Blogs

How to Rebuild Your Credit
Feel like you are stuck and cannot find a way out?
Are you overwhelmed by financial challenges?  Do you want to rebuild your credit?  Many people try to solve their problems in the privacy of their homes, rather than asking for guidance.  Fortunately, the Internet allows them to research answers to their financial questions, without exposing their situation to neighbors, co-workers or family.  Unfortunately, there is a lot of bad advice on the Internet, just like bad advice from neighbors, co-workers and family.
The best answers – follow your gut, do your own research and use common sense.
The following article gives some very simple suggestions about rebuilding your credit, whether after bankruptcy, or other financial disaster. I have not edited this article because it is short and to the point.  My thanks to the author for sharing this information.

How to Build Your Credit: Your Step-by-Step Guide

By Maurie Backman,(TMFBookNerd) May 1, 2017

Step 1: Check your credit report on a regular basis
One of the easiest ways to build your credit is know where you stand, which means you should access and review your credit report at least once a year. More than one-third of Americans don’t check their credit reports regularly, but by law, you’re entitled to a free copy of your report each year from all three major credit bureaus — Equifax, Experian, and TransUnion. You can access your free credit report online here.
Step 2: Dispute credit report errors immediately
It’s estimated that 20% of credit reports contain errors, but if you’re among the 16% of Americans who never check their credit reports at all, you could be missing out on an easy way to boost your score overnight. According to the Federal Trade Commission, 20% of consumers who dispute credit report errors see their scores increase as a result, so if you spot a mistake, be sure to contest it at once. Credit bureaus are required by law to respond to disputes within 30 days, or otherwise remove the data in question, so you have nothing to lose by making your case.
Step 3: Pay your bills in full and on time
Your payment history plays a big role in determining your credit score, and if you make a habit of paying your bills on time and in full month after month, you can build up your credit sooner than you’d think. While there are other factors that come into play when calculating your credit score, your payment history carries more weight than any other aspect, so it pays to get into a good bill-paying pattern early on.
Step 4: Don’t use more than 30% of your available credit
Your credit utilization ratio, or the extent to which you’re using your available credit, is another factor that goes into calculating your credit score. You should always aim to keep your credit utilization ratio to 30% or less, which means that if you’re given a $5,000 line of credit, you should never borrow more than $1,500 at any single point in time.
Step 5: Pay down existing debt
Erase your debt whenever possible.
Paying off existing debt can help your credit in several ways. First, if you start making timely payments, it’ll boost your payment history. Additionally, the more debt you eliminate, the lower your credit utilization ratio will fall. A good way to approach your present debt is to tackle those balances that carry the highest interest rates first and then work your way downward. Another option is to transfer your existing high-interest debts to a credit card with a lower rate.
Step 6: Get a secured credit card
A secured credit card differs from a regular credit card in that it requires you to keep a certain amount of money in a linked savings account as collateral. Getting approved for a secured credit card is relatively easy, even if you’re not starting out with great credit, because your lender is taking on significantly less risk. But if you use that card and pay your bills on time, they’ll count toward your payment history just as regular credit card payments would.
Step 7: Become an authorized user on somebody else’s card
Getting your name added to an established account can work wonders for your credit score, even if you don’t actually use that card yourself. When you become an authorized user on someone else’s card, that person’s credit limit gets added to yours, which can help bring your credit utilization ratio down. Furthermore, becoming an authorized user on another card can help you beef up your credit history if you’re fairly young and haven’t had time to establish a solid one of your own.
Step 8: Take out a credit-builder loan
As the name implies, credit-builder loans are designed to help folks with poor credit improve their financial standing. You can open one through a credit union or bank, and once you do, the amount you borrow will be deposited into a savings account that you can’t touch until your loan is repaid in full. While a credit-builder loan won’t give you immediate access to extra cash, your payments will be reported to all of the major credit bureaus, which means you easily can boost your credit by sticking to the terms of your loan.
Step 9: Avoid opening too many new accounts at once
Some people shy away from checking their credit reports for fear that doing so will lower their scores. But while a soft inquiry, such as requesting your own credit report, won’t damage your score, a large number of hard inquiries could impact it negatively. Any time a lender delves into your credit history, it’s considered a hard inquiry, and having too many at once can hurt you. That’s why it’s best to open new accounts slowly over time.
Step 10: Keep your accounts open for as long as possible
Your credit history is another factor that goes into figuring your credit score. Unlike your payment history, which speaks to your ability to pay your bills in a timely fashion, your credit history represents the amount of time you’ve had active accounts. Closing an old credit card, therefore, can actually hurt your credit history, but more so than that, it can impact your credit utilization ratio by lowering your overall credit limit. Unless you have a pressing reason to close an old account (say, the introduction of a high annual fee), you’re better off keeping it open and being smart about how you use it.

Share this entry

• Share on Facebook
• Share on Twitter
• Share on Google+
• Share on Pinterest
• Share on Linkedin
• Share on Tumblr
• Share on Reddit
• Share by Mail

About Diane:
Diane L. Drain is a well known and respected Arizona bankruptcy attorney. She is an expert in both consumer bankruptcy and Arizona foreclosure. Since 1985 she has been a dedicated advocate for her clients and spokesperson for Arizona citizens. Diane is a retired professor of law teaching bankruptcy for more than 20 years. As a teacher she believes in offering everyone, not just her clients, advice about the Arizona bankruptcy laws. She is also a mentor to hundreds of Arizona attorneys.
I would be flattered if you connected with me on GOOGLE+
*From Diane: This article/blog is available for educational purposes only and does not provide specific legal advice. By using this information, you agree there is no attorney client relationship between you and me, and that this information should not be used as a substitute for competent legal advice from an attorney familiar with your personal circumstances and licensed to practice law in your state.*

The post How to Rebuild Your Credit – guest post appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.

New Rules To Recover Impounded Vehicles In recent months, there has been a tidal wave of activity surrounding bankruptcy, the City of Chicago, parking tickets and consumers trying to recover their impounded vehicles. For many years, it was common practice for the City of Chicago to release vehicles back to a debtor upon the filing+ Read More
The post Filing Bankruptcy After Your Car Has Been Impounded For Parking Tickets, No Longer A Good Option appeared first on David M. Siegel.

Unlike Chapter 7, which is a liquidation bankruptcy, Chapter 13 requires debtors to create a reorganization plan lasting three to five years. Under the reorganization plan, the debtor makes monthly payments on various debts, some of which must be paid off in full in order for the plan to succeed and the bankruptcy to be discharged. While every debtor’s reorganization plan will ultimately be unique, there are a few basic principles that generally apply in California Chapter 13 cases. Our Roseville bankruptcy attorneys explain some key information about the payments that are generally required in Chapter 13 reorganization plans.

How Much Do I Have to Pay in Chapter 13?
If you are a resident of Folsom, Sacramento, or Roseville who plans to file for Chapter 13 bankruptcy, you will likely do so in U.S. Bankruptcy Court for the Eastern District of California, which has jurisdiction over Sacramento and Placer Counties, among many others. Your Roseville Chapter 13 lawyer will assist you with this process and the documentation that is required.
The court will assign a person called a “trustee,” who will oversee the bankruptcy proceedings, to your case. One of the trustee’s most important jobs is to distribute your monthly payments amongst your creditors, according to how your debts are categorized. Generally speaking, debts are paid in the following order in Chapter 13:
1. Secured Debts – Debts secured by collateral, such as mortgage debt, where the collateral is your house.
2. Priority Debts – Debts which are given special priority despite not being secured by collateral. Examples include alimony, child support, certain tax-related debts, and any earnings you may owe employees, where applicable.
3. Unsecured Debts – This category covers all other debts, ranging from medical debt to personal loan debt to credit card debt.
Chapter 13 debtors are generally required to pay secured debts and priority debts in full, plus interest. Unsecured debts are of lesser importance in bankruptcy. Creditors holding unsecured claims are not necessarily required to be paid in full, but must receive at least the amount they would have received if you had filed for Chapter 7 bankruptcy. This standard is called the “best interest of creditors test.” Moreover, Chapter 13 cases require the debtor to put all of his or her disposable income toward the plan. Additionally, some debtors are approved for a three-year plan, while others are required to disperse payments over a period of five years, which, perhaps needless to say, can have a significant effect on payment amounts.
These factors – the duration of your repayment plan, the amount of disposable income you have, and your ratio of secured debts to unsecured debts to priority debts – all have an impact on the amount of you will pay in order to satisfy your Chapter 13 plan. If the plan becomes too expensive and unmanageable while the case is underway, you may be required to convert your case to a Chapter 7 bankruptcy.
California Chapter 13 Payment Calculator
Be wary of any Chapter 13 payment calculators you find on the internet. There are numerous websites that feature these calculators, but no matter how much detail they require you to input, they invariably fail to account for the financial complexity of reorganization bankruptcy. An online bankruptcy calculator may be able to give you a rough idea, but you should not rely on the calculator’s estimate as an accurate reflection of what your final plan will be.
Remember, the repayment plan you propose must gain approval from the bankruptcy court. Moreover, one or more of your creditors might object to the Chapter 13 plan that you initially propose. Many pitfalls can arise in a Chapter 13 bankruptcy case, which is why it is so critical to be assisted and represented by a knowledgeable Folsom Chapter 13 attorney with prior experience handling cases similar to yours.

Contact Our Roseville Chapter 13 Bankruptcy Attorneys
Bankruptcy has an unfair and rather exaggerated reputation. Despite the many pernicious myths about bankruptcy, the reality is often quite different, and many people go on to say that filing was one of the best financial decisions they ever made. Not only can bankruptcy help erase liability for various debts – it can also help you protect your car from repossession, save your home from foreclosure, and put an end to harassment by debt collectors.
If you’re a California resident and are struggling to manage debt that has grown too overwhelming, we urge you to contact The Bankruptcy Group for a free and completely confidential consultation regarding your legal options. Chapter 13 or Chapter 7 bankruptcy may be the optimal solution for getting your finances back on track. For a free consultation with our Sacramento Chapter 13 attorneys, contact The Bankruptcy Group at (800) 920-5351 today.
The post How Much Do You Have to Pay Back in a Chapter 13 Bankruptcy in California? appeared first on The Bankruptcy Group, P.C..

On April 26, 2017, the White House unveiled a plan to provide “tax relief to both our corporations that will help grow jobs, and to middle Americans.” In a briefing, Secretary of the Treasury Steven Mnuchin and Director of the National Economic Council Gary Cohn admitted that the President’s plan takes away a critical benefit for student loan borrowers.
Under the plan, which looks to slash corporate tax rates in an effort to spur a business expansion, the federal tax deduction for interest paid on student loans would be eliminated.
This comes on the heels of well-publicized moves by the U.S. Department of Education to strip away various consumer protections for borrowers in default.
Existing Student Loan Interest Deduction Rules
The student loan interest deduction is one of the few tax benefits that favors the taxpayer with limited income who doesn’t own a home, has no children, and otherwise would be hard-pressed to find a way to lower his or her tax bill.
Under current law, taxpayers with income of less than $80,000 ($160,000 if filing a joint return) can deduct from their taxes the amount paid for interest on qualified student loans. This adjustment to income, available to taxpayers even if they don’t itemize their deductions, can reduce the amount of income subject to tax by up to $2,500 per year.
For interest on the loan to be deductible, it must have been incurred for payment of qualified educational expenses of the taxpayer, his or her spouse, or a dependent. Loans taken from relatives or an employer’s retirement plan don’t count, but the loan doesn’t lose its status if the taxpayer later gets divorced or the dependent becomes self-supporting. A student loan for your child, for example, would qualify even if the child eventually moves out of the house and gets a job of his or her own.
The student must be enrolled at least half-time in a program leading to a degree or certification at a college, university, vocational school, or other postsecondary educational institution eligible to receive federal student loans. Certain educational institutions located outside the United States, as well as institutions conducting internship or residency programs leading to a degree or certificate from an institution of higher education, a hospital, or a health care facility that offers postgraduate training also qualify.
The deduction provides a benefit to millions of taxpayers each year as they try to balance their student loan obligations with the demands of making ends meet. Given the income limitations, it comes as no surprise that the student loan interest deduction is important to people who need the money most.
This is exactly the benefit the Trump tax reform plan seeks to eliminate. But the Administration claims the overall benefit to the middle class will far outweigh the loss of this crucial deduction.
Who Benefits From the Administration’s Plan?
The White House plan doubles the standard deduction from the current $6,350 for single taxpayers and $12,700 for married taxpayers filing joint returns. It also does away with the alternative minimum tax as well as the estate tax. In exchange, all other deductions except those for mortgage interest, charitable giving and retirement savings are eliminated.
There’s no doubt that doubling the standard deduction will help millions of people, effectively giving $24,000 in tax-free money to married couples. But the alternative minimum tax, or AMT, is another story entirely.
AMT is a complex system that requires taxpayers to pay the higher of either their tax calculated under regular income tax rules or their tax calculated under the alternative minimum tax (AMT) rules. Given the way the numbers are calculated, AMT is more likely to hit households with higher incomes. In fact, according to the Tax Policy Center, 30.9% of households with income between $200,000 and $500,000 will be affected by the AMT in 2017. Married couples filing joint tax returns in 2017 will not be subject to AMT at all if their income is below $84,500.
The repeal of the so-called “death tax”, pitched as a tax cut for the middle-class, is also laughable. The IRS currently exempts the first $5.49 million of an estate’s value from taxation (though some states such as Massachusetts and Oregon have a lower limit). The estate tax does not affect people who die with less than $5.49 million worth of assets. In fact, according to the Joint Committee on Taxation, 99.8% of estates owe no estate tax at all. That means only the estates of the wealthiest 0.2 percent of Americans are impacted by estate taxes.
In the end, it’s the wealthy and super-wealthy who benefit from the tax plan.
Guess Who Bears the Tax Burden?
Over 44 million Americans have student loan debt, with average monthly payments at about $350. According to a 2011 analysis of IRS Statistics of Income data performed by the Association of American Universities, over five million taxpayers benefited from the student loan interest deduction.
These are people with income below $80,000, or $160,000 for married couples filing a joint return.
None of these couples will have to worry about estate taxes because not only are they alive (estate taxes are taxes on the estate, not the beneficiaries) but their income is far below the $5.49 million mark. Even those subject to AMT are still able to deduct their student loan interest so long as they fall within income limits.
In other words, the burden imposed by the loss of the student loan interest deduction will be felt by households with more than $24,000 in annual income. The benefits of the new tax proposal, however, will be felt solely by those who make enough money that they would not qualify for the deduction in the first place.
Don’t Want to Lose Your Tax Deduction for Student Loans?
If you think this sounds like a raw deal, now’s the time to contact your Congressional representatives and let them know. Tell them you want them to vote against the 2017 Tax Reform for Economic Growth and American Jobs. Let them know the tax reform proposal will hurt you financially, and that you oppose it.
If you don’t let your elected officials know how you feel about the tax reform, how can you expect them to know?

Learn More Here

• Briefing by Secretary of the Treasury Steven Mnuchin and Director of the National Economic Council Gary Cohn (full text)
• Find Your Representative in the US House of Representatives
• Find Your U.S. Senator
• Instructions for IRS Form 6251, Alternative Minimum Tax
• Student Loan Debt Statistics for 2017, from Student Loan Hero
• Bankrate’s 2017 Tax Guide

The post How Trump’s Tax Reform Plan Will Affect Student Loan Borrowers appeared first on Shaev & Fleischman LLP.