When you exit bankruptcy, life is supposed to return to “normal” minus the stress of insurmountable debts. And for most people in the 21st century, “normal” life entails living with credit. But would credit card issuers do business with a discharged bankrupt? You might be surprised but the answer is “Yes”. In fact there are many credit card companies that specialize in granting credit to people who have exited bankruptcy and are starting anew financially.
But as you might guess, the interest rates charged to you would be higher than that for other customers because the credit card issuer assumes you pose a higher risk to them. This justifies their high interest rates, which can sometimes be rather exorbitant. Should you resign yourself to paying sky high interest rates for credit just because you have been declared a bankrupt before? Fortunately, the answer is “No”.
So if you have been offered a credit card(s) but are being charged higher than usual interest rates, you need to know how to address this matter.
The first thing you can do is look around for cheaper rates. One place you can look at is Credit.com where you can get all sorts of advice on credit card usage, compare credit card companies and find credit cards for people with bad credit scores. Although you probably would not qualify for all the cards listed there, you could find one that suits your circumstances. If so, you could apply for a card and either transfer your existing balance to your new card and enjoy lower rates or cancel your existing card and just use your new one.
If you are not interested in obtaining another card, your other option is to negotiate with your existing card issuer. Most credit card issuers would be open to discussing with you on terms that could lower your interest rate.
If your credit card company is not willing to lower your interest rates, ask to convert your existing card to a secured credit card. A secured card is a card where your credit is backed up by a cash deposit as collateral. This type of credit card carries lower interest rates than unsecured cards but they are treated the same way as unsecured ones on your credit score.
If you are considering filing for bankruptcy to overcome your debts, call us at (813) 200 4133 for a free consultation.
Related Blogs
Filed under Chapter 7 (Tampa) by on Mar 15th, 2012. Comment. 
Is it possible to wipe out all your debts and live debt-free? Yes, it is. But this is somewhat of a pipe dream for 99.9% of people in the world. Yet if you are smart, you can have all your debts wiped out in a short length of time. How? Through filing for a bankruptcy petition.
If you are already sold on the idea of finally wiping your financial slate clean through bankruptcy, do not rush headlong into it so quickly even though I’m sure you cannot wait to end your ordeal of debt. You should consider the following matters first.
Where your debts come from
There are certain types of debt that cannot be discharged by bankruptcy so filing a bankruptcy petition would be of no use. If most of your debts are in the form of student loans, child support or alimony, tax debts then bankruptcy may not be the ideal solution as these debts are typically non-dischargeable by bankruptcy.
However, if your debts are mostly credit card debts, medical bills, mortgage debts and car loans, then it would make sense to file for bankruptcy because these debts can be discharged by a bankruptcy filing.
Which type of bankruptcy to file
For most individuals, the two types of bankruptcy that apply are Chapter 7 and Chapter 13 bankruptcy. There is another type of bankruptcy open to individuals called Chapter 11 bankruptcy but it is generally too expensive for most individuals and as such is only used for businesses.
The choice between Chapter 7 and Chapter 13 is crucial so that you can go through the bankruptcy process as smoothly and quickly as possible. Generally, you should weigh your income against your debts. If you are generally able to repay your debts in installments over a period of time with your present income, then Chapter 13 bankruptcy is suitable for you. Chapter 13 bankruptcy also allows you to keep your assets (they do not have to be liquidated to pay your debts) and generally has a shorter period where the bankruptcy stays on your credit record.
But if your debts are insurmountable compared to your income, then you should consider Chapter 7 bankruptcy. But in order to qualify for Chapter 7, you need to pass a means test. A means test is to determine if your household income is below the average income set by your state. If you pass the means test, then you are eligible for Chapter 7. In Chapter 7 bankruptcy, you do not have to repay all your debts. Those which you cannot repay will be forgiven. But the downside to Chapter 7 is that your non-exempt assets will have to be liquidated to pay off your debts. And your bankruptcy generally stays longer on your credit record than Chapter 13.
If you are considering filing for bankruptcy protection, call us at (813) 200 4133 for a free consultation.
Related Blogs
Filed under Chapter 7 (Tampa) by on Mar 14th, 2012. Comment.
No event in your life will uncover all your personal financial information the way bankruptcy does. By its very nature, bankruptcy entails you disclosing every asset and liability you have. Only then can the bankruptcy court administer your bankruptcy effectively. However, due to the high level of disclosure of such sensitive information, identity theft can very easily take place during and even after bankruptcy is filed. But the good news is that you can take some practical steps to avoid becoming a victim of identity theft because of bankruptcy.
Firstly, you should always have a copy of your credit score with you to see if any debts have been opened under your name without your knowledge or consent. Your credit score will show the debts under your name. Granted, if you file for Chapter 7 bankruptcy, these debts might very well be forgiven but still, you should know what debts are under your name and whether they are accurate. After all, if someone has racked up debts using your name, it is your assets that will be liquidated to pay off those debts. Obviously, you should not pay for these debts if you did not incur them.
Secondly, be careful to whom you divulge your financial information. Once you file for bankruptcy, technically you do not have to communicate with anyone other than the bankruptcy court and your bankruptcy lawyer. If any other party such as debt collectors approaches you, you can rightfully inform them you have filed for bankruptcy and tell them to contact your lawyer. If they ask you any questions about your finances, you are not obliged to answer them. By doing so, you reduce the chances of your personal financial details being leaked out to unauthorized persons.
Thirdly, you might want to consider a credit monitoring service. Such services are normally available through your bank or credit card issuer and will monitor your credit standing.
And fourthly, after you exit bankruptcy, you might very well receive offers from credit card companies or other lenders. Be careful – some of these so-called credit providers may be scams out to obtain your identity through fraudulent means. You should only accept credit offers coming from reputable lenders who have worked with discharged bankrupts before.
Finally, take all common sense steps to avoid scams like email solicitations of your personal details. Phishing scams commonly use email to obtain your financial details. You should never divulge such information online.
Related Blogs
Filed under Chapter 7 (Tampa) by on Mar 13th, 2012. Comment.
In my previous article, I wrote about how student loans cannot be discharged through bankruptcy. This fact has been driven home through the changes in the law since 2005 when the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) came into existence. So these days it is virtually impossible to have your student loan discharged via bankruptcy. But if you are struggling with repaying your student loan and are contemplating filing for bankruptcy, you need to know how bankruptcy can affect your student loan.
Technically, if you want to file for bankruptcy because you cannot repay your student loan, you need to prove to the bankruptcy court that repaying your loan will severely affect your ability to live a normal standard of life. But the bankruptcy court’s definition of “normal standard of life” is rather narrow. It basically means being impoverished. If the bankruptcy court is convinced of this, then your student loan can be added to your list of liabilities to be discharged.
In addition to showing that you will be impoverished, you also need to show how you have been faithfully repaying all you can towards your student loan but due to the bad economy, you either could not land a job or your job is simply not paying you enough to service your student loan and lead a “normal standard of life”.
At the same time, you should not have anyone else in your household that may be deemed able to help you repay your loan. If anyone in your household earns a reasonable income, even if he or she is not related to you, your chances of getting your student loan included in your dischargeable debts are slim.
On the other hand, even if your student loan is not dischargeable, you should still file for bankruptcy protection because you can have other debts discharged, such as credit card debts and medical bills. This would lessen your burden in repaying your student loan.
If you are contemplating filing for bankruptcy to help you cope with your debts, call us at (813) 200 4133 for a free consultation.
Related Blogs
Filed under Chapter 7 (Tampa) by on Mar 9th, 2012. 1 Comment.
In the past, student loans could be discharged by bankruptcy but not anymore. Since 1976, the bankruptcy code was changed to disallow student loans from being discharged. Recent statistics have shown that the amount of student loans outstanding nationwide exceeds $1 trillion and the figure shows no sign of abating due to the ever-increasing cost of education. In fact, since 2006 the amount of student loans increased by a significant 75% and now amounts to even more than credit card debts. Could this massive debt trigger a financial meltdown as bad as or worse than the sub-prime mortgage crisis a few years ago?
In view of this, the National Association for Consumer Bankruptcy Attorneys (NACBA) has been lobbying for the bankruptcy code to be revised to allow for student loans to be discharged. These student loans are privately funded loans that have no limits on interest fees or rates. The NACBA says that student loan interest rates have increased significantly in recent years.
On top of that, landing a job these days is difficult due to the bad economy. People are getting laid off as companies downsize to cut costs, which makes finding a job for fresh graduates all the more difficult. For a young worker fresh out of college and venturing into the job market laden with a hefty student loan to repay, getting a job is crucial. The longer he or she takes to land a job, the more money is owed on the loan. It is not only the fresh graduate that is affected by student loans, but often the parents also. Parents who signed as co-guarantors for the loan are also liable to repay the loan. The NACBA reports that 81% of those filing for bankruptcy protection also struggle with student loan debt.
There are two bills in Congress now that may have a direct effect on the dischargeability of student loans through bankruptcy. They are the House’s Private Student Loan Bankruptcy Fairness Act and the Senate’s Fairness for Struggling Students Act. If Congress passes these laws, at least student loans from private vendors may be eligible for discharge.
If you are struggling with financial problems, consider filing a bankruptcy petition to free yourself from your debts. Call us at (813) 200 4133 for a free consultation on bankruptcy.
Related Blogs
Filed under Chapter 7 (Tampa) by on Mar 8th, 2012. Comment.
