Is it possible to rebuild a good credit standing after bankruptcy? The answer is an emphatic yes! Filing for bankruptcy does not mean you will never be granted credit or given a loan again. It all boils down to doing the right things to rebuild your credit after a bankruptcy.
Rebuilding your credit means having to re-establish your standing before the credit bureaus. To do so, you have to show yourself to be prompt and faithful in paying your dues. There is practically no way for an individual by himself to deal with credit bureaus and because of that, you need to go through an intermediary like a credit card company. Credit card companies submit regular reports on their clients to the credit bureaus.
So the first step would be to apply for a credit card. Since you have been a discharged bankrupt, some banks might impose certain restrictions and conditions in issuing you a credit card. For example, you may be granted a secured credit card i.e. one that is backed up by some collateral put up by you. Another example may be a bank issuing you a prepaid credit card which is a credit card where you are given credit only upon paying the bank. Some banks might even issue you a credit card that is only valid in certain countries and not worldwide.
Once you have been issued with your credit card, you should seek out a regular payment schedule where you can pay using your credit card. Then all you need to do would be to use your credit card to pay the regular payments each month. As long as you regularly pay each month’s payments on time with your credit card, your credit score will eventually rise as the credit company reports your payments to the credit bureaus.
Another means of increasing your credit score is to obtain a mortgage. This may be difficult due to your bankruptcy but there are some mortgage products you may qualify for. It may be one with a higher interest rate or you may need to take up an interest-only loan in order to get a mortgage. You cannot afford to be picky. Just choose a mortgage arrangement that is within your means to repay and start repaying on schedule. This will also improve your credit rating over time.
If possible, try to get a good mix of credit arrangements without biting off more than you can chew. For example, if you can secure a store account, a car loan and housing loan, it goes to show to the credit bureaus that you can manage different types of credit well. Such a credit mix will augur well for you in increasing your credit score.
Filed under Chapter 7 (Tampa) by on Jul 1st, 2010. 1 Comment. 
Here are some grim statistics for the first quarter of 2010. The number of bankruptcy filings in Tampa/Fort Myers division (Polk included) jumped almost 21%. This is mirrored by the eerily similar rise of 21% in bankruptcy cases in the Middle Disctrict of Florida (including Orlando and Jacksonville). In fact, the 16,149 bankruptcy cases filed there gave the Middle District bankruptcy court the unenviable record of being the second busiest bankruptcy court in the country, behind only the Central District of California bankruptcy court.
March 2010 was one of the Middle District bankruptcy court’s busiest month on record. It was third only behind the two months prior to the time when the bankruptcy laws changed with the passing of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). The BAPCPA was supposed to deter individuals from filing for bankruptcy, especially Chapter 7 bankruptcy as a means of copping out of their tax debts.
And from the look of things, there seems no evidence of this trend abating anytime soon.
Experienced bankruptcy lawyers predict that the peak in number of bankruptcies will only come in a year or 18 months’ time before the numbers slide. US Bankruptcy Judge Catherine Peek McEwen is handling 6,500 cases in Tampa. The District Chief Judge in Jacksonville had forewarned his judges to anticipate a year of record numbers of bankruptcy filings.
What appears to be affecting consumers in Florida most are the combined effects of the state’s 12.2% unemployment, low housing prices and a huge backlog of foreclosure cases. Although banks are starting to lend again at a ‘modest’ level, the unemployment rate is yet to show a significant drop. Unemployment and bankruptcy both go hand in hand and are usually the last to be overcome in an economic recession. It is not uncommon to find unemployment still rising even after the recession has officially ended. Bankruptcy improvements tend to show even later as it is often a last resort people take for themselves and their businesses.
There has been a wide range of businesses going bankrupt from property developers to retailers. Even professionals and certain franchises have not been spared. Recently, a local Church’s Chicken, several Dunkin’ Donuts franchisees and an Arby’s chain have all filed for bankruptcy.
Of those who file for personal bankruptcies, most have problems with paying for their properties. Banks have been criticized for being reluctant to reduce principal amounts in mortgages and slow in revising mortgage terms to help struggling borrowers.
Filed under Chapter 7 (Tampa) by on Jul 2nd, 2010. Comment.
The nation’s top three finance officers lobbied before the House Financial Services Committee for more stringent regulatory measures over financial markets to prevent any more major bankruptcies like Lehman Brothers. Treasury Secretary Tim Geithner, Federal Reserve chairman Ben Bernanke and Securities and Exchange Commission (SEC) chairwoman Mary Schapiro who have come under sharp criticism lately for their institutions’ failure to prevent Lehman from going bankrupt, appealed for an overhaul of the financial systems.
At the opening of a hearing to discuss policy matters on financial markets, the case of Lehman’s bankruptcy was brought up highlighting the fact that the nation’s financial regulatory bodies did not pick up on Lehman’s exposure to risky derivatives and their highly questionable accounting practices to hide these activities in the years prior to their collapse.
Financial reform has been in the forefront of many people’s minds not least because the SEC last week charged another Wall Street giant, Goldman Sachs with fraud. At the hearing, legislators began their debate on the tough measures needed to be taken for the government to better regulate derivatives and the appropriate capital requirements for Wall Street firms.
One of the matters brought up in the debate was how Lehman surreptitiously used an accounting trick known as ‘Repo 105’ to mask its massive losses and remove some $50 billion of assets from its balance sheet instead of selling them off at a loss.
At the discussions, lawmakers from both sides of the political divide decried Lehman’s gross mismanagement and expressed disappointment at the feeble regulatory system that did not detect their wrongdoing and under-capitalization until it was too late.
This led to a call for the need to enforce the Wall Street Reform bill that was proposed by the Democrats and passed by the Senate Banking Committee last month. But this proposal was quickly shot down by the GOP representatives, branding such a move as trying to reinforce a broken system. The Republicans are generally against giving the Fed Reserve and SEC more regulatory authority.
The committee questioned Shapiro on how the SEC could have overlooked Lehman’s condition and did not take action on the investment bank earlier. In reply, Shapiro stated that the SEC did not have “the staff, the resources or…the mindset” to effectively regulate the operations of the world’s largest financial institutions. At the time of Lehman’s bankruptcy, the SEC had only 24 employees overseeing five of the largest investment banks in the world.
Shapiro was quick to add that the SEC had learned from its mistakes and has adopted more stringent methods of cracking down on the types of transactions that led to Lehman’s downfall. The SEC has sent letters to all major financial institutions requesting detailed descriptions of accounting practices including possible Repo 105 type transactions and will make its findings public after reviewing them.
Filed under Chapter 7 (Tampa) by on Jul 3rd, 2010. Comment.
Private Investigator Files for Bankruptcy
Derrick Snowdy, the private investigator known for being the man who passed on allegations about Helena Guergis and Rahim Jaffer has filed for bankruptcy. In his bankruptcy application, Snowdy blamed the collapse of a security company he owned for his own financial troubles. Records show that Epic Protection Group Ltd had about $3.2 million in debts.
Snowdy explained that one of his former employees committed an action involving a ‘source deduction account’ that ultimately started a chain reaction which combined with other factors led to the fall of his company, Epic Protection. This employee subsequently sued Snowdy for business loss amounting to $11 million. Snowdy turn sued back. This amount of money is registered as a claim in Snowdy’s bankruptcy records, but no finding has been made in the court action. In addition, Snowdy owed taxes to the Canada Revenue Agency and debts to credit card companies and retail outlets like Leon’s Furniture. Under the heavy weight of debt, Snowdy declared personal bankruptcy last August with liabilities amounting to $13 million.
Bankruptcy Fraud lands Woman 3 Months’ Jail
Arlene Arellano from Vermont was given a sentence of 3 months’ imprisonment in US District Court in Burlington for fraudulently filing for bankruptcy in 2007.
At the time of filing for bankruptcy, Arellano, 64 concealed the fact that she owned 50% of a property in Wardsboro worth $150,000 at the time and possessed $3,000 in her bank account in a South Carolina bank.
According to prosecutors, a month after filing for bankruptcy, Arellano transferred her ownership of the property to a daughter and concealed the transfer also.
Arellano, who pleaded guilty to the charge, is due to begin her sentence May 4.
Mt. Diablo YMCA goes Bankrupt
The YMCA branch in Mt. Diablo region has filed for Chapter 11 bankruptcy protection. The organization said that its services to the public and its members will be continued by the Berkeley-Albany YMCA.
In a statement last Friday, the YMCA chairman of Mt. Diablo region Rick Callaway said that the branch’s child care programs, youth sports and family programs in the San Ramon Valley, will continue unabated but it would be taken over by the Berkeley-Albany YMCA branch.
In March, the Pleasant Hill-based Irvin Deutscher Family YMCA of Mt. Diablo region had announced the closure of its facilities in Oakley and Clayton. It also cancelled a long-planned Alamo building plan.
Filed under Chapter 7 (Tampa) by on Jul 4th, 2010. Comment.
Point Blank files for Bankruptcy
The US Army’s supplier of body armor, Point Blank Solutions Inc. has filed for bankruptcy protection Wednesday. This was partly due to the legal costs it incurred pertaining to a former chief executive’s indictment for fraud. Its former CEO, David Brooks is the company’s largest shareholder with a 22.6% ownership of the company. He is currently on trial in New York after being charged for fraud and related crimes.
Court documents show that the company spends as much as $600,000 a month on legal fees alone. On top of that, it is also the subject of a Securities and Exchange Commission investigation and faces a lawsuit by some of its shareholders.
As at December 31, the company’s assets totaled $68 million while its liabilities amount to $72 million. It had secured a Debtor in Possession (DIP) loan for $20 million to fund its bankruptcy expenses. Among its shareholders are Prescott Group Capital Management and Steel Partners, who provided the DIP loan.
The company stated in court that it had appointed Scott Avila of CRG Partners Group LLC as their chief restructuring officer to negotiate its sale as a going concern.
Point Blank Solutions, based in Pompano Beach in Florida supplies about 80% of the US military’s soft body armor vest requirements employing 920 staff members.
St. Vincent’s files for Bankruptcy
St. Vincent’s Hospital in Manhattan filed for Chapter 11 bankruptcy Wednesday in Federal District Court of Manhattan. In its bankruptcy application form, the hospital stated its liabilities as ‘more than $1 billion’. How much more is anybody’s guess.
The hospital has revealed that its biggest unsecured creditor is a federal pension insurance agency, the Pension Benefit Guarantee Corporation. The second largest creditor is a medical malpractice trust monitor to whom the hospital owes $113 million.
The Pension Benefit Guarantee Corporation itself is unable to pay some $180 million in pension claims as the fund currently is in deficit. The Pension Benefit Guarantee Corporation is an arm of the federal government. However, both a spokesman for St. Vincent’s Hosptial, Michael Fagan, and that for the pension fund, Jeffrey Speicher reiterated that the pensions of their staff were ‘not at risk’ and that ‘the nurses are going to get their pensions.’
The hospital said that it was taking the step of filing for bankruptcy so that it could continue to care for its patients as it closes down.
Filed under Chapter 7 (Tampa) by on Jul 5th, 2010. Comment.
