Bankruptcy Discussion

Archive for November, 2011

A credit score is a numerical expression based upon a statistical analysis of a person’s credit files, to represent the credit worthiness of that person, or so says wikipedia. FICO is a publicly traded corporation (under the ticker symbol FICO) that created the best known and most widely used credit score model in the United States.

When you file a bankruptcy petition, you are asking the bankruptcy court to apply the bankruptcy laws to your situation, basically in one of three ways: (1) to discharge all your unsecured debt immediately (chapter 7), (2) to force your creditors to accept 100% payment over a period of time (chapter 13 100% plan), or (3) to force your creditors to accept payment over a period of time with your unsecured creditors receiving less than 100% of what is due to them (chapter 13 partial plan).

A chapter 7 bankruptcy stays on your credit report for about 10 years after filing. A chapter 13 bankruptcy stays on your credit report for about 7 years after filing. The idea is that you put more effort into a chapter 13 bankruptcy to pay back creditors, so you are rewarded by having the bankruptcy removed from your credit report in less time.

Can you and how do you rebuild your credit rating after a bankruptcy filing. Yes you can rebuild. That is the whole point of bankruptcy. In fact, many of my clients, in our initial consultation, will convey worry that a bankruptcy will hurt their credit rating. However, after they make their worry known, they quickly realize that their concern is, as Mr. Spock might say, “quite illogical”. Most often, if you’re looking at the prospect of filing bankruptcy, your credit rating has already taken a beating. I can’t say for certain how a particular credit rating agency will react to a particular bankruptcy, but I can say that wiping the slate clean of unsecured creditors is a step in the right direction.

My advice as to how to start rebuilding your credit rating after a bankruptcy is to fill out the next credit card application that comes in the mail (and they will come). The credit card companies and banks need you more than you need them. They might approve you for a $500.00 limit. Before I start getting attacked for advising to take another nip of the dog that bit you, there are two warnings I have. First, if you have an uncontrollable compulsion to use credit cards (like a gambler in a casino), then do not apply for another credit card and stick with a debit card. Secondly, if you do get approved for another credit card, do not carry a balance and pay finance charges. Pay off the balance at the end of each month. If you can’t stick to that plan, don’t get back into this dangerous game.

Some, especially people in the lending industry, may tell you to carry a balance and keep your payments current. This is technically the better way to build your credit rating more quickly, however, I do not condone playing this game and paying finance charges. My way will build your credit rating also. Slow and steady will win the race every time.

Finally, your credit score will affect the rate you get on your next auto loan or whether or not a life insurance company will issue you a policy, but do not judge yourself by your credit score. Enjoy your time off the credit grid. Maybe you’ll get used to it. Too many Americans are in too much debt, and the stress of carrying a load of debt is no good for your life on any level. Let bankruptcy be a fresh start and a respite for reflection upon life’s priorities.

I am a bankruptcy attorney with offices in Nassau County and Suffolk County, on Long Island, in New York. I have been practicing for over fifteen years in the same courts, and I would love to dispel some myths about bankruptcy and enlighten people on the legitimacy of deciding to file a bankruptcy petition.

The architects of this country were much more tuned in to finances than you may think. In fact, the basis for the freedom they envisioned had as much to do with money as it did with enumerating basic individual rights. So what does a room full of powdered wigs have to do with your bills? Everything. Article I, Section 8 of the United States Constitution authorizes Congress to enact uniform Laws on the subject of Bankruptcies for the benefit of debtors who are United States citizens. Under this grant of authority, Congress enacted the Bankruptcy Code. It is a set of statutes identified as Title 11 of the United States Code, and it was conceived, drafted and passed into law for . . . YOU!

Unfortunately, you may find yourself in one of the follow situations:

* You or the breadwinner in your family just fell victim to an accident or serious illness and the medical bills and paperwork have crushed your credit, your ambition and any chance you may have had to live like you used to.

* You or your spouse lost a lucrative job or position, and you didn’t realize until now how fragile the balance was between monthly expenses and your ability to pay them.

* Over the past few years, you genuinely believed that your income would improve, so you kept maintaining your needs by expanding your credit card balances. After all, it was only a matter of time before things turned around. However, you’re now maxed out and you have tapped your extended family for “loans” as much as you and/or they are willing.

* You took student loans out to get that degree or license, because that degree or license was your ticket to a higher income. However, the job in your fantasy never came to fruition and now you’re not only in student loan debt but credit card debt as well.

* You bought your house and were on the road to owning the biggest asset of your life. Then you refinanced and decided to take some extra money out of the equity for an addition, or a car, or to pay your kids tuition or to take a vacation, etc. Well, now your house is worth close to or less than your mortgage balance, and your taxes and your groceries and your utilities are 4 times as high. Should your start draining your retirement account?

In the past, the common attitude toward these situations was 1) you were irresponsible, 2) you made your bed, now lie in it, 3) get yourself a couple of jobs, you’ll eventually work it off. I say, with total sincerity and authority, to reset the game for yourself, and have no regrets about it. Just read the following, and you’ll begin to see why.

For the past thirty years, our Federal Government, with our States Attorneys General sitting on their hands, has let banks run wild and they’ve managed to get themselves into a pretty deep hole. Savings banks have been combined with investment institutions. Corporations have started their own banks and have issued their own credit cards. High finance allows bets on just about anything at such levered levels as to put the very existence of these institutions at risk. The Federal Reserve has offered very cheap money to banks, has set artificially low interests rates, and has prevented natural market forces from prevailing. The list goes on, and it may be hard to understand how this relates to you, but here is the prime example of how you may be affected by this game.

The Federal Reserve made money cheap for banks to borrow, and banks lent out much more than they held, as much as ten times more. Many of these loans were recklessly approved over the past decade. However, quasi-governmental agencies offered insurance for these loans as long as the banks made these loans in accordance with certain guidelines. Neither the banks nor the government actually investigated whether these loans were made within the guidelines, but that’s okay because the loans were be bundled together and sold around the world as highly-rated securities. Since it was so easy to get loans, for example for the purchase of a house, the prices of houses skyrocketed. In 1997, the fair market value of a house may have been $165,000, and your loan may have been $125,000. Ten years later, in 2007, the fair market value of the same house was $465,000 and your loan to purchase it was $450,000. Four years after that, the fair market value of the house is $320,000, and the balance on the loan is $440,000, plus the loan is now in foreclosure and real estate price are continuing to decrease in a stagnant market. That’s because the government and the banks manipulated the market. There are two parties left holding the bag – you, the homeowner, and the pension fund or other investor that bought that bundle of securitized mortgages. Next time you hear, “Banks got bailed out. We got sold out.,” you’ll understand it with a little more depth.

With all the sensationally ill-conceived policies and acts of governments, banks and corporations going on these days, and with many of these policies and acts negatively affecting the “common citizens”, you are well within your rights, both morally and legally, to reset the game with respect to your creditors and get a fresh start on life. You can end the telephone harassment. You can end the letters from collection agencies, and tomorrow can really be the first day of the rest of your life. Bankruptcy not only is the beginning of the credit healing process, it is the beginning of the psychological healing. It will help alleviate your stress. This is your health and well-being about which we are speaking. This is important stuff. After all, are you a consumer first, or are you first a human being, family member, friend and soul? Just think about the word, “consumer”! It’s demeaning, and you may never have even noticed.

Therefore, the next time you think about the possibility of bankruptcy for yourself, DO NOT CONSIDER what your neighbor may think about it. He or she has no business judging you, and most likely cannot even begin to contemplate the psychological pain you are now suffering. In fact, your neighbor will probably not even find out if you file a bankruptcy case unless he or she searches the federal docket. The decision to make legitimate use of the bankruptcy laws is a decision that should be made between you and your attorney, end of story.

I am a bankruptcy attorney with offices in Nassau County and Suffolk County, on Long Island, in New York. I have been practicing for over fifteen years in the same courts, and I would love to dispel some myths about bankruptcy and enlighten people on the legitimacy of deciding to file a bankruptcy petition.

The architects of this country were much more tuned in to finances than you may think. In fact, the basis for the freedom they envisioned had as much to do with money as it did with enumerating basic individual rights. So what does a room full of powdered wigs have to do with your bills? Everything. Article I, Section 8 of the United States Constitution authorizes Congress to enact uniform Laws on the subject of Bankruptcies for the benefit of debtors who are United States citizens. Under this grant of authority, Congress enacted the Bankruptcy Code. It is a set of statutes identified as Title 11 of the United States Code, and it was conceived, drafted and passed into law for . . . YOU!

Unfortunately, you may find yourself in one of the follow situations:

* You or the breadwinner in your family just fell victim to an accident or serious illness and the medical bills and paperwork have crushed your credit, your ambition and any chance you may have had to live like you used to.

* You or your spouse lost a lucrative job or position, and you didn’t realize until now how fragile the balance was between monthly expenses and your ability to pay them.

* Over the past few years, you genuinely believed that your income would improve, so you kept maintaining your needs by expanding your credit card balances. After all, it was only a matter of time before things turned around. However, you’re now maxed out and you have tapped your extended family for “loans” as much as you and/or they are willing.

* You took student loans out to get that degree or license, because that degree or license was your ticket to a higher income. However, the job in your fantasy never came to fruition and now you’re not only in student loan debt but credit card debt as well.

* You bought your house and were on the road to owning the biggest asset of your life. Then you refinanced and decided to take some extra money out of the equity for an addition, or a car, or to pay your kids tuition or to take a vacation, etc. Well, now your house is worth close to or less than your mortgage balance, and your taxes and your groceries and your utilities are 4 times as high. Should your start draining your retirement account?

In the past, the common attitude toward these situations was 1) you were irresponsible, 2) you made your bed, now lie in it, 3) get yourself a couple of jobs, you’ll eventually work it off. I say, with total sincerity and authority, to reset the game for yourself, and have no regrets about it. Just read the following, and you’ll begin to see why.

For the past thirty years, our Federal Government, with our States Attorneys General sitting on their hands, has let banks run wild and they’ve managed to get themselves into a pretty deep hole. Savings banks have been combined with investment institutions. Corporations have started their own banks and have issued their own credit cards. High finance allows bets on just about anything at such levered levels as to put the very existence of these institutions at risk. The Federal Reserve has offered very cheap money to banks, has set artificially low interests rates, and has prevented natural market forces from prevailing. The list goes on, and it may be hard to understand how this relates to you, but here is the prime example of how you may be affected by this game.

The Federal Reserve made money cheap for banks to borrow, and banks lent out much more than they held, as much as ten times more. Many of these loans were recklessly approved over the past decade. However, quasi-governmental agencies offered insurance for these loans as long as the banks made these loans in accordance with certain guidelines. Neither the banks nor the government actually investigated whether these loans were made within the guidelines, but that’s okay because the loans were be bundled together and sold around the world as highly-rated securities. Since it was so easy to get loans, for example for the purchase of a house, the prices of houses skyrocketed. In 1997, the fair market value of a house may have been $165,000, and your loan may have been $125,000. Ten years later, in 2007, the fair market value of the same house was $465,000 and your loan to purchase it was $450,000. Four years after that, the fair market value of the house is $320,000, and the balance on the loan is $440,000, plus the loan is now in foreclosure and real estate price are continuing to decrease in a stagnant market. That’s because the government and the banks manipulated the market. There are two parties left holding the bag – you, the homeowner, and the pension fund or other investor that bought that bundle of securitized mortgages. Next time you hear, “Banks got bailed out. We got sold out.,” you’ll understand it with a little more depth.

With all the sensationally ill-conceived policies and acts of governments, banks and corporations going on these days, and with many of these policies and acts negatively affecting the “common citizens”, you are well within your rights, both morally and legally, to reset the game with respect to your creditors and get a fresh start on life. You can end the telephone harassment. You can end the letters from collection agencies, and tomorrow can really be the first day of the rest of your life. Bankruptcy not only is the beginning of the credit healing process, it is the beginning of the psychological healing. It will help alleviate your stress. This is your health and well-being about which we are speaking. This is important stuff. After all, are you a consumer first, or are you first a human being, family member, friend and soul? Just think about the word, “consumer”! It’s demeaning, and you may never have even noticed.

Therefore, the next time you think about the possibility of bankruptcy for yourself, DO NOT CONSIDER what your neighbor may think about it. He or she has no business judging you, and most likely cannot even begin to contemplate the psychological pain you are now suffering. In fact, your neighbor will probably not even find out if you file a bankruptcy case unless he or she searches the federal docket. The decision to make legitimate use of the bankruptcy laws is a decision that should be made between you and your attorney, end of story.

Hi, and welcome to my Bankruptcy Discussion blog. My name is Charles Fisher. I am an attorney, and I have been practicing bankruptcy law for over 15 years. Before that, I worked for a bankruptcy court judge whose court was located in Suffolk County. My offices are located in Nassau County and Suffolk County, but my clients are located from Westchester to Montauk, and also in New Jersey.

Over the years, and after seeing many clients and changes, I am pretty well keyed into my clients’ main concerns about bankruptcy. This blog may help answer some questions for you and may give you some added knowledge, which in most cases means a little comfort. You are welcome to contact me anytime for more information.