WHAT ARE HIGH-PRIORITY ERRORS ON YOUR CREDIT REPORTS AND WHY THEY NEED TO BE CORRECTED RIGHT AWAY?

When our clients file bankruptcy, we pull their credit reports to include all creditors listed in their credit file. We often discover that there are numerous errors in these reports. Some studies say that approximately 80 percent of people have errors on their credit report. This means that a lot of people are seriously harmed by errors on their credit reports.

Some errors are simple, such as having a wrong address or misspelled name listed on your account. These are low-priority errors and have very little impact on your credit score. But some errors can have a significant impact on your score, and should be fixed immediately. These are high-priority errors. By removing these errors, your credit score could jump 20, 50, or even 100 points.

High-priority errors you need to correct right away include:

Important information- such as names, social security numbers, or accounts that do not belong to you;

Delinquent account information- such as collection notices that are listed more than once;

Credit limits that are incorrectly reported or not reported at all;

Incorrect delinquent information, especially if the information is less than 2 years old.

If you find any of these errors, make sure you dispute legitimate errors only. There are some questionable credit repair companies that recommend you dispute everything on your report. If you do that, credit bureaus will likely consider your requests to be frivolous, and may ignore all of your requests for correction.

All of our bankruptcy clients have access to a credit-rebuilding program, which addresses all of these issues. If you do not need to file bankruptcy but need to bolster or rebuild your credit score, let us know.

WILL EVERYONE KNOW THAT I FILED BANKRUPTCY?

A few weeks ago, I met with a client who was considering bankruptcy. After going over all her options, she decided that bankruptcy was her best option. I got a strong feeling that she was still worried about something. After talking further, she revealed that she was concerned that all her friends, family, neighbors and employer will find out she filed bankruptcy, which will be embarrassing.

She felt much better after I told her this was a common concern and that it is unlikely they will know you filed unless you tell them. Years ago, notices of bankruptcy filings were published in daily newspapers. Today, even though bankruptcy filings are public records, there are very few places where they are published, and it takes some effort to find them. There are, however, certain circumstances where your bankruptcy will be revealed to people you know.

Family Members or Friends -If a family member or friend is a joint account holder or a co-signer on a debt, if they lent you money, or if you recently paid them money or gave them a gift, they must be listed in your paperwork and they will be notified.

Former Spouse -If you pay child support, alimony, or court ordered marital debt to a former spouse, they must be listed and they will receive notice.

Landlord- if you have an unexpired lease for an apartment or home, you have to list it in your paperwork.

Employer- Your employer will generally not be notified and will not know about your case, unless the Bankruptcy Court orders a wage deduction order for a Chapter 13 Plan. This is usually not done unless you fall behind on your Chapter 13 Plan payments. There are also laws that prevent an employer from terminating you or demoting you solely on the fact that you filed bankruptcy.

Partners or Shareholders in Businesses- You must list all businesses you had an interest in prior to filing bankruptcy, including any other partners and shareholders.

These are the more common ways outsiders can discover that you filed bankruptcy. Keep in mind, it is nearly impossible to keep your bankruptcy completely secrete. A client told me that a friend of his Mother saw him at a bankruptcy hearing, and word spread to his family. That should not stop you from filing if you need to. The vast majority of our client’s cases go through with very few, if any, people knowing about it. Our office can assist you in developing a strategy to discuss your case with family, friends, employers or anyone else that needs to know. Our clients are often pleasantly surprised to discover that the support they receive from their family and others who they confide in far outweighs any embarrassment they thought they would endure.

IS MARITAL PROPERTY PROTECTED IF ONE SPOUSE FILES BANKRUPTCY?

We often help married couples where only one spouse files bankruptcy. When this happens, clients usually ask if jointly held marital property becomes part of the bankruptcy case. Property held by spouses can be considered exempt from creditors and the bankruptcy court in Florida if it meets certain conditions. The legal term for this type of ownership is tenants by the entireties.

Property owned as tenants by the entireties is considered exempt because it is not held or titled in the name of an individual, it is held or owned by the marriage. If one spouse owes an individual debt, property owned as tenants by the entireties cannot be taken to satisfy the debt of that individual spouse. Determining if the property is held as tenants by the entireties is not always easy.

Real or personal property held as tenants by the entireties have 6 characteristics:

1. Unity of possession (joint ownership and control);
2. Unity of interest (the interests must be identical);
3. Unity of title (the interests must have originated in the same instrument);
4. Unity of time (the interests must begin at the same time)
5. Survivorship (if one spouse dies, the surviving spouse automatically has ownership of the deceased spouse’s interest);
6. Unity of marriage (the parties must be married at the time the property became titled in their joint names)

Even if all these elements apply, and a particular piece of property is considered held as tenants by the entireties, it does not mean it is always fully protected. For example, if a couple has joint debt, and only one spouse files Chapter 7 bankruptcy, the Trustee can administer entireties property up to the amount of the joint debt, with the rest protected.

It is often difficult to prove property is entireties property, especially personal property. If you are considering filing bankruptcy without your spouse, feel free to contact us to help you figure it out.

WHEN SHOULD YOU START PAYING YOUR STUDENT LOAN AFTER GRADUATING

After working hard for 4 or more years, graduation day finally arrives and you are rewarded with a college degree. For many, that degree would not have been possible without student loans. Now you have to decide when and how you are going to start paying it back.

There is a waiting period before you have to start paying back your loan after graduation known as a Grace Period. The decision you have to make is should you use the Grace Period, and if so, what actions should you take during the Grace Period.

The length of the Grace Period often depends on the type of student loan you have, whether you are entitled to extensions, and if you previously used a Grace Period on the loan.

For Federal Loans, Stafford Loans usually have a 6-month grace period after graduation. Older Stafford Loans may be longer, and you may or may not accrue interest during the grace period, depending on the type of Stafford Loan. Grace periods are not available for PLUS Loans, and payments typically begin 60 days after the final disbursement. Even though there is no Grace Period, a Graduate Student or Parent may request a 6-month in school deferment, with interest accruing. Perkins Loans normally have a 9-month Grace Period after graduation, without accruing interest.

Private Loans are not as predictable as Federal Loans. There are no Grace Periods, but most do have “Interim Periods” before payments begin. You must read your loan agreement carefully, since each Private Loan have different terms and conditions for payment.

Some other facts you need to know about Grace Periods:

a. Grace Periods can be extended if you are active duty military after graduation.
b. You can only use your Grace Period once per loan.
c. Consolidating your loans usually eliminates any remaining Grace Period for the loans consolidated.

If you opt for the Grace Period, you should use the time to adjust for life outside of school, find or get settled into your new job, but most importantly, use the time to evaluate the best repayment option for paying back your loan.

Our goal is to make sure you choose the right repayment option to meet your current needs. The worst thing you can do is delay. If you have a Federal Loan, and you do nothing, the Department of Education will choose your payment option.

WILL I LOSE MY CAR IF I FILE BANKRUPTCY?

People are often hesitant to file bankruptcy because they are afraid of losing their vehicle. That is understandable since without their car or truck, they can’t get to work, or get their children to school. What happens to your vehicle depends on whether your car is worth more than you owe. If there is no or very little equity in the vehicle, you have 3 options. If it is paid for or has substantial equity, you have 2 choices.

Most clients who file bankruptcy have little or no equity in the vehicle. If you are current and want to keep it, you can reaffirm the debt. By reaffirming, you agree to continue making the payments under the same terms and conditions. You are legally bound by the agreement after the bankruptcy, so you must be certain you really want the vehicle and can afford the payments. If you want the vehicle, but you owe much more than it is worth, you can redeem. This is where you get another loan based on the value of the vehicle to pay your current loan (for example, if your truck is worth $12,000, but you owe $20,000, you get a new loan for $12,000 to satisfy the current loan of $20,000). Redemption depends on various factors and is not always an option. Finally, you always have the option to surrender the vehicle in bankruptcy, and wipe away the debt forever. We can work with you on the timing of surrendering the vehicle and can help you find another one if needed.

If your vehicle is paid for or if it is worth much more than you owe, you have 2 choices.

If you want to keep it and it is paid for, you can keep it so long as the value fits within your personal property allowance (for example, your car is worth $800, and you are allowed $1000 auto exemption, Trustee can’t take it) If the value of the vehicle exceeds the exempt allowance, you must buy-back the overage from the Trustee (for example, your car is worth $3000, you are allowed $1000, so if you want it, you must pay the overage of $2000 to the Trustee, usually in installments not to exceed 10 months).

Sometimes you still owe money to the finance company, and if the vehicle is nearly paid for, you have to continue to pay the finance company, in addition to overages to the trustee. If that is not feasible, you can always surrender the vehicle to the Trustee. That is the second choice. Again we can help you find another vehicle if necessary.

These options are available if you file Chapter 7. If you file Chapter 13 repayment bankruptcy, the options are different. Either way, if you need to get your debts under control, we can help you work through all the options regarding your vehicle.

CHOOSING THE WRONG CREDIT CARD WILL DAMAGE YOUR CREDIT SCORE

Did you know that 46% of credit cards negatively affect your credit score? If you don’t rebuild your credit with the right credit cards, your credit will never improve. 46% of credit cards report the incorrect credit limit to the bureaus, which has a negative impact on your credit score. Think about it… you can spend all your time rebuilding your credit after your bankruptcy, and two, three, four years later… your credit score won’t move a bit because you applied for the wrong credit cards.

A Federal Reserve Board Study was commissioned to look at credit scoring, and they found that in 46% of the time, credit cards don’t report the proper information to the credit bureaus. Most of the time, the errors have to do with two factors:

CREDIT LIMITS. If a proper credit limit is not reported, it impacts the utilization rate, which has a direct impact on the credit score. For example, if a credit card is showing that there is $0 credit limit and a borrower owes $10 on the card, then according the credit bureaus, that credit card is maxed out and it will impact a person’s credit score by 10-30 points.

REPORTING TO ALL THREE CREDIT BUREAUS. Some credit cards don’t report to all three bureaus, which is why some credit scores are higher than others.

Many people try to rebuild their credit after bankruptcy by applying for credit, but they are getting the wrong credit cards. This happens ALL THE TIME!!!

That is why we conducted a nationwide search to find the easiest, fastest and most effective credit-rebuilding program for our clients. With 7 Steps to a 720 Credit Score, not only will they tell you the exact credit cards that have the biggest impact on your credit score, but they will show you the ones with the lowest interest rates as well. We are the exclusive provider of this program in the area.

If you want more information on the program, feel free to contact us anytime.

YOUR STUDENT LOAN CAN BE FORGIVEN IF YOUR SCHOOL COMMITTED FRAUD

We receive calls periodically from clients wanting to get their federal student loans forgiven due to fraud or misrepresentation. Although the process is not an easy one, there are times where it can be done.

The U. S. Department of Education recently agreed to cancel nearly $28 million for 1300 former students of Corinthian Colleges and their affiliates, which resulted in the schools filing bankruptcy. The school was charged with falsified placement rates and deceptive marketing, among other violations.

Most of these fraud cancellations occur at for-profit schools which promise their students top instructors, guaranteed job placement, and state of the art facilities and equipment. Often, the students know more about the subject than the instructors, the facilities are obsolete, and the job-placement data is made up.

Even if the school is legit, if they knowingly accepted you into a program for an industry that you will never qualify for employment, that can be a basis for forgiveness. For example, if the school accepted you in a truck driving program, knowing you would never qualify for a commercial license, that can be a basis for forgiveness.

These debts can be forgiven directly through the Department of Education, or through bankruptcy proceedings. Some are easier to get rid of than others, depending on the school you attended, and the program you studied. If you or someone you know have suspicions about a school you attended, let us know.

BANKRUPTCY AND YOUR TAX REFUND

A common question we receive this time of year is “Can I keep my tax refund if I file bankruptcy”? The answer depends on whether you already received the refund, the nature of the refund, and what you do with the funds.

If you already received the refund and want to file, your refund is considered part of the property you own at the time you file, and you must disclose it to the Trustee handling your bankruptcy case. That does not necessarily mean that you will lose your refund. Your refund can be partially or fully exempt (if you don’t own or want to keep your home, you are allowed $5,000 individually, $10,000 jointly personal property exemption). You can spend your refund to pay attorney fees and costs to file your bankruptcy case. You can spend your refund on necessary items, such as catching up mortgage or car payments, repairs, taxes, or utilities (although paying regular monthly bills absent loss of income may not work). Also, any part of your refund that is based on the Earned Income Tax Credit is exempt in Florida (but not Child Care Credit).

If you file bankruptcy before you get a refund, you cannot spend any of the funds until you hear from the Trustee. The Trustee will inform you how much, if any, he is returning to you. If you need funds that the Trustee keeps, you must make a written request with documents supporting your reasons for using the funds, and wait for the approval of the Trustee. The Trustee may or may not decide to let you keep the funds, depending on your reasons. If you filed a Chapter 13, and are paying your unsecured creditors in full, there is no reason for the Trustee to keep your refund.

As previously stated, you can use your refund to pay your attorney fees and costs to file bankruptcy. If you or someone you know is thinking about bankruptcy, now is the time. If you have any questions, feel free to contact us anytime.

TOP REASONS WHY PEOPLE FILE BANKRUPTCY

As we begin the New Year, people often think about getting their finances in order and start considering Bankruptcy. A common misconception held by many people is that debtors declare bankruptcy primarily due to extravagant spending, and rather than paying back their creditors, they take the easy way out and file for bankruptcy. In reality, that is rarely the case.

After filing close to 1500 cases, we find that there are usually 4 reasons people declare bankruptcy.

Job Loss or Reduced Income -This is by far the most common reason, especially after 2008.

Most of our Clients are living paycheck to paycheck with no cash reserves. Even a temporary loss of income is enough to lead the way to financial disaster, including foreclosure, repossessions, and wage garnishment. Other times, loss of a spouse’s income or overtime pay can be enough to reach a point where they lose complete control of their debts.

Medical Expenses– Recent studies show that around 62% of personal bankruptcies filed are due in part to medical bills. The vast majority of these filers have some type of health insurance. Co-payments and deductibles can quickly add up. This is true even for people covered under the Affordable Care Act. If they cannot work because they are ill or injured, the bills don’t stop and their finances quickly fall apart. Most consumers do not have short or long term disability benefits, and the benefits of the Family Medical Leave Act are limited.

Divorce– When a household with two incomes is cut in half because of divorce, bankruptcy usually follows. Expenses often increase due to establishing and maintaining two separate households, child support, alimony payments, and the costs of divorce. Many clients tell us that it takes years to recover financially from a divorce. When creditors are unwilling to work with them while they adjust to the realities of divorce, the result is often bankruptcy.

Years of Debt That Final Becomes Unmanageable– Credit card and other personal debt that was easily controlled can become a disaster when balances slowly creep up over the years, or when low introductory rates expire. A monthly payment of $250 per month can suddenly double or triple when a 0 or 3% interest rate converts to 15% or higher.

There are other reasons why people declare bankruptcy, such as unexpected large expenses, co- debtors who quit making payments, or student loans that cannot be deferred.

The purpose of Bankruptcy is to give an unfortunate debtor who has fallen on hard times, usually by forces he could not control, a chance to get a fresh start and get back a normal life.

10 Things You Need To Know About Your Student Loan

We are proud to present our new e-book, 10 Things You Need To Know About Your Student Loan.

According to Market Watch, in 2015, there is over 1.3 trillion dollars in outstanding student loan debt, and it is increasing at $3,055.19 every second. There are over 40 million Americans carrying some type of student loan debt, 70% of students graduate college with debt, and only 37% of borrowers are paying back their debt. That is where trouble begins.

When you default on your student loan, not only is your credit damaged, but you also risk having your paycheck garnished or your tax refund taken for Federal Loans, without a Court Order. For Private Loans, you could face a major lawsuit. The good news is there are things you could do to prevent these problems. That is why we wrote this book. We wanted to give the reader a basic understanding of the common issues that arise in student loan cases.

The book covers topics like identifying the type of loan you have, what you need to do before your loan goes in default, payment options, why you should use a student loan attorney, deferment vs. forbearance, how your loan may be forgiven or eliminated in certain situations, bankruptcy and student loans, how to handle private student loans and lawsuits, and much more, including real life situations.

We have found that when Clients are familiar with the concepts outlined in this book, they are less anxious, and they become more confident that they can finally get their student loans under control.