You are here:Home Archives for NCLC
3/3/09

10 Things to Think About Before Using Your Credit Card After Bankruptcy

Ten Things to Think About Before Using Your Credit Card After Bankruptcy

1.  Establish a realistic budget.

Before using a credit card after bankruptcy, try paying cash for a while.  This will help you learn how much money you need each month to pay the basic necessities.  Don’t forget to budget for the payments on any debts you reaffirmed in your bankruptcy.

2.  It is important not to use credit cards to make up for a budget shortfall.

Credit card debt is expensive.  Sometimes credit cards are so easy to use that people forget they are loans.  Be sure to charge only things you really need and plan to pay the balance off in full each month.  If you find you are constantly using your card without being able to pay the bill in full each month, you need to consider that you are using cards to finance an unaffordable lifestyle.

3.  If you get into financial trouble, do not make it worse by using credit cards to make ends meet.Continue Reading

PrintFriendlyShare
Filed Under: After Bankruptcy
3/2/09

10 Things to Think About Before Getting a New Credit Card After Bankruptcy

Ten Things to Think About Before Getting a New Credit Card After Bankruptcy

1.  Don’t apply for a credit card until you are ready.

Unfortunately, bankruptcy may not have permanently resolved all of your financial problems.  It is a bad idea to apply for new credit before you can afford it.

2.  Avoid accepting too many offers.

There is rarely a good reason to have more than one or two credit cards.  Having too much credit can lead to bad decisions and unmanageable debts, and it will lower your credit rating.  This can make it harder for you to get other lower interest rate loans.  Avoid accepting a credit card just to get a discount at a store or a “free” gift.

3.  Remember that lenders are looking for people who run up big balances, because those consumers pay the most interest.Continue Reading

PrintFriendlyShare
Filed Under: After Bankruptcy
3/1/09

What You Can Do to Avoid Problems with Credit After Bankruptcy

What You Can Do to Avoid Problems with Credit After Bankruptcy

* If you don’t want it, don’t get it.  If you have doubts about whether you really need the loan or service, or whether you can afford it, don’t let yourself get talked into it by a salesperson using high-pressure tactics.  You can always walk away from a bad deal, even at the last minute.

* Shop around.  You may qualify for a loan with normal rates from a reputable bank or credit union.  Don’t forget that high-cost lenders are counting on your belief that you cannot get credit on better terms elsewhere.  Do not let feelings of embarrassment about your past problems stop you from shopping around for the best credit terms.

* Compare credit terms.  Do not consider just the monthly payment.  Compare the interest rate by looking at the “annual percentage rate,” as this takes into account other fees and finance charges added on the loan.  Make sure you know exactly what fees are being charged for credit and why.

* Read before you sign.  If you have questions, get help from a qualified professional to review the paperwork.  A lender that will not let you get outside help should not be trusted.

* If you give a lender a mortgage in a refinancing deal, remember your cancellation rights.  In home mortgage refinancings, federal law gives you a right to cancel for three days after you sign the papers.  Exercise these rights if you feel you signed loan papers and got a bad deal.  Don’t let the lender talk you out of cancelling.

* Get help early.  If you begin to have financial problems, or you are thinking of consolidating unmanageable debts, get help first from a local non-profit housing or debt counseling agency.

Source: Using Credit Wisely After Bankruptcy Pamphlet, National Consumer Law Center, Boston, MA, www.nclc.org.

PrintFriendlyShare
Filed Under: After Bankruptcy, Credit, Financial Help
2/28/09

Beware of Rent-to-Own

Beware of Credit Offers Aimed at Recent Bankruptcy Filers

Rent-to-own

By renting a TV, furniture or appliance from a rent-to-own company, you will often pay three or four times more than what it would cost to buy.  The company may make even more profit on you because the item you are buying may be previously used and returned.  And if you miss a payment, the company may repossess the item leaving with you no credit for the payments you made.

Source: Using Credit Wisely After Bankruptcy Pamphlet, National Consumer Law Center, Boston, MA, www.nclc.org.

PrintFriendlyShare
Filed Under: Credit, Financial Help
2/26/09

Beware of Payday Loans, Auto Title Loans

Beware of Credit Offers Aimed at Recent Bankruptcy Filers

Small Loans

It is always best to save some money to cover unexpected expenses so you can avoid borrowing.  But if you are in need of a small loan, avoid the following high cost loans:

Payday loans

Some “check cashers” and finance companies offer to take a personal check from you and hold it without cashing it for one or two weeks.  In return, they will give you an amount of cash that is less than the amount of your check.  The difference between the amount of your check and the cash you get back in return is interest that the lender is charging you.  These payday loans are very costly.  For example, if you write a $256 check and the lender gives you $200 back as a loan for two weeks, the $56 you pay equals a 728-percent interest rate!  Continue Reading

PrintFriendlyShare
Filed Under: Credit, Financial Help, Vehicles
2/25/09

Beware of "Bad Credit, No Problem"

Beware of Credit Offers Aimed at Recent Bankruptcy Filers

Be wary of auto dealers, mortgage brokers and lenders who advertise: “Bankruptcy? Bad Credit? No Credit? No Problem!”  They may give you a loan after bankruptcy, but at a very high cost.  The extra costs and fees on these loans can make it impossible for you to keep up the loan payments.  Getting this kind of loan can ruin your chances to rebuild your credit.

Mortgage Loans

If you own your home, some home improvement contractors, loan brokers and mortgage lenders may offer to give you a home equity loan despite your credit history.  These loans can be very costly and can lead to serious financial problems and even the loss of your home.  Avoid mortgage lenders that:Continue Reading

PrintFriendlyShare
Filed Under: Credit, Financial Help
2/23/09

Beware of High Cost Predatory Lenders

Beware of Credit Offers Aimed at Recent Bankruptcy Filers

Avoid High Cost Predatory Lenders

Don’t assume that because you filed bankruptcy you will have to get credit on the worst terms.  If you can’t get credit on decent terms right after bankruptcy, it may be better to wait.  Most lenders will not hold the bankruptcy against you if after a few years you can show that you have avoided problems and can manage your debts.

Source: Using Credit Wisely After Bankruptcy Pamphlet, National Consumer Law Center, Boston, MA, www.nclc.org.

PrintFriendlyShare
Filed Under: Credit, Financial Help
2/22/09

Beware of Credit Repair Companies

Beware of Credit Offers Aimed at Recent Bankruptcy Filers

Credit Repair Companies

Beware of companies that claim:  “We can erase bad credit.”  These companies rarely offer valuable services for what they charge, and are often an outright scam.  The truth is that no one can erase bad credit information from your report if it is accurate.  And if there is old or inaccurate information on your credit report, you can correct it yourself for free.

Source: Using Credit Wisely After Bankruptcy Pamphlet, National Consumer Law Center, Boston, MA, www.nclc.org.

PrintFriendlyShare
Filed Under: Credit, Financial Help
2/21/09

Beware of "Secured" Credit Card Offers

Beware of  Credit Offers Aimed at Recent Bankruptcy Filers

“Secured” Credit Card

Another type of credit marketed to recent bankruptcy filers as a good way to reestablish credit involves “secured” credit cards.  These are cards where the balances are secured by a bank deposit.  The card allows you a credit limit up to the amount you have on deposit in a particular bank account.  If you can’t make the payments, you lose the money in the account.  They may be useful to establish that you can make regular monthly payments on a credit card after you have had trouble in the past.  But since almost everyone now gets unsecured credit card offers even after previous financial problems, there is less reason to consider allowing a creditor to use your bank deposits as collateral.  It is preferable not to tie up your bank account.

Source: Using Credit Wisely After Bankruptcy Pamphlet, National Consumer Law Center, Boston, MA, www.nclc.org.

PrintFriendlyShare
Filed Under: Credit, Financial Help
2/20/09

Beware of “Disguised” Reaffirmation Agreement

Beware of Credit Offers Aimed at Recent Bankruptcy Filers

“Disguised” Reaffirmation Agreement

Carefully read any credit card or other credit offer from a company that claims to represent a lender you listed in your bankruptcy or own a debt you discharged.  This may be from a debt collection company that is trying to trick you into reaffirming a debt.  The fine print of the credit offer or agreement will likely say that you will get new credit, but only if some or all of the balance from the discharged debt is added to the new account.

Source: Using Credit Wisely After Bankruptcy Pamphlet, National Consumer Law Center, Boston, MA, www.nclc.org.

PrintFriendlyShare
Filed Under: Credit, Discharge, Financial Help
2/19/09

Should I Reaffirm Department Store Credit Cards?

Some department store credit cards may be secured.  The things you buy with the credit card may be collateral.  The store might tell you that they will repossess what you bought, such as a TV, washer, or sofa, if you do not reaffirm the debt.  Most of the time, stores will not repossess used merchandise.  So, after a bankruptcy, it is much less likely that a department store would repossess “collateral” than a car lender.

However, repossession is possible.  You have to decide how important the item is to you or your family.  If you can replace it cheaply or live without it, then you should not reaffirm.  You can still shop at the store by paying cash, and the store may offer you a new credit card even if you don’t reaffirm. (Just make sure that your old balance is not added into the new account.)

For Example

Some offers to reaffirm may seem attractive at first.  Let’s say a department store lets you keep your credit card if you reaffirm $1000 out of the $2000 you owed before bankruptcy.  They say it will cost you only $25 per month and they will also give you a $500 line of credit for new purchases.  What they might not tell you is that they will give you a new credit card in a few months even if you do not reaffirm.  More importantly, though, you should understand that you are agreeing to repay $1000 plus interest that the law says you can have legally canceled.  That is a big price to pay for $500 in new credit.

Another option for keeping property with a purchase money security interest is redeeming it from the creditor for a lump sum cash payment.

Source: Your Legal Rights During and After Bankruptcy:  Making the Most of Your Bankruptcy Discharge Pamphlet, National Consumer Law Center, Boston, MA, www.nclc.org.

PrintFriendlyShare
Filed Under: Chapter 7, Discharge
« Older Posts