Browsing all articles in Bankruptcy & Debt Relief
Can I get credit after bankruptcy? How soon?
The short answer is, yes and quickly. But do you really want it? Credit cards, in particular, are a big reason you may be in financial trouble anyway. Also auto loans. And, as you can imagine, these are the two easiest to get out of bankruptcy.
Many clients report getting a new credit card while IN the bankruptcy still before discharge! The interest rate is often high (20%+) and there is usually an annual fee. But I do recommend people eventually (w/in 6 months) get 2 credit cards or so, which they should pay off every single month. This will help rebuild your credit history and score. However, carrying high balances or having late payments will actually make you worse off. So, it’s a delicate situation with credit cards…always.
As for auto loans, these are things people also get almost immediately after discharge. Interest rates are often over 20%. The result is that from a financial planning perspective it is almost always not a good idea to get a car loan so quick out of bankruptcy. The upside is that this open loan account, if paid on time, will help raise your credit score. But the true cost of such loans–with those staggering rates–is simply not worth the credit score boost.
The rule of thumb for mortgages is a little bit different. Generally, you must be at least 2 years out of bankruptcy to get a new home loan (or refinance). This is a strict FHA rules for government backed loans. Most banks also follow this rule for conventional mortgages. There may be banks that make exceptions, but I don’t know of any.
For more information call Attorney Newton today at (312) 948-4084!
Stagconomy Still Sluggish
We woke up today with more sobering news. After 4 years of economic malaise, the economy is still not on the path to recovery we all hope for. In the Fourth Quarter of 2011, U.S. GDP growth was at 3%. Analysts had predicted Q1 2012 would indicate a 2.6% annual growth rate for this year (which is itself woeful). Instead, the Commerce Department released the data today showing growth is at a measly 2.2% annualized. This probably means a sluggish job market (indicated by a drop in hiring and increase in unemployment applications over the last 2 weeks) and that the housing market will continue in many places to drop or sit at bottom. I hate to say it, but this is almost exactly what we were seeing in terms of indicators at the beginning of 2011 headed into Summer. The worst may not be over, but it’s a sign that it may be time to plan for the future!
Median Income Adjustments
On May 1, the median income figures for Chapter 7 bankruptcy eligibility will be updated. The current figures through April 30, 2011, can be found here. The new numbers for Illinois are as follows:
| Household Members # –>
ILLINOIS |
1
$46,983 |
2
$59,794 |
3
$68,865 |
4
$81,570 |
Each additional household member beyond 4 will add $7500 to the median income ceiling. As a reminder, generally speaking, your median annual household income must be at or below the median to be eligible for a Chapter 7 liquidation bankruptcy. Your income is figured based the average of the 6 months prior to the month you file. This average number is then times by twelve to arrive at your annual income for purposes of the Chapter 7 “means test.” If you are above this median, you are probably still eligible for Chapter 13 repayment bankruptcy. This type of bankruptcy has advantages, such as cram down (where you only have to pay what something’s worth rather than was you “owe”) and lien stripping (which can eliminate the liens from junior mortgages in certain circumstances.
Chicagoland Foreclosures Spike in March: 1 in 383 Homes
Last week, RealtyTrac released its 1st quarter 2012 and March foreclosure reports. The Illinois review is here. The Sun Times has an article overview with details, including:
In Illinois, 13,820 homes received a filing, up 14.7 percent from a year earlier and up 3.9 percent from February.
In the first quarter, the state posted the nation’s third highest foreclosure total with 11,342 homes receiving filings, up 13.8 percent from the year-ago quarter and up 17.5 percent from the fourth quarter of 2011.
Illinois fared worst than the nation as a whole. Nationally, the number of homes hit with filings dropped 17.1 percent to 198,853 from March 2011 and fell 3.9 percent from February. The number of homes receiving filings dropped 15.9 percent from the first quarter of 2011 and dipped 2.3 percent from February.
RealtyTrac’s Chief Executive added, “The low foreclosure numbers in the first quarter are not an indication that the massive reservoir of distressed properties built up…has somehow miraculously evaporated….The dam may not burst in the next 30 to 45 days, but it will eventually burst, and everyone downstream should be prepared for that to happen, both in terms of new foreclosure activity and new short sale activity.”
Legal Services for the LGBT Community
Estate planning packages. Gays and lesbians are treated differently under the law. Whether we like it or not, it is a fact that we should address directly in planning our futures. Newton’s Law P.C. offers a bundle of estate planning instruments tailored to lesbian and gay couples or individuals. Please click below for more information.
Family law issues. Newton’s Law P.C. offers a wide range of services for gay and lesbian families including dealing with out-of-state marriages, local domestic partnerships or civil unions, adoption counseling, divorce, and dissolution of partnerships, among others. Call 312 | 948 | 4084 for details.
You have an attorney on your side. Sometimes everyone needs a representative that understands them, their lives, and the problems they face. Newton’s Law P.C. provides that service when you need it most. No matter what your problem, concern, situation, or emergency, feel free to count on this firm as your go-to source for legal advice. Please call or email with any questions.
Illinois Religious Freedom Protection and Civil Union Act of 2010. Beginning in June 2011, gay and straight Illinois couples will be eligible to enter into state-sanctioned Civil Unions. These unions will ensure that all Illinois citizens receive the rights, privileges and incidents attendant to marriage on the state level. Federal laws and regulations still do not recognize same-sex unions and are unaltered by Illinois’ new law. The time to start planning your union is now. Some couples will need to dissolve prior arrangements from other states, etc., in order to be recognized as a civil union in Illinois. Others just need to plan ahead for a smooth transition to this very important day that has been a long time in coming. Call 312 | 948 | 4084 today for a FREE CONSULTATION.
Chicago Foreclosures Up Massively Over A Year Ago
RealtyTrac’s foreclosure market report for February 2012 showed a 43% increase in Chicagoland from a year ago. The next report for March and Q2 FY2012 is expected to be released on Wednesday, April 11. Check back for details.
Student Loans in Bankruptcy
Another good article out discussing what’s next for student loans, which are next to impossible to discharge in bankruptcy.
Bankruptcy & Debt Relief
The Chicago Debt Eraser can help ERASE credit card debts, car loans, second mortgages, construction bills, medical bills, and debts other people saddled you with: CALL TODAY 312 | 948 | 4084. We will match or beat any advertised, attorney prices in Chicagoland!
Chapter 7 Bankruptcy Sometimes called “liquidation” bankruptcy, Chapter 7 cancels your debts, although it can involve a court liquidating (selling) some of your property for the benefit of your creditors. Even after changes in the law, e.g., a new ability-to-pay test, most debtors can still file for this type of bankruptcy. Get a FREE CONSULTATION and stop the stress.
Chapter 13 Bankruptcy Sometimes called reorganization bankruptcy, Chapter 13 is very different from Chapter 7 bankruptcy. Typically, Chapter 13 is the route for those who make too much income for Chapter 7 relief. In a Chapter 13 bankruptcy, you don’t have to hand over any property, but you must use your income to pay some or all of what you owe to your creditors over time–from three to five years, depending on the size of your debts and income. Through Chapter 13, the Debt Eraser might be able to ELIMINATE YOUR SECOND MORTGAGE!
Fair Debt Collection The FDCPA stops some creditors from: calling relatives, neighbors, or your employer about a debt; calling before 8 AM or after 9 PM; contacting you at work; using obscenity or insults; suing you in a far away place; representing they are official or government; lying to you; threatening you with arrest. The FDCPA also provides for a mechanism to dispute debts. Sometimes creditors mistakenly claim old debts; a dispute might solve your problem.
Counseling To make a decision, you need all the information and truth. Newton’s Law P.C. offers consultations to discuss consolidation, credit counseling, bankruptcy, and other remedies, their benefits and pitfalls, and which is right for you.
See If You’re Eligible For Chapter 7 Bankruptcy: Nolo’s Means Test Calculator
It’s TIME to call or e-mail us today! No commitment necessary; just find out your rights and options….before it’s too late…
Bounce Back After Bankruptcy
This article from MSN Money discusses how to rebuild your credit quickly after getting a fresh start through bankruptcy.
What’s the Deal with Credit Counseling or Debt Consolidation?
You won’t turn on your radio or TV nor check your email without some advertisement for a credit counseling service. CCCs, as they’re known, are either for profit or nonprofit companies that are organized to help people who are in debt over their heads. Many people choose to go this route, because either they think they can’t file for bankruptcy or they believe bankruptcy will destroy their credit for too long a period. There are truths and falsehoods about every solution, and clients have a right to be informed before they make choices.
CCCs help you consolidate your debts, lower interest rates, and pay in one lump-sum monthly payment to many of your debtors. There are a lot of positives in this arrangement. You can afford that $250 a month, but you can’t keep on with $500 each on 3 credit cards. There are also problems. Many CCC plans last up to five years. During that time, your credit score is not going up. At best it’s staying put; at worst it continues to drop. Additionally, the vast majority of people that sign on for credit counseling, do not complete the process. According to a recent MSN Money article: “Here are the statistics, straight from the [National Federation of Credit Counselors]. Of the 3.2 million people who contacted NFCC agencies for help last year:
- About one-third were able to handle their finances on their own after a counseling session.
- Another third were either too far gone for debt management plans to help, with too little income or too much debt, or had problems credit counseling couldn’t help and were referred to social services agencies because of issues such as a gambling problem, alcoholism or other addiction.
- The final third enrolled in debt-management programs (DMPs), but the dropout rate averages at least 45%.” (Read more.) So, the reality is that CCC programs simply don’t work for most people.
Moreover, there is the reality of life we all hate: your FICO score. As noted, in a CCC situation, your participation is reported on your credit report and, in most cases, your credit score won’t improve much until you’re done with your 2-7 year repayment plan. Bankruptcy is also reported on your credit. It stays there 7 years from discharge. The nice thing about bankruptcy, however, is that the day of discharge is the rock bottom for your credit score. Every day after that you have a chance to improve the score. In other words, bankruptcy draws a line in the sand today, rather than 5 years down the road. Of course it all depends on your own situation, income, debts, and such, but most people report that lines of credit are extended to them beginning about 2 years after a bankruptcy is discharged. You can still get a mortgage; you can still buy a car; and, with a rededication to smart finances, you can still get a credit card.
Get yourself informed on the pluses and minuses before you act. Control your own life and where you end up!
