The most common type of unsecured debt is credit card debt. Since you do not put up any collateral against your debt, the credit card company has the right to sue you for payment if you default in your obligation to service your outstanding balance. In addition, the credit card company might also file a lien in court on your property or you could be subject to wage garnishment. What should you do when these things happen?
First, you should understand the process of how credit card companies go about collecting on the debt you owe. If you receive a notice from an attorney about an impending lawsuit, it may not be the credit card company that is suing you (although they have the right to do so). That is because some credit card companies prefer not to get involved in messy collection efforts and so they sell off their debts to debt collectors and the debt is written off as a bad debt (usually after 180 days). An added reason for the credit card company to write off your debt is that they receive a tax break for such losses.
Secondly, you should know your rights. You have the right to validate the debt that the credit card company says is yours. You may need to validate because if you learn about your debt from a debt collector, you should determine if the debt is rightfully yours.
Another right you have is the right to the statute of limitations. The statute of limitations is the time limit by which the credit card company has to initiate legal proceedings against you. The credit card company cannot sue you for any outstanding debt that is older than the statute of limitation.
Thirdly, you should consider how to resolve the issue of the lawsuit by the credit card company or debt collector. One way to do so is to file for bankruptcy. But time is of the essence. It is important to file for bankruptcy before the credit card company initiates legal action. If you do so after, the bankruptcy court may not consider your credit card debt as part of your dischargeable debt.
Filing for bankruptcy before any legal proceedings may put a stop to it before it begins. As filing for bankruptcy brings about an automatic stay on all actions by creditors to get payment from you, it may prevent the credit card company or debt collector from initiating their lawsuit.
For more information about how bankruptcy can help you resolve your credit card and other unsecured debt problems, call us at (813) 200 4133 for a free consultation.
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Filed under Chapter 7 (Tampa) by on Apr 25th, 2012. Comment. 
After having your debts discharged through bankruptcy, it is time to start anew financially. After all, that is the purpose of filing a bankruptcy petition. Bankruptcy wipes your slate clean and allows you to become debt free again. But now that you have been given a new lease of life financially, it is time to start off on a right footing and not repeat your past mistakes.
You should know that a bankruptcy filing will stay on your credit record for between 7 to 10 years. This is unavoidable but it is remediable. In other words, you may have this “blemish” wiped off your record in less than the customary 7 years. If you are interested in improving your credit score after bankruptcy, read on.
The first thing to do to remedy your credit score is to check to see if all your debts have been recorded as discharged by the credit agencies. Sometimes, errors can occur and some of your debts that have been discharged may not be recorded as such and this would jeopardize your credit score. In such an event, write to the credit agencies formally and inform them of the oversight. Make sure they correct the error and show that your debts have been discharged by your bankruptcy.
One of the most effective ways to improve your credit record is to start a new record of good and prompt payments of your credit each month. So contrary to what you might think, your credit card actually becomes your ally not your enemy after bankruptcy. By all means use your credit card, BUT make sure you pay up more than just the minimum payments on time every month.
If you are not eligible for a normal credit card, you can apply for a “secured” credit card, which is one that is issued against some collateral as a deposit. This collateral will then become your balance limit.
Another way to avoid past financial mistakes is to have regular savings. Setting aside some money each month is a good way to save for a rainy day. You never know, this saving may help you avoid another bankruptcy in future should any unexpected emergencies occur such as high medical bills.
If you keep control of your debts by making regular payments on all of them and also set aside some savings regularly, you are well on your way to a life of financial prudence.
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Filed under Chapter 7 (Tampa) by on Feb 29th, 2012. Comment.
With the recession showing no signs of abating very soon, many people continue to tighten their belts and grit their teeth to try to endure these tough times. Are you one of them? In my business as a lawyer, I make it a point to fight for justice and it pains me to see hardworking folks like you having to struggle for a living just because interest rates have skyrocketed. And worse still, it disturbs me to see you being hounded by debt collectors and creditors who are only thinking of their cash flow and couldn’t care less about you and your family.
That’s why I set up this blog. It is to give you information to fight back and take control of your finances. One of the things most people do to overcome their debt problems is to borrow more money. After all, they are already working multiple jobs and yet it is insufficient to cover their loan repayments. But is this the best move to make?
To help you decide whether you should sign on the dotted line on another loan agreement, consider these factors:
1. Is there room to negotiate on your existing loans?
Instead of borrowing a fresh loan, you should firstly look into negotiating better terms for your existing loans. You could negotiate an extension to the repayment term or ask for lower interest rates in exchange for collateral etc. Talk to the officer from your financial institution. They would much rather recoup a lesser repayment from you than have to sue you for the money if you cannot repay at all.
2. Do not apply for the maximum amount of loan
Suppose you feel you need another loan. The very least you should do to safeguard yourself is to apply only for only the amount you need and not max out the loan limit. This would protect you in the event that interest rates are raised in future. If a conservative amount of loan is still not enough for your needs, then you should file for bankruptcy instead.
3. Make sure your loan repayments do not exceed 25% of your gross income
Suppose you are able to get a loan from a friend or relative for which you do not need to pay interest. Still, you should not bite off more than you can chew. You owe it to your friend or relative to repay your loan within the agreed time frame. To give you the best chance of doing so, you should ensure your total loan repayments (including your existing loans) do not exceed 25% of your gross income. That is the general rule for all financial institutions and you should apply it to yourself also. If your total repayments already exceed 25% of your gross income, then you should not apply for another loan and instead, you should seriously consider filing for bankruptcy.
If it is not wise to apply for another loan, what are the benefits of filing for bankruptcy, then?
There are many but let me briefly put forth a few:
1. Bankruptcy enables you to repay your debts over a scheduled payment plan
2. You can have certain unsecured debts forgiven after repaying all you are able to repay
3. Your creditors are prohibited from contacting you the moment your bankruptcy filing goes through
4. Bankruptcy protects certain assets that the bankruptcy court declares cannot be liquidated
If you wish to file for bankruptcy, call us for a free consultation at (813) 200 4133 and we will help you plan a strategy for you to overcome your debts, whether they are individual or corporate ones.
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Filed under Chapter 7 (Tampa) by on Dec 8th, 2011. Comment.
Bankrupt investment bank Lehman Brothers has sued JPMorgan Chase & Co. alleging that J.P. Morgan illegally obtained billions of dollars from it in the days prior to their bankruptcy filing. J.P. Morgan was Lehman’s one time ‘clearing bank’ or middleman between Lehman and its investors and creditors. This, according to Lehman, allowed J.P. Morgan to be privy to the financial condition of Lehman, especially when it continued to weaken. Lehman further alleged that J.P. Morgan’s Chief Executive James Dimon and other top executives took advantage of this insider information to get Lehman to turn over $8.6 billion in collateral in September 2008, an act that significantly contributed to its lack of liquidity and its subsequent downfall.
Lehman’s lawsuit goes on to allege that J.P. Morgan siphoned billions of dollars out of Lehman by demanding more collateral to cover its risks. This in turn ensured that J.P. Morgan would have the advantage over all other Lehman creditors, not just for its clearance exposure, but for all possible exposure that would have resulted from Lehman’s bankruptcy.
On its part, Lehman felt the need to give in to J.P. Morgan’s demands, fearing that should J.P. Morgan stop its clearing activities, it might have precipitated Lehman’s immediate collapse.
Although the lawsuit did not come as a surprise to industry players, J.P. Morgan spokesman Joe Evangelisti described it as ‘ill conceived and meritless’ and said the company will vigorously challenge it.
In a recent report, a bankruptcy court examiner found that Lehman could pursue a legal claim against J.P. Morgan for making excessive collateral requests albeit not a very strong claim. In his report, the court examiner said that Lehman could recoup $6.9 billion of the $8.6 billion pledged to J.P. Morgan. At the same time, the court examiner chided Lehman for using certain accounting techniques to hide its leverage and deceive the market before it ultimately fell into bankruptcy. All the while, J.P. Morgan was among the only institutions to continue lending to Lehman before and after its bankruptcy.
Evangelisti used the bankruptcy court examiner’s report to refute Lehman’s allegations and claimed that it was due to Lehman’s own poor decisions in taking on leverage and exposing itself to subprime mortgages that led to its eventual downfall and not any inappropriate use of confidential information on the part of any J.P. Morgan employee.
As it turned out, when Lehman could no longer get itself out of its downward spiral, the government declined to rescue it, forcing Lehman to file the largest bankruptcy in US history.
Filed under Chapter 7 (Tampa) by on Aug 7th, 2010. Comment.
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.
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Filed under Chapter 7 (Tampa) by on Jul 15th, 2010. Comment.
