pay off their debt. That calculation assumes an average annual percentage rate (APR) of 16%.

Here are some ways to beat the holiday debt cycle:

Understand where your money went.  Track exactly where your money went the last three months.  There are useful apps that can help you understand where your money has gone. LevelMoney splits your expenditure into fixed, recurring expenses and variable expenses.

Carefully review your credit report. You can download your report for free at AnnualCreditReport.com for all three bureaus.

Use the debt snowball method.  A recent study found that consumers are more likely to stick to paying off debt when paying off credit cards with the smallest balances, first.  This strategy provides consumers with small “wins” against debt and builds momentum to keep you motivated.

Make 2018 your year to be debt free! By taking the right approach and building good financial habits, you can successfully pay down debt in the New Year.  Here are some ways to keep to your New Year’s Debt Resolutions. If holiday expenditures have put you over the limit financially, it might be time to examine your finances in closer detail and meet with a financial advisor or bankruptcy attorney.   Here are some signs you should file for bankruptcy.

Click here to read more on this story.

If you have any questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Related Resources:

http://www.kgw.com/money/magnify-money/many-holiday-shoppers-will-start-the-new-year-with-1003-worth-of-debt/382430335

The Negative Effects Store Credit Cards Can Have on Your Credit Score

January 5, 2018 Posted by kingcade

Getting a deal on holiday purchases can end up costing you more in the New Year- a lot more, in fact.  The reality of a cheerful sales clerk asking, “Would you like to save 20 percent on your purchases today by opening a store credit card?” Sounds tempting, right?  But these cards can ultimately hurt your credit score.   Store credit cards can have a large impact on your credit usage, which is a big factor in credit scores.   Applying for these cards requires an inquiry on your credit report and reduces the average age of your credit accounts.

Store credit cards have significantly higher APR’s and it is easy to fall into debt. The credit limits on these cards are typically 10 percent compared to other cards.  How much of your credit limit you use has a substantial impact on your credit score.  The one factor that matters more is paying on time. Credit experts advise staying below 30 percent of the limit on any card. Consumers with the highest credit scores use less than 10 percent.

When you apply for a store credit card, the card issuer will pull one of your credit reports.  This helps qualify you, but it can cause a temporary dip in your score. On top of potentially hurting your credit scores, retail cards have usability issues. These cards are good only at one store or retail chain.  They are typically accompanied by high interest rates and severe penalties if a payment is missed.  These cards also have less security features.

If you shop at a particular store often, it might be worth opening a store card to access ongoing discounts, presales and insider benefits.  But avoid making this decision lightly and in the checkout line.

Click here to read more on this story.

If you have any questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Life after Bankruptcy: 5 Things You Need to Do After Bankruptcy

January 2, 2018 Posted by kingcade

If you recently filed for bankruptcy, you are likely experiencing a sense of relief from having your debts discharged and getting a fresh start financially.  These tips for “life after bankruptcy” will help you avoid future debt problems and improve your credit score once your case is finalized.

Collect and preserve all paperwork from your case. Your bankruptcy attorney should provide you with a copy of your bankruptcy petition (i.e. – 40-50 pages of detailed financial information – including the facts about the debts and assets involved in your case.)  You should also have a notice of bankruptcy filing directly from the court, which shows the deadlines that affected your case.  Finally, you should have a copy of your discharge order entered by the bankruptcy judge. This is important as some lenders require to see a copy of the bankruptcy papers before lending you new credit.

Check your credit reports regularly. You can obtain your credit report for FREE from each of the three main credit bureaus once a year.  It is important to see what creditors are saying about you.  Especially after a bankruptcy, you want to make sure that all of the discharged debt is being reported to the credit bureaus with a zero balance so it does not count against you as outstanding debt.  You also want to make sure the account is not transferred to a new collection agency who falsely pursues you for the discharged debt.

Start a budget and review it regularly. Creating and sticking to a budget is the key to staying on track financially.  It is also a great way to manage your income and expenses and see where every dollar is going.  Just like in the Means Test that compared your income and expenses over a six-month period to standards set by the Census Bureau and the IRS. The concept was to identify those who actually had the means to pay their debts, but who were living an extravagant lifestyle financed on credit cards and other debt.  It’s an urban myth that people who file for bankruptcy live lavishly and are financially irresponsible. Statistics monitored since 2005 show that a very small percentage fit into this category.  Most bankruptcies are caused by an unforeseen illness or medical expense,  job loss, or even a divorce.

Start an emergency fund.  When establishing a budget for yourself, make sure you put aside a portion of your income for savings.  Having an emergency fund will help you avoid incurring unplanned debt or taking out cash advances to cover unexpected costs like a car repair or appliance repair.

Think about new credit.  A great way to rebuild your credit after filing for bankruptcy is to obtain a secured credit card.  You can open this card by depositing money into an account as security.  Your credit limit is the amount you deposited into the account.

If you have any questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.

Related Resources:

http://blog.credit.com/2014/12/5-things-to-do-after-bankruptcy-103308/

https://www.legalzoom.com/articles/life-after-bankruptcy-get-back-on-your-feet-after-filing-chapter-7