Zero Debt Expert

Current economic circumstances are making a lot of people who have never before considered filing bankruptcy to now consider it as a potential answer to their financial difficulties. The problem is that not everyone can be assisted by filing bankruptcy. So, if you’re one of those people who has never, until lately, given thought to filing bankruptcy, you need to know whether bankruptcy will assist you or not.

Should You Even Be Considering Filing Bankruptcy?

As unusual as it sounds, there’s no common test you can take to see whether bankruptcy is proper for you. You don’t need a particular level of debt. You don’t need to earn less than a particular sum of money. And, you don’t even need to be in arrears in payments to your creditors.

Bankruptcy isn’t a decision you make by checking off boxes on a flow chart. Bankruptcy is a personal decision. But, it’s a personal decision that’s based on specific factors in your life. They are some of the things you need to consider before deciding one way or the other about bankruptcy.

1. Are you in financial trouble? You may be in financial distress if you’re having difficulty paying the minimum payments on your credit cards. And, if you’re scarcely able to keep necessaries like food, clothing and shelter you’re likely in financial trouble.

2. Do you live paycheck to paycheck? If you had even a small health issue, would it put you in a financial crisis?

3. Are you judgment proof? Put differently, do you have no assets that can be seized and sold to pay off your indebtednesses? You may not need to file bankruptcy if you’re judgment proof. Then again, judgments do stick around for a while. Each state’s judgment rules vary on exactly how long a judgment can hang around. But, what you need to consider is that your current bad situation may, and in all likelihood will, improve in the future. If it does, those judgments that were of no interest during your financial crisis will interest you because you could be looking at the seizure of your future assets. Most lawyers will give you a free bankruptcy consultation. You should use it to talk about this particular issue.

4. Are creditors and collection agents harassing you? Bankruptcy is one alternative to halt that harassment. But, you can also stop it with a letter writing campaign under the federal Fair Debt Collection Practices Act and affiliated state law fair debt collection laws. But, bankruptcy is in all likelihood the easiest choice if you’re being harassed and you’re in financial trouble (see #1).

5. Are you facing foreclosure? You’ll be able to block a foreclosure by filing a Chapter 13 bankruptcy. Chapter 13 lets you to restructure your debts and pay your mortgage arrears over time.

Will Bankruptcy Help You?

Bankruptcy won’t give you more income. So, if you don’t make adequate money to support your life-style, bankruptcy isn’t your answer. You either need to lower your expenses or increase your income. You may even need to do both. But, you don’t need to file personal bankruptcy.

Bankruptcy also won’t help if your primary debts are non-dischargeable debts. Bankruptcy law defines those debts that are dischargeable and those that are not. The following is a compact listing of some non-dischargeable debts in a Chapter 7 Bankruptcy under current bankruptcy laws.

* Current taxes and government penalties

* Your Child Support

* Criminal files or restitution ordered by a court

* Personal injury awards where the debtor was drunk at the time of the incident

* Debts that aren’t listed in the bankruptcy filing

* Student loans (exceptions exist but it’s almost impossible to meet the requirements for them. So, it’s advisable to consider student loans as non-dischargeable)

* Debts that were part of a prior bankruptcy case and that weren’t discharged

Concluding Considerations for Personal Bankruptcy

Making Up One’s Mind whether to file bankruptcy isn’t an uncomplicated decision. But, it’s a decision you’ll be able to make if you take a reasoned and well-balanced approach to it. As part of your consideration, you’ll need to consider your emotions, your background, your religious beliefs and your values. So, look at the following:

1. Do your own research. Learn everything you can about bankruptcy.

2. Keep your future in mind. Think of how you’ll feel when the case is all over and you’re out from under a stack of debt. How will you feel about yourself in 6 months or a year? Will you be delighted with your choice to either file bankruptcy or not file bankruptcy?

3. Find the correct bankruptcy attorney for you. Nearly all attorneys will give you a free bankruptcy consultation. Use that free consultation to interview the lawyer. But, when you start questioning bankruptcy lawyers, don’t base your final hiring decision totally on price. It will be enticing to employ the most low-priced. After all, you’re in a financial crisis so the more inexpensive the better, right? That’s not always the case. Question the lawyer first. Be sure you’re a good match with that attorney. Your bankruptcy lawyer will be working for you so you need to be comfortable with the whole approach to your case. You need to feel good about the fundamental interactions you have with the lawyer and staff. You want a bankruptcy lawyer who will help you through this crisis in a positive way. You don’t want to feel judgment or disapproval from either the lawyer or the staff.

4. Filing bankruptcy is a moral decision. Don’t kid yourself into believing it’s not. But, you do have to make the decision that’s best for you and your household. So ask yourself: “Is it more respectable to fight a losing financial battle that places your family’s future at risk in an attempt to pay back old debt?” Or, is it more respectable to admit you did your best, you couldn’t make it work and you need a fresh start that will permit you to devote your personal time and effort into activities that will more positively impact your family’s future?”

Only you can answer that question. Take your time. Make the right decision for you and your household. Once you’ve made that decision, have faith in your power to make the appropriate choice. Then, go ahead knowing that your financial troubles will soon pass.

Late payments are not created equal; a 90 day and 120 day late pay will cause your score to be dramatically lowered. However with a 30 day or 60 day late pay it will cause very minimal damage to your score.

You can remove a 30 or 60 day late pay by contacting the lender directly and asking them to erase it. Often they will do this as a gesture of good will and to keep your business.

We suggest making a phone call and writing a follow up letter. In your letter you should supply a brief explanation and be polite and respectful, after all they do not have to remove the mark.

A 90 and 120 day late pay is much more difficult to remove. However if your account is still open then you should contact the lender, and ask for removal of the mark.

It is a good idea to make sure your account is up to date before making this request. Typically if the lender sees a history of late payments they will not remove it.

If you can not get the mark removed we suggest you dispute it directly with the credit bureaus. This is done by creating a dispute letter and mailing it to each bureau or you can hire a service to do this on your behalf.

This item will be on your report for a maximum of seven years. Additionally your account will be charged off after 180 days of delinquency.

A lender can remove this mark because they report monthly to the bureaus and can choose what to report to them. Thus if they do not report your late payment the next month then it will not be on your credit history.

If your account is not in good standing, it will be very difficult to convince the lender to remove the mark from your report. Also there is a lot of information that says a negative item must stay on your report for seven years.

This is false, seven years is the maximum amount of time most negative items can remain on your report. The Fair Credit Reporting Act passed by Congress made this law. There is no minimum amount of time a negative item has to be on your report.

In sum the first step is contacting the lender, if you still have the account, and then if that is unsuccessful dispute it directly with the bureaus.

If you have a tax lien on your credit report, you should take immediate action to remove it. This is a very bad mark and will lower your score considerably.

The first step is to have the bureaus validate the lien. You need to send each bureau a dispute letter.

Surprisingly it is not out of the ordinary for incorrect information to be reported on your credit. It is estimated that 1 in 4 people have inaccurate information on their report.

Upon receipt of your letter the bureau will investigate the mark. They will contact the state or federal government and ask for verification that the debt does exist. If it is verified then you will have to make some form of payment.

Depending on the amount you owe it may be in your interest to contact a tax negotiator. This is because they can often negotiate a reduced payment for you. However you can also negotiate directly with the government.

This debt can be collected on for 10 years. It will be reported on your report for 7 years once it is paid.

However once you pay in full, wait three months and dispute the mark again. It has been learned that frequently the government will ignore future validation requests from the bureaus once a lien is paid.

This means your tax lien will not be verified and the bureau will erase it from your report. However if this mark is incorrect to start with you can demand proof that the account is yours, and send any documentation you have to prove your side.

Repayment

The IRS and state government often accept partial payment. To propose this to them you will make an offer in compromise, often called an OIC.

The government will look at; your ability to repay, your income, your assets, and what they expect to recover. Additionally it will help your chances of acceptance, if you attach a letter showing financial hardship.

It may be in your interest to hire a tax attorney or negotiator to help negotiate a repayment amount. It is not absolutely necessary but nonetheless a good idea.

In sum, you can remove a tax lien and other negative marks from your credit report. You do not just have to live with bad credit.

If you have filed bankruptcy you should expect your credit will be severely damaged. However there is hope, you can take action to remove your bad credit and by building some positive credit you can have a high score.

Contrary to popular belief this mark can be removed from your report and without waiting 10 years. To remove this mark we suggest:

1. Dispute the mark with each bureau.

You can do this yourself or by hiring a service, a dispute letter must be sent to each bureau disputing the accuracy of the mark. Upon receipt the bureaus will investigate, however because bankruptcies are recorded in public records which the bureaus will not check during an investigation, the mark will not be verified.

The Fair Credit Reporting Act says that a listing that in not verified must be removed from your report. Additionally this act says that you can dispute any item you feel is inaccurate on your report. It is a common concern about the legality of repairing your credit; you will never have any legal consequence for disputing a listing.

Before you dispute the bankruptcy it is a good idea to make sure that all other negative marks read “included in bankruptcy.” The reason is once the initial bankruptcy mark is removed you will dispute all the other negative items because you do not have a bankruptcy mark on your report. There are rumors that it is much easier to remove this mark after two years.

2. When your bankruptcy mark is erased, you can start to dispute each negative account.

This can be done because no where on your credit report does it say you have filed a bankruptcy so how can these negative items be included? Upon an investigation the marks should be erased and this will provide you with a clean report.

3. Open a new revolving line of credit such as a credit card. This will help you build some positive credit on your report.

By making your on time monthly payments you will create a positive payment history. Additionally keep your monthly balance at 25% of your available limit because this will show the bureaus that you do use your card and use it responsibly. This will improve your ratio of available credit to debt, a very important factor when your score is calculated.

It might not be the most ethical to dispute items you know are accurate on your report. However is it ethical for lender to charge you 30% interest rate for missing a payment, no matter how long you have been a model customer?

In sum a positive payment history, report clear of derogatory items, and a good ratio of available credit to debt is the recipe for a 700 plus score. This will improve your quality of life by; saving you money on large deposits, high interest rates, and the embarrassment of a denial.