Duncan Law Blog

Rebuilding Your Credit After Bankruptcy in 6 Steps (Step #5)

Jul 28, 2010 No Comments by

Rebuilding Your Credit After Bankruptcy in 6 Steps” is a series of posts that will appear over the course of the next couple of weeks. Following these 6 steps will help you lay the foundation to achieve better credit. Here are the six steps:

Step #1: Review Your Credit Reports
Step #2: Get a Secured Credit Card
Step #3: Get an Unsecured Credit Card
Step #4: Pay Your Monthly Bills, On Time and Every Month
Step #5: When Appropriate, Get and Pay a Mortgage Payment or Car Loan
Step #6
: After Seven (7) Years Ask the Credit Bureaus to Remove the Bankruptcy Off of Your Credit Report

By following the first four steps of this six step plan you are well on your way to reestablishing your credit.  After your credit score has inched ever closer to the 700 mark you can go and make a larger purchase like an automobile or house.  Don’t purchase these items simply for the sake of getting them but if you need a newer (notice I said “newer” not “new,” big difference) automobile you can do this with your newly established credit.  Like your other bills, you have to pay this each and every month.  It’s also important that you purchase something within your means.  Look over your budget and make sure that you can afford this new vehicle or house.  We don’t want to ruin your credit after you’ve worked this hard to rebuild it by failing to make the necessary payments.

Making these monthly payments on a big-ticket item like a house or car is going to show the credit reporting agencies and those checking your credit that you have taken the steps necessary to rebuild your credit.  They will view you as someone who is worthy of lending to.  By this point in time your credit is going to be as strong, if not stronger, than your other friends and family.

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Rebuilding Your Credit After Bankruptcy in 6 Steps (Step #4)

Jul 26, 2010 No Comments by

Rebuilding Your Credit After Bankruptcy in 6 Steps” is a series of posts that will appear over the course of the next couple of weeks. Following these 6 steps will help you lay the foundation to achieve better credit. Here are the six steps:

Step #1: Review Your Credit Reports
Step #2: Get a Secured Credit Card
Step #3: Get an Unsecured Credit Card
Step #4: Pay Your Monthly Bills, On Time and Every Month
Step #5:
When Appropriate, Get and Pay a Mortgage Payment or Car Loan
Step #6:
After Seven (7) Years Ask the Credit Bureaus to Remove the Bankruptcy Off of Your Credit Report

I’m sure you never thought this would be the case but this is the easiest step of them all.  If you’ve followed the three steps before this you should have cleaned up your credit report, spent a year laying the foundation for your new credit with a secured credit card and now you should have obtained a reasonable unsecured credit card.

Once you have received your new unsecured credit card don’t use it.  Not yet at least.  Using that new unsecured credit card, contact the company for your water, cable or some other utility bill that you have and let them know you want to automatically pay that bill each month with that credit card.  You probably shouldn’t put all of your utilities on the credit card.  Instead, pick one or two utility bills and have them paid automatically each month on the credit card.  Next, coordinate with your bank and credit card billing department and give them permission to automatically take the monthly balance of the credit card out of your bank each month.

Next, take your favorite and sharpest pair of scissors and cut up the credit card into 100 little pieces. (Okay, it doesn’t really need to be 100 but you should cut it up so you can’t use it any more.)  However, make sure you do not close down the account with the credit card.  We want to leave this credit card open and have those one or two utility bills paid each month with the card.  The credit card company should then automatically withdraw that amount from your bank.

Now that those one or two utility bills are set up to be paid each and every month your credit will benefit.  With that said, you have to continue to pay your other bills and live your life responsibly.  However, following this plan and living within your means you will watch your credit score increase exponentially.

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Rebuilding Your Credit After Bankruptcy in 6 Steps (Step #3)

Jul 23, 2010 2 Comments by

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Rebuilding Your Credit After Bankruptcy in 6 Steps” is a series of posts that will appear over the course of the next couple of weeks. Following these 6 steps will help you lay the foundation to achieve better credit. Here are the six steps:

Step #1: Review Your Credit Reports
Step #2: Get a Secured Credit Card
Step #3: Get an Unsecured Credit Card
Step #4
: Pay Your Monthly Bills, On Time and Every Month
Step #5: When Appropriate, Get and Pay a Mortgage Payment or Car Loan
Step #6: After Seven (7) Years Ask the Credit Bureaus to Remove the Bankruptcy Off of Your Credit Report

After you’ve spent time laying the foundation for your new credit by using a secured credit card you will want to begin looking for an unsecured credit card.  An unsecured credit card is a card where you do not put up collateral (cash, automobiles, etc.) as an assurance that you will pay.  We typically recommend that you use a secured credit card for at least one year before moving on to an unsecured card.  Sites like www.CreditCardGuide.com or www.CreditCardTuneUp.com will allow you to browse a number of different types of unsecured credit cards.  Regardless, at the appropriate time take the next step to get an unsecured credit card.

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Rebuilding Your Credit After Bankruptcy in 6 Steps (Step #2)

Jul 21, 2010 3 Comments by
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Rebuilding Your Credit After Bankruptcy in 6 Steps” is a series of posts that will appear over the course of the next couple of weeks. Following these 6 steps will help you lay the foundation to achieve better credit. Here are the six steps:

Step #1: Review Your Credit Reports
Step #2: Get a Secured Credit Card
Step #3: Get an Unsecured Credit Card
Step #4: Pay Your Monthly Bills, On Time and Every Month
Step #5: When Appropriate, Get and Pay a Mortgage Payment or Car Loan
Step #6: After Seven (7) Years Ask the Credit Bureaus to Remove the Bankruptcy Off of Your Credit Report

Secured Credit Card | Rebuild Credit After Bankruptcy

After your credit report is accurate you are ready to look for a secured credit card. A secured credit card is a credit card where a balance of money has already been posted. For example, most secured credit cards will require you to put up anywhere between $300 and $500. After doing this, you have a credit limit of the amount that you put up. I know, its not what you are used to in your pre-bankruptcy days but that’s okay. We are in a rebuilding period now.

To find a good secured credit card you need to do some research. There are some key things that you need to pay close attention to in your search. First, make sure that you get a card that does not have an application fee. Although you can find a card that does not have an application fee you aren’t likely to find a secured credit card that doesn’t have an annual fee. However, what those annual fees are vary a great deal. You’ll want to do your research and read the fine print to make sure you find a card that doesn’t try to nickel and dime you in other charges and fees. Second, make sure that the secured credit card reports to the three main credit agencies (Equifax, Experian or TransUnion). It does you no good to be making payments on a secured credit card if you aren’t going to get the acknowledgement of making those regular payments.

There are a number of places online where you can do research about different secured credit cards offers. One place is at BankRate.com. If you are a credit union member then they often times will have fairly decent options when it comes to secured credit cards. But again, do your homework and make sure you are getting the best deal for you.

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Bankruptcy Lawyers in Charlotte NC

What is a Reaffirmation Agreement?

Jul 19, 2010 10 Comments by

After filing a Chapter 7 bankruptcy and after your creditor’s meeting, the creditor that you owe for your house or car may send a document called a Reaffirmation Agreement to your attorney. A reaffirmation agreement is a document that your attorney will help you fill out. You have a choice of whether or not to sign a reaffirmation agreement. It asks for your monthly household income, monthly household expenses, and how much you still owe on your house or car. The document also asks how much your monthly payment is on your house or car, and will ask you and your attorney if you have enough money each month to make your payment on the debt that is referred to in the reaffirmation agreement.

Let’s pretend you have one mortgage and two car payments. You will receive a reaffirmation agreement for each of those payments – for a total of three reaffirmation agreements. Your attorney will guide you in which of the document should be filled out. In North Carolina, the bankruptcy Judges have discouraged the signing of reaffirmation agreements for real property (in other words, your mortgage) unless there is a change in the interest rate or monthly payment under the reaffirmation agreement. Reaffirmation agreements are most often signed for vehicles. In most districts, if you do not sign the reaffirmation agreement for your vehicle, then the creditor has the right to repossess the car.

If you do sign the reaffirmation agreement for a car payment, and the document shows that you are able to afford the monthly payment, when the document is submitted to the court, there will generally not be any problems. You will get to keep your car as long as you keep making the payments. However if, in the future, you are unable to make your car payments, the creditor has the right to repossess the car and you will be responsible for any deficiency balance after the repossession. If you sign the reaffirmation agreement but the document does not show that you are able to afford the monthly car payment, there will be a court hearing in front of the bankruptcy Judge for you and your attorney to explain why you should be able to keep your car.

If you do not sign the reaffirmation agreement for a car payment, the creditor will have the right to repossess your car. If you do not sign the reaffirmation agreement for a house payment, you will be able to keep your house as long as you continue making the payments. If, in the future, you are unable to continue making your house payment, the creditor will have the right to foreclose on your home BUT you will not be responsible for any deficiency balance after the foreclosure.

Reaffirmation agreements can be complicated, but your attorney will guide you through the process. Reaffirmation agreements are to be submitted to the court no later than 45 days after your first scheduled creditors’ meeting date. If you have not heard from your attorney regarding your reaffirmation agreement within 3 weeks after your creditors’ meeting, contact your attorney so that they can request the reaffirmation agreement from the creditor.

If you have any questions or would like to learn more about filing bankruptcy, contact Duncan Law in Charlotte, NC or Greensboro, NC for a free initial consultation.

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Rebuilding Your Credit After Bankruptcy in 6 Steps (Step #1)

Jul 19, 2010 2 Comments by
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Rebuilding Your Credit After Bankruptcy in 6 Steps” is a series of posts that will appear over the course of the next couple of weeks. Today, we will focus on the first step. Without completing this step all the rest are pretty much meaningless. Following these 6 steps will help you lay the foundation to achieve better credit. Here are the six steps:
Step #1: Review Your Credit Reports

It seems that at least once every day when I am sitting in my office going through a free consultation with a potential client I will get the question, “How does bankruptcy impact my credit?” ?So lets go ahead and get this out of the way:

Bad News Alert: Bankruptcy Will Hurt Your Credit Score.

Good News Alert: You Can Rebuild Your Credit.

Anyone who tells you that bankruptcy won’t hurt your credit is lying to you. Bankruptcy will hurt your credit initially. However, if you are interested in filing bankruptcy your credit is probably already damaged quite a bit or is well on its way to being damaged. One of the nice things about bankruptcy is it allows you to hit the “refresh”? button to start over. The question on whether a bankruptcy will hurt my credit is an easy one to answer. Yes. The more important question we should really be asking is: Can you rebuild your credit after filing bankruptcy and, if so, how? Yes, you can rebuild your credit after filing bankruptcy.

I recommend to our clients a six-step process to rebuild your credit. Today, we will discuss the first step.

Step #1: Review Your Credit Report

After you’ve filed your bankruptcy a critical step is to look over your credit report to make sure that the debts that were discharged from your bankruptcy (Chapter 7 bankruptcy) or are included in your repayment plan (Chapter 13 bankruptcy) are reflected accurately on your credit reports. According to the National Credit Reporting Association, in 2002 almost 1 in 4 credit reports had reporting errors!

If you haven’t done so within the last 12 months, you can pull a free credit report at AnnualCreditReport.com. They are one of the few legit places you can pull your credit report without having to pay any money. If you have included a debt on your bankruptcy but your credit report from either Equifax, Experian or TransUnion shows that debt not included in the bankruptcy then you need to correct that. If you don’t, that debt will remain on your credit report as being delinquent or outstanding and will continue to pull down your credit score.

As someone looking for a fresh financial start, it is important that your credit report is accurately reflecting that your debts are either discharged after your Chapter 7 bankruptcy or are being repaid in a Chapter 13 bankruptcy. If you find information is inaccurate then you need to send, in writing, a letter to each of the credit bureaus, attaching a copy of the Report of Filed Claims and the Bankruptcy Discharge Papers, to show that your debts have been included in a bankruptcy. The credit bureaus should correct any of their errors but you will need to be vigilant and persistent to make sure those errors are corrected. If you don’t get this step right then all the steps after this one are moot.

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Bankruptcy Lawyers in Charlotte NC

Confessions of Former Debt Collectors via CNN

Jul 17, 2010 1 Comment by

Today CNN is running an eye opening article about the tactics and strategies used by debt collectors or creditors.  The article covers 10 different people who used to call and harass people for a living.  They unveil some of the extreme tactics that creditors use to get money from debtors.  A common theme that is seen throughout the ten different stories is the fact that these people make their money by collecting money.

Many of these creditors are on commission and the more money they bring in the more money they make for a living. Is this the best way to ethically collect debt? We too often see that creditors will bend or even break consumer protection laws simply to make a little more money.  If they aren’t being commissioned then maybe there would be more civility in the debt collection profession.  Regardless, this is a great article by CNN – check it out. The article is called Confessions of Former Debt Collectors.

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Bankruptcy Lawyers in Charlotte NC

Can I Buy a Car While I’m in a Chapter 13 Bankruptcy?

Jul 12, 2010 1 Comment by

Due to unforeseen circumstances, sometimes a person in a Chapter 13 bankruptcy will need to take out a new loan to get a car. This can happen if, for example, the car that you were driving when you filed the bankruptcy is in an accident or breaks down beyond repair.

You can buy a car while you’re in a Chapter 13 Bankruptcy. However, you must obtain approval from your Chapter 13 Trustee in order to finance a car while you’re bankruptcy. The Chapter 13 Trustee can generally approve a credit request for up to $15,000.00.

It’s important that you contact your attorney so he or she can advise you how to proceed. You will need to find a car you want to purchase and obtain the terms of the loan from the lender/dealership. It will be necessary for your attorney to update your monthly income and expenses prior to submitting the request for credit authorization to the Trustee. You need to be able to show the Trustee that you can afford your Chapter 13 plan payment and a new car payment.

Your attorney will submit a credit authorization request form to the Trustee, with the terms of the loan, including the amount of the loan, the interest rate and the monthly payment. It can take up to ten (10) days for the Trustee to approve the request. Once you have final approval from the Trustee, the car can be purchased.

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Bankruptcy Lawyers in Charlotte NC

Happy Independence Day

Jul 04, 2010 No Comments by

Have a Wonderful and Safe Independence Day from All of Us at Duncan Law!Independence Day

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Bankruptcy Lawyers in Charlotte NC

Why Do I Have to Take a Credit Counseling Course?

Jun 28, 2010 No Comments by

The courts require that you take a credit counseling course from an approved agency prior to your bankruptcy being filed. This is not a requirement from just our law firm, this is a requirement by the Court.

When the bankruptcy laws were changed in 2005, one of the changes included two course requirements. The first is that you take a credit counseling course prior to filing bankruptcy. You must take the course within 6 months prior to your bankruptcy filing. Another court requirement is that you take the course at least 24 hours prior to your bankruptcy being filed. The course is simple, and there are even approved agencies that allow you to watch a video online to complete the course.

The second change in the 2005 bankruptcy laws was the requirement of a financial management course. This is a different course than the credit counseling. Financial management must be taken prior to the discharge of your bankruptcy. You can also take this course online from an approved agency.

At your free initial consultation, we will explain both of these course requirements in more detail.

To find out more about how Duncan Law can help you, visit our website.

Duncan Law, PLLC

Charlotte Office:
4801 E. Independence Blvd.
Suite 1100
Charlotte, NC 28212
704-563-1224

Greensboro Office:
628 Green Valley Road
Suite 304
Greensboro, NC 27408
336-856-1234

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