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!  [Read more…]

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: [Read more…]

25th Bankruptcy and Debt Carnival

The 25th Bankruptcy and Debt Carnival is a collection of Internet blog posts about credit cards, debt, debt consolidation, finance, loans and personal finance.

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.

Student Loans Not Dischargeable in Bankruptcy

Generally, you cannot discharge your student loans in bankruptcy.  There is an exception for hardship but the definition of hardship is so narrow, the exception rarely applies.

To make matters worse, the time limits for collecting delinquent student loans have been eliminated.  Collection efforts will follow you for years and years.

The National Consumer Law Center established the Student Loan Borrower Assistance Project (SLBA), the premier Internet site for student loan borrowers.  There you will find information on repayment options for borrowers who are unable to pay their student loan contract payments.

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.

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.

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.

Free Credit Reports Aren't Really Free

The frequently advertised free credit report websites aren’t really free–there is a catch.  But there is a place you can get free credit reports once a year without any traps.

Yes, you get a free report on the advertised website, but you have to enter a credit card number and sign up for a monthly credit monitoring service.  That’s free, too, for 30 days, but if you forget to cancel the service after the first month, you automatically get charged for each month thereafter.

Go to www.annualcreditreport.com

On this site you truly can get your own credit reports once per year from each of the three credit reporting agencies. Consumer advocates suggest you pull one of the three reports every four months so you can monitor your own credit at no cost to you.

Beware of Tax Refund Loans

Tax refund anticipation loans

Some tax return preparers offer to provide an “instant” tax refund by arranging for loans based on the expected refund.  The loan is for a very short period of time between when the return is filed and when you would expect to get your refund.  Like other short-term loans, the fees may seem small but amount to an annual interest rate of 200 percent or more.  It is best to patient and wait for the refund.

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

Mortgage Loan Modification Programs

Here is a collection of voluntary mortgage loan modification programs from various lenders in the United States collected by the National Consumer Law Center, America’s consumer law experts.

Some lenders will modify and some won’t.  Mortgage modification agreements are being offered by some lenders. But all mortgage modification agreements are not equal.  Here’s what’s happening in the real world, today.

Relying on lenders to do voluntary mortgage modifications has not been successful thusfar.  Less than 10% of the voluntary modifications result in reduced principal, more than half capitalize the unpaid interest onto the loan balance, and a third of the modifications reduce the monthly payment while almost half have monthly payments increases.

Gambling Your Way Out of Debt Against the Odds

You can’t gamble your way out of debt problems.  The odds are against you.   You might win a jackpot or two but the casino wins in the long run.  We can tell you from years of experience that gambling causes many bankruptcy filings.

Compulsive gambling is an addiction, an illness that can be treated like other illnesses.   In fact, gambling to “solve” financial problems is one of 20 signs of problem gambling according to Gamblers Anonymous, a 12-step recovery program for people who are compulsive gamblers.

Help is available for problem gambling.