Blogs

By Sergio Cabrera and Carolyn Protz

A new narrative about the decline of the iconic taxi has emerged. In this new perspective, the entry of Uber and Lyft into the New York City taxi market was not the catalyst for the decline of taxi medallion values. Rather, the medallion lending industry ruined the value of this unique investment.
The real scandal, however, is not just that regulators turned a blind eye to predatory lending, but how the Taxi and Limousine Commission, as well as elected officials, played a pivotal role in taxis’
demise. And it was no accident.

In 2010, the TLC had in hand an internal report predicting the collapse of the lending market because loans were unsustainable. But the agency—even though it knew how fragile the situation was—ignored its own rules, flooded the streets with additional vehicles and streamlined the processing of new drivers, cars and bases competing with taxis.

In essence, the city lit a match to a combustible situation. It was regulators’ malfeasance that allowed the Ubers to come in with little or no financial barrier to entry—exacerbating the danger created by lending now being excoriated.
The TLC was created in 1971 with a mandate to ensure the well-being of the iconic yellow taxi. TLC rule 52-04(a)(4) states: “Establish and enforce standards to ensure all Licensees are and remain financially stable.” This mandate was consciously ignored.
Meera Joshi, who chaired the TLC throughout Uber’s flooding of city streets with vehicles, now says she was worried about medallion costs and lending but was pushed to prioritize other matters. Like what? Adding 85,000 vehicles? Joshi ignored, bent and changed many of her own rules that, if respected, would have prevented this destructive onslaught.
Lest we forget, the TLC—according to former Chairman Chris Lynn—has the final say over all medallion transactions, and Joshi was its general counsel when the 2014 minimum auction bid of 
$850,000 for a medallion was established.

Some examples stand out. In April, 2017, the TLC held a hearing on industry economics that went on for six hours with medallion owners telling TLC commissioners how horrific their lives had become.

Yet all that came out of it was an option for tipping of app drivers.

The following year, amid owner and driver suicides, the willfully blind TLC commissioned a study of driver income. Yet the academics tasked with the study were explicitly told to exclude the yellow-cab industry and to not consider a cap on for-hire vehicles. The study led the city to establish a minimum wage for drivers of for-hire vehicles.

Perhaps the most egregious display of favoritism was how the mayor and the City Council mishandled Uber and Lyft’s resistance to meeting the wheelchair-accessibility requirements mandated for taxis. When push came to shove, the city caved and allowed a company-sponsored plan with no accessible-vehicle mandate.

The tragic bankruptcies and foreclosures being highlighted today were unknown prior to the influx of Ubers. The Ubers’ catalytic role, and the subsequent shameful enabling of the city, is unmistakable.

In 1971 taxis were making 500,000 daily trips. Today they are doing 250,000 while the invaders are doing 769,000. Uber itself has lost billions of dollars undercutting competitors through predatory pricing to capture market share. This cannot be airbrushed out of the picture.

The public sector needs to be held to account for its part in the threatened demise of taxis and the wanton harm done to thousands of defrauded immigrants who came to this country in search of a better life.

Sergio Cabrera and Carolyn Protz are medallion owners and members of Taxi Medallion Owner Driver Association.

What can you lose in a credit card lawsuit?
Debt can grow out of control for a variety of reasons. An extended illness, a visit to the ER, or a loss of a job can saddle you with debt you can’t repay overnight. Add to this student loans, unsecured debts and mortgage for more than a house is currently worth, can leave with you what seem like an unwinnable situation. If you owe someone money, they have a number of options available in an attempt to collect from you. If you do not resolve your debt situation, the creditor may end up filing a credit card lawsuit against you in court.
Depending on the type of lawsuit, money in your bank accounts and personal property can be awarded to the plaintiff to satisfy the judgment. In a breach of contract case, the defendant could be ordered to complete a job as specified, redo the work completely or to pay another qualified party to complete the work. In the case of a tort, the defendant can similarly be ordered to make amends for a wrong done to the other party. This could include cleanup and repair costs as well as punitive damages.
What exemptions exist for collection?
The court can also place a lien against your home which can be paid out when the homes sold. However Texas has a home state protection clause which prevents creditors and judgments against you from forcing you to sell your house to pay the debt.
Caps also exist in personal injury and malpractice cases.
How does wage garnishment work?
Because the state of Texas has a 100% exemption on the garnishment of wages this section is included to provide a complete understanding of what is possible and what could affect you were you living in another state where such an exemption does not exist. Wage garnishment as a way for a creditor to collect on a judgment directly from your paycheck. This is often employed as a last resort after other attempts to retrieve the money from bank accounts and other sources have been exhausted. Wage garnishment can only be done with a court order and is most frequently done by the government to collect on back taxes, or child support.
After a judgment is won the plaintiff files paperwork for wage garnishment with the court. Once filed, the clerk of the court forwards the documentation to the defendant’s employer. The employer is then required to comply and withhold the correct amount of money from the defendant’s paycheck. The court then collects the funds from the employer and forwards the money to the plaintiff until the amount of the debt is fully settled.
Limits on wage garnishment
The garnishing of wages does come with some limitations. Wage garnishment is applied to disposable income which is calculated as the pay you receive after various taxes have been deducted. You probably know this is take home pay. There is a Federal imitation which exempts 75% of your disposable income from garnishment.
Dealing with debt collectors
Well before your situation leads to a courtroom in a credit card lawsuit, you’re going to be contacted by your creditors. If you speak to a collection agent on the phone, chances are high that you do not personally owe that person money. You’re speaking with an agent who has a job assignment to call you. He or she is a real person, and may even have debt problems similar to yours. While you may be frustrated and confused over your situation, yelling and name calling isn’t going to get you the outcome you desire. Treat this business matter as one and seek to work with the agent to achieve some sort of fair resolution.
Negotiation options
Even though you certainly entered into a debt with the best of intentions unforeseen circumstances can happen to anyone. Your creditor may be unhappy that you have not paid your bill and it shouldn’t be difficult to understand why. However it is important to face your circumstances for what they are and to work with your creditor and work something out.
Here are some possible options you may wish to explore when working with a creditor.
Interest rate reduction
Interest rates on consumer loans have skyrocketed and can be the most burden-some aspect for paying off the debt. If you suffer a loss of income due to unemployment, illness or other reason, you may end up in a situation where you would never be able to pay off the loan at the current interest rate.
Speak with your creditor and ask for a reduction to your interest rate. With credit cards, the bank may agree to do this on the condition that your account be closed as well. If your charging privileges have already been suspended due to nonpayment this may be a minor stipulation compared to the benefits received with a lower interest rate.
Temporary suspension of payments
If you’re in a situation where your income has completely stopped, it may make sense to freeze all possible outflows of money until your income resumes. The payment that you make to a debt collector in this situation might be better spent on food, rent, utilities or the tank of gas taking you to your next job interview.
If the creditor agrees to temporarily suspend your required payments, interest is likely to continue accruing during the suspension. Always be sure to ask exactly what will happen during this period and what is expected from you. If your situation is not improved at the end of the suspension period, be sure to contact any creditors you negotiated this with to either extend the suspension or to negotiate a new plan.
Deferment of payments
Loan deferments are often granted in special situations such as when you are enrolled in school, unemployed, completing an internship or suffering economic hardship. Depending on the type of loan, the deferment may be of both principal and interest or it may be for principal only which means you would need to continue making interest payments throughout the deferment. Many lending institutions have applications for deferment programs so ask if this is possible and if so request an application.
Loan consolidation
If you have multiple student loans or credit card accounts it is possible to consolidate the loans into a single loan with a lower interest rate and a lower single payment. As part of a loan consolidation process you may also be able to request deferment to give yourself some time to recover your income or build up a small buffer in case of emergency.
Cancellation of debt
Depending on the type of loan it may be possible to have the debt canceled. Debt cancellation is even possible with certain kinds of student loans which may carry a cancellation clause if you take a job in prescribed areas such as overseas or in low income areas.
Because the debt is incurred with the expectation of being paid back, cancellation of debt may convert the debt into income. For example if that $10,000 debt was canceled you may now owe state and Federal income tax on that $10,000 as though you had received it as income. If your debt is converted into income you may receive an income statement from the creditor which they will also send to the IRS. Even if they fail to do so you may still be obligated to report this income and pay taxes on it or face criminal charges.
Bankruptcy may be your best option
At some point it may become obvious that your only option when dealing with a credit card lawsuit is to seek bankruptcy protection. This is really not something you should discuss with the collection agent. Keep in mind that if all other attempts at negotiations fail, if you have no income or assets, and if your savings are completely depleted, bankruptcy protection may be your only option.
Whether or not you should file for bankruptcy protection is a legal matter. Chances are the collection agent you’re speaking with is not a lawyer. They may not offer any legal advice. It is against the law to do so. If the collection agent happens to be a lawyer, he or she is not your lawyer and is representing the interests of his or her client and not your interests. Do not take legal advice from “the other side.” Seek out your own professional legal advice if you think bankruptcy protection is your only recourse and relief from debt.
Speak to Allmand Law Firm, PLLC
If you are being sued for debt, a bankruptcy attorney at Allmand Law Firm, PLLC can help you stop a lawsuit from a creditor or discuss other options available to you. To learn more how we can help with a credit card lawsuit, contact us today.
The post Credit Card Lawsuit appeared first on Allmand Law.

Arizona Courts Overview
Ever wonder how our court system works?  It is rather confusing when you talk to me about bankruptcy and how that interacts with your creditor’s lawsuit and potential garnishment of your wages and bank accounts.
Here is a great summary that may help explain the court system.  One note – bankruptcy courts are federal courts, not state courts.
The following video ends with a discussion about the Peoria courts, but that is the same for all Arizona courts.  Other states may have a different court structure, until you get into the federal system – which applies to all states.

The post Our Court System appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.

Using Bankruptcy to Stop Credit Card Collections

 
Can Bankruptcy Stop Credit Card Collections?
Bankruptcy CAN stop collection attempts from credit card companies that include lawsuits or other forms of legal action. Theautomatic stay offers protection from collection attempts and stays in place until your case is completed. The stay goes into effect when you file bankruptcy, either Chapter 7 or Chapter 13 .
The Automatic Stay
When you file bankruptcy and the automatic stay goes into effect, collection attempts from creditors should cease or stop. This includes phone calls, notices sent by mail, email and any other payment demands.  The credit card company may not attempt to sue you or obtain a judgment against you. If a lawsuit was already filed against you, legal action associated with it ceases. There are exceptions to the automatic stay that should be considered.
In Chapter 7 bankruptcy the automatic stay may not apply to co-debtors. If you have a credit card and another person is named on the account as also being responsible for debt incurred, the credit card company may decide to purse them for payment; especially if the co-debtor hasn’t filed bankruptcy. If you file Chapter 13 bankruptcy the co-debtor may benefit from protection of the automatic stay, even if they don’t file for protection. This is often the case when credit card debt is considered consumer debt. Consumer debt relates to personal or household expenses such as utility payments, groceries and medical payments.
When the Credit Card Company Alleges Fraud
If the credit card company alleges fraud associated with your credit card this may affect the automatic stay. If you obtain a discharge from debt when your case is closed the automatic stay ends. At this point you will no longer be responsible for the debt. Questions or concerns should be reviewed with a qualified bankruptcy expert.
Filing for Bankruptcy? Stop Using Your Credit Cards

If you are among the millions of Americans struggling with debt that seems insurmountable, bankruptcy may be the best option for finding relief and a fresh financial head start. If you are considering bankruptcy, you should now that there are certain things you might want to avoid prior to filing under any Chapter of the bankruptcy code. This is especially true when certain action, such as using credit cards, may actually negate your eligibility for filing, or even subject you to criminal consequences.
For many people struggling with debt, using a credit card has been a means to get by. Unfortunately, incurring charges can only cause the cycle of
debt to continue. At Allmand Law Firm, PLLC, we have worked with numerous men, women, families, and businesses throughout the Dallas – Fort Worth area when they were dealing with tough times. We know the struggles our clients face, and we know that credit cards can be the lifeline they rely on when times get increasingly tough.
While using a credit card to pay down debts and obligations may not always have negative consequences, you must consider how it is being used and why you should try to limit or avoid using one altogether.

• Your transactions will be reviewed – When you file bankruptcy, a court appointed trustee will review your financial records, including recent transactions to any credit cards your own. These reviews will pay close attention to how much debt was incurred, as well as what types of items were purchased or where payments went.
• Fraud allegations – The primary reason why it is best to avoid racking up credit card debt prior to bankruptcy is that it may be viewed as fraud. Trustees who review financial statements are on the lookout for signs of credit card transactions, such as excessive charges, luxury goods and services, and more, which signify a person ran up their bills with no intention to repay them, either because they knew they would soon be filing for bankruptcy, or because they lacked the financial resources to make good on the debt. Fraud allegations can create a host of problems, including the possibility of federal charges for bankruptcy fraud and potential prison sentences.
• Federal laws – Federal laws have guidelines for dealing with excessive and fraudulent credit card use prior to a bankruptcy filing. This includes running up more than $675 in charges for luxury goods or services within 3 months of filing. Cash advances over $950 within 70 days prior to filing will also be considered fraud
• Bankruptcy eligibility – If a bankruptcy trustee suspects fraudulent credit card use, or even creditors for that matter, it can affect your ability to file bankruptcy. In many cases, allegations of fraud will result in a bankruptcy filing being thrown out. It will be up to you to prove that charges did not amount to fraud, and that can be a difficult task worth avoiding.
• No discharge – In some cases, creditors may wish to petition the court to prevent a discharge on unsecured credit card debt if they object to recent transactions. This may be the case if spending increases in the months prior to filing.

Because there are many negative consequences associated with credit card use prior to filing, the safest bet is to avoid using them. Our Dallas bankruptcy lawyers know that this can make difficult times even more stressful, which is why we encourage anyone in this situation to seek immediate help from our legal team. You may have options available, and our experienced attorneys can help you explore them when you speak personally with a member of our team. Request a FREE financial empowerment session today.
How to Get Rid of Credit Card Debt Through Bankruptcy

Excessive debt is one of the major reasons why people file for bankruptcy. In many cases, the excessive debt is the result of paying for necessities such as medical bills and vehicle repairs. While there are some exceptions, most credit card debt can be discharged when a person successfully completes Chapter 13 or Chapter 7 bankruptcy.
Chapter 7 Bankruptcy and Credit Card Debt
When you file for Chapter 7, most of your debt can be discharged. However, Chapter 7 requires you to give up all of your non-exempt property. The trustee will sell the property and use the money to pay off creditors. Most credit card debt is viewed as non-priority, unsecured debt, so it’s discharged with Chapter 7. Tax debts and child support are two examples of priority debts, which cannot be discharged with Chapter 7 bankruptcy.
Although it doesn’t make sense in most situations, it’s possible to file for Chapter 7 and reaffirm all debts except for credit card debt. In this situation, an individual is liable for reaffirmed debts when the bankruptcy is finished.
Chapter 13 Bankruptcy and Credit Card Debt
Depending on your situation, Chapter 13 bankruptcy might make sense. This type of bankruptcy involves partially or fully repaying some creditors. It involves a specialized payment plan, which might be anywhere from three
to five years. In most cases, a portion of unsecured debt is paid with Chapter 13 bankruptcy. Credit cards are great examples of unsecured debt. When determining how much money you’ll pay, several factors are considered. A major factor is the amount of disposable income you make. The majority of individuals who file for Chapter 13 bankruptcy must only pay a tiny percentage of their unsecured debt. When the repayment period is over, remaining credit card balances are discharged.
When Creditors Can Challenge the Discharge of Your Credit Card Debt
While the discharge process is usually the same for most people, there are some exceptions. If a person ends up with credit card debt because he or she engaged in fraudulent activities, the debt cannot be discharged. However, the creditor must challenge the debt discharge process. If the creditor is successful, the court will make the individual pay the credit card debt. Common Examples of Credit Card Fraud:

• Making a false statement on a credit card application.
• Charging over $650 with any creditor for luxury services or goods within 90 days before filing for bankruptcy. In this situation, it’s presumed that your intent was fraudulent.
• Getting a cash advance that totaled more than $925 within 70 days of filing for bankruptcy.

Although it’s quite rare, some creditors take security interest in property. This information is usually disclosed in the agreement. In this situation, the credit card debt is actually secured.
Can I Be Sued After Bankruptcy?
No. One of the benefits of filing for bankruptcy is that it prevents creditors from taking you to court. It also prevents creditors from engaging in further collection attempts. After filing bankruptcy, the automatic stay prevents credit card companies from calling you, sending letters and engaging in similar activities.

Fraudulent Credit Card Charges in Bankruptcy

Bankruptcy and Fraudulent Credit Card Charges
Credit card debt is one of the most common forms of debt that is discharged or eliminated in bankruptcy. While bankruptcy is a powerful tool that can eliminate qualifying debt, if a credit card company senses fraud in your case, this may reduce chances of the debtor getting debt discharged. So what is the difference between card charges that are fraudulent and legal?
In bankruptcy, a credit card issuer may feel charges on a card are fraudulent if the debtor or card issuer ran up charges they didn’t intend to pay back.  Some may even lie to obtain credit in the first place.
The court may view the following charges as fraudulent:

• Luxury goods, services or purchases of $550 or more within 90 days before your petition was filed.
• Cash advances made within 70 days of filing that total $825 or more.

The credit card company may choose to challenge other transactions besides those previously mentioned. One of the most important factors includes the timing of your filing. A shopping spree that included a variety of charges right before your filed may raise a red flag. The credit card company would complete a separate process in order to prove credit card charges were fraudulent. This includes filing a complaint, showing up in court and presenting evidence. In such cases, credit card companies don’t always come out victorious.
Obtaining legal advice is a good idea when considering bankruptcy. You can discuss credit card transactions you may be concerned about upon filing.  If you are in a position in which you are unable to make payments on your credit cards you should refrain from using them.
Can I Keep My Credit Card After Bankruptcy?

Debtors filing bankruptcy often want to keep at least one credit card out of their bankruptcy filing. Their reasoning is that since it is almost impossible to survive in our society without a credit card, keeping one credit card out of bankruptcy would be helpful. However, when a debtor files bankruptcy they are required to include all of their debts in the bankruptcy filing. But they are allowed to “reaffirm” a debt after the bankruptcy filing. When a debtor reaffirms a debt, they are entering into a legally binding agreement that says that that particular debt will be permanently taken out of bankruptcy and that the debtor will repay the debt, adhere to the originals terms of the loan and continue to make payments as agreed. Many debtors reaffirm mortgage debt and car loan debt which are secured loans. They often reaffirm the secured loans in bankruptcy because it allows them to keep the secured property (house or car). However, is it a good idea to reaffirm credit card debt? In most cases it is not a good idea to reaffirm unsecured credit card debt during bankruptcy. Even if a debtor reaffirms credit card debt during bankruptcy, it is not guaranteed that the credit card account will remain open and available for the debtor’s use. A matter of fact, it is highly likely that the credit card account will remain closed and you will be required to repay the debt, plus any additional fees and interest accrued. For debtors filing bankruptcy, the best solution is probably to keep all of your credit card debt in bankruptcy and get a secured credit card after your bankruptcy has been discharged. A secured credit card will allow you to have the convenience of a credit card while rebuilding your credit record.
Post-Bankruptcy Survival: 5 Mistakes Credit Card Debtors Make

The fresh start that bankruptcy provides isn’t just the discharge of difficult to pay debts; it is also an opportunity to learn knew habits that will increase the chances of financial success. However, there are some common mistakes that many post-bankruptcy debtors make when they finally begin using credit cards again.
Let’s take a look at a few of those mistakes:
Failing to fully understand the credit card terms. Many post-bankruptcy debtors are so excited to receive credit card offers after their bankruptcy that they end up skimming over the terms of the credit card. This can result in signing up for credit cards which are stuffed with many fees and high interest rates.
Placing irresponsible authorized users on their credit card account. Many post-bankruptcy debtors make the mistake of trying to “help” out friends and family by placing them on their credit card accounts as authorized users only to be left with a large bill after those people fail to pay.
Co-signing credit card accounts or other loans for friends and family with credit issues. Post-bankruptcy debtors must remember that if they are not paying their own bills their friends and family members are even less likely to pay a bill which was co-signed.
Failing to communicate with creditors early and often when they run into financial problems. Post-bankruptcy debtors are not immune to financial issues after their bankruptcy discharge. But when those issues do come up, they must make sure they communicate clearly and early with creditors.
Failing to get any creditor agreements in writing. As we mentioned in point #4, sometimes there are financial issues which require us to work something out with creditors. But post-bankruptcy debtors need to make sure that they get all agreements in writing.

Post-Bankruptcy Survival: How Credit Cards Impact Your Credit Score

How Credit Cards Impact Your Credit Score
Within a few short years of exiting bankruptcy, debtors are able to get unsecured credit cards again. But if the debtor wants to maintain a high credit score they need to be wise about how they use the credit card.
Tips on making sure that your credit card use has a positive impact:
Maxing out your credit card will have a negative impact on your credit score. When a potential lender sees that a debtor is using their credit cards to the max, they see a debtor who is already living on the edge and who is probably not ready for more credit. Also, maxed out credit cards bring down your credit rating by increasing your debt to income ratio.
Paying off your credit card each month only to charge it up again will not improve your credit score. Let’s take a look at how this works. If you have a credit card with a credit limit of $1000 and you charge $800 each month and then pay it off each month, you will still have a high debt to income ratio which is bad news for your credit score.
Keep your usage of your credit cards low and you will reap the rewards of a low debt to income ratio which shows that you are not depending on your credit cards just to survive. The irony of the credit game is that lenders are more willing to extend credit to those who don’t need it. If you want to win the credit game you must project the image of being one of the debtors who don’t need the high credit limits and you will find that more lenders want to work with you.
Use Credit Cards With No Spending Limit Sparingly

Depending on your credit card usage habits, having a credit card with no spending limit could have a negative impact on your FICO score. Credit cards that have no spending limit report their cards to the credit reporting agencies in one of two ways, or  a) as an open account or b) as a revolving account.  If the credit card is reported as an open account it will have no impact on the debtor’s credit rating. However, if the credit card account is reported as a revolving account it could have either a negative or a positive impact on the debtor’s credit report depending on how the debtor uses the credit card.Debtors who keep a high balance on the revolving credit card account which has no spending limit could be dinged for having a “high utilization” of the credit on the card. Any credit card which shows that the debtor uses 50 percent or more of the credit limit will have a negative impact on the debtor’s credit score because of the “high utilization” factor. If debtors want to avoid lowering their credit score they may want to limit their usage of these types of credit cards.For post-bankruptcy debtors, credit cards which have the tendency to negatively impact their credit score should be avoided.  For those exiting bankruptcy, every FICO point lost or gained can have a huge impact on their ability to get a mortgage, car loan or other types of credit especially since they are in the rebuilding phase of their credit history.
Avoiding Credit Card Scams

As we have mentioned several times before, once you exit bankruptcy, it will only be a few short years before you are able to get unsecured credit. But with unsecured credit come risks and responsibilities. We’ve talked about guarding your credit from bad spending and budgeting habits; but what about the predators out there who steal credit cards to make their living?
Below are a few credit card scams that ever post-bankruptcy debtor must avoid:
Cell phones and digital cameras have become smaller and even more capable of taking very clear photos. Many scammers, some of them working in retail where they can have easy access to your credit card, will steal credit card information by taking a photograph of the back and front of your card. When using your credit card at any store make sure that you don’t allow the clerk to leave the area with your credit card and make sure you keep sight of your credit card at all times.
Other scammers are using fake credit cards to increase the time between when they steal your credit card and you report it missing. How it works? Scammers take your credit card and then replace it with a fake that looks like your credit card while they take off with the real thing and charge up large amounts of debt. This can be particularly damaging for a post-bankruptcy debtor who is trying to rebuild his credit because credit cards only allow a certain window of time for a victim to report their credit card lost or stolen. If they don’t report the credit card lost/stolen in that time frame they could liable for the charges.
Finally, fake fraud alert calls are on the rise. This scam involves the con-artist calling the victim and saying that they are calling from the fraud department of the credit card company. Once the con gets the victim on the phone they ask for the three (or four) digit card verification number on the back of the credit card. Remember, no credit card company will ask for that.
Rewards Credit Cards Create More Debt

Post-bankruptcy debtors who sign up for credit cards which offer “rewards” such as cash back, may be at a higher risk for accumulating large amounts of debt. In a recent study which analyzed the spending habits of 12,000 credit card consumers, it was found that debtors who have rewards credit cards are likely to spend more and accrue more debt.
The initiation of a 1% cash rewards program yielded, on average, a $25 reward each month-and an increase in spending by $68 a month and in credit-card debt of $115 a month, the economists say in a paper to be presented at the American Economic Association meetings next week. ..In many cases, rewards entice people whose cards were dormant to start spending, the study found. About 11% of those who hadn’t use their credit cards in the previous three months made purchases of at least $50 in the first month of the program.
Debtors exiting bankruptcy need to understand that these rewards credit cards are working as they were designed. Credit card companies want consumers to spend more money, accrue more credit card debt and pay them more interest on their credit cards. Should post bankruptcy debtors avoid rewards credit cards? Ideally, post-bankruptcy debtors will use all credit cards sparingly. If they have another credit which they are using, they may want to transfer their spending to the rewards credit card so they can benefit from the cash back rewards while not increasing their spending. But if they do not have the discipline to avoid an increase in their spending on their rewards credit card, then they might want to avoid the rewards credit cards altogether.

Four Things You Should Know About Your Credit Card

One of the first tools post-bankruptcy debtor uses to rebuild their credit score is the credit card. While they may start off with a secured credit card, within a year of making regular payments post-bankruptcy debtors can graduate to unsecured credit cards. But what are some of the important facts debtors coming out of bankruptcy need to look at before choosing a credit card?
Let’s take a look at a few:

1. Post-bankruptcy debtors should take a look at their credit limit on the credit card before they apply. A low credit limit on your credit card will require that you avoid spending too much on the credit card.  Credit cards which are maxed out could negative impact your credit score.
2. What is the credit card’s APR or annual percentage rate?  The APR is the interest charged on debt which you have not paid off during the grace period.   Post-bankruptcy debtors should try to avoid high APRs and avoid carrying a balance.
3. Is your APR fixed or variable? Unfortunately many subprime credit cards have variable interest rates. For debtors exiting bankruptcy, finding a fixed interest rate credit card could be most beneficial especially considering the possibility that interest rates may go up.
4. How long do you have before interest accrues?  The grace period is especially important for post-bankruptcy debtors who want to avoid interest charges.  Some charge cards, such as AMEX have no grace period, so be careful.  And never assume that a grace period is 30 days, some credit cards have grace periods of only 20 days.

Keeping Credit Cards After Your Bankruptcy

Many people find their credit card canceled even though they had a zero balance and the credit card was not included in their bankruptcy schedule.
Imagine six months after your bankruptcy has been discharged.  You’ve turned your financial situation around and there is no more worrying how you are going to pay your bills.  Everything is on the up and up; you’re budgeting well and have a little money to spend, so you decide to pick up the tab for a meal with some of your family, friends, or worse, your boss.  Out of nowhere your credit card is denied.  Your credit card has been canceled without warning by the creditor.
You wonder how this could be, because this credit card wasn’t even included in the bankruptcy.  The credit card had a zero balance on it so you weren’t required to list it on your bankruptcy schedule.  What happens is your creditor caught wind of your bankruptcy and immediately canceled you in order to be protected.  With Chapter 13 cases some creditors will cancel you on accounts that you paid off.
The credit bureaus actually offer a monthly service to the creditors.  The service goes by different names for each bureau.  The Equifax Bankruptcy Navigation Index, Experian Bankruptcy Score, and TransRisk Bankruptcy score are the three names.  The bureaus offer the creditors the social security numbers of all the people who filed for bankruptcy that month.  The creditors then compare the people with their debtors and cancel the cards of all of the people that filed bankruptcy.
A similarly related issue is that some people find that their credit cards are listed as “discharged under bankruptcy” on their credit reports even though they worked hard to pay them off.  They felt that keeping a remaining card in good standing would help them bounce back from their bankruptcy.  Then the card ends up listed just like the others.
If this happens to you, contact the applicable credit report agency and let them know that there is a mistake.  Also, if you find out that your card was canceled due to your creditor finding out about your bankruptcy, you should write the company to ask them to reopen your account.
A good place to start with this is to locate the name of the Director of Consumer Affairs for the company.  Write them a letter explaining that you paid off your credit card debt with them, in full, and ask that they reopen your account with a small balance.  If the company sees that they are not taking a lot of risk with you, and they see that you stayed in good standing, it is very possible that they will reopen your account.
In conclusion, it is important to make sure to review your credit reports after your bankruptcy.  Also, make sure to check your remaining credit cards periodically to make sure that they haven’t been canceled.  If you have any specific questions, a bankruptcy attorney can help you.  Make sure to contact a Dallas-Fort Worth bankruptcy attorney today.

Is That Credit Card Right For The Post-Bankruptcy You?

Rebuilding your credit rating is an important first step after a bankruptcy discharge. One of the ways post-bankruptcy debtors rebuild their credit is by taking out a credit card; but how do you know if the credit card is worth it or just another trap door leading to more debt? Below are few tips on how to choose the right credit card while rebuilding your credit after bankruptcy;
Is the credit card issued by a major bank? You want a credit card that you can use just about anywhere and that will report your payments to one or more of the credit bureaus.
Does the credit card have a teaser rate or is the initial interest rate there to stay? One of the most common ploys of high interest rate credit cards is to get the debtor with a low teaser interest rate that skyrockets within a few months. Before you agree to taking on a credit card, read the fine print and find out what the true interest rate is.
Does the credit card have a grace period that allows you time (at least 28 days) to pay the balance without accruing interest? For post-bankruptcy debtors, having a grace period can help them avoid the slow slide into debt that landed them in bankruptcy in the first place. Smart post-bankruptcy debtors make sure that their credit card has a grace period with fair terms.
Does the credit card have an annual fee or other sign-up fees? Don’t allow the fact that you filed bankruptcy stop you from demanding a credit card with fair terms and no annual fees or sign-up fees. There are credit cards out there that have no such fees that are willing to work with those just exiting bankruptcy.
Bankruptcy Basics: How to Avoid a Credit Card Dispute

Avoiding Credit Card Disputes
Under the bankruptcy laws enacted in 2005, bankruptcy petitioners need to be more cautious about their credit card use than ever before. It’s not just because bankruptcy courts can dismiss bankruptcy petitions over what they deem to be overtly fraudulent use – it is because card lenders can file a dispute to block your bankruptcy petition.
Understandably, credit card lenders want to ensure that they collect on your debts and then some – and if they see that you are preparing to file a petition for bankruptcy, they will look for every excuse in the book to block your petition. The 2005 bankruptcy laws have made it easier for lenders to do so because credit card companies sponsored them.
Therefore, if you want to ensure you can file for bankruptcy without experiencing any hiccups in the form of sneaky credit card lenders, here’s what you need to know:
1. If you absolutely have to use your card to purchase necessities (for example, you need to buy groceries or pay for utility bills), try to use just one card for your purchases. If your credit limit won’t allow you to do so, then use as few cards as possible to make those purchases. Credit card lenders can dispute your bankruptcy filing if they believe you have been juggling your credit to make multiple purchases. On that note, keep all of your receipts – that way, if lenders dispute your charges, you can prove it was for essential items.
2. If you made large – and potentially extravagant – purchases with your card within 90 days of filing for bankruptcy, return the items so the money can be refunded to the card. While credit card lenders can dispute charges made as far back as one year from the bankruptcy filing, legally speaking, you only need to answer for those made in the last 90 days from filing for aChapter 7 bankruptcy or a Chapter 13 bankruptcy .
3. Take note of what magic number brings about the attention of credit card lenders. Lenders will usually dispute debt dismissals of over $10,000; however, this may vary in different districts, so don’t expect to get off totally scot-free if you have just under ten grand in credit charges.
These tips and techniques will help you eliminate one more obstacle in the form of your credit lenders and make your bankruptcy filing go much smoother.
Five Ways To Get Out Of Credit Card Debt

In the throes of this recession, the average Americans is just piling on more credit card debt and finding it more difficult to find a way out.  According to a report released by TransUnion, as of October 2009, the national average for credit card debt $5,612 per person.  The average!  That’s scary knowing that the job situation is only getting worse with at least one company announcing job losses at least every week.
So what can we do to get out of credit card debt?

1. Pay more than the minimum.  You will not get out of credit card debt quickly if you pay only the minimum. I am so glad that the Credit Card Act was passed so that this reality will be in front of the eyes of debtors every month.
2. Pay off credit cards with high interest rates and fees first.  The more you pay on these high interest credit cards, the better.
3. Use your negotiation skills.  Even if your credit is not perfect, your credit card lender may be willing to reduce your credit card interest rate or even waive an annual fee if you just ask.  But there is a trick to it.  Let them know you are willing to leave them if they don’t comply with you request.  This may be very effective for those who have long-term (good) relationships with their credit card lenders.
4. Avoid late fees by paying your credit card bills on time.  I know this may be difficult for some debtors who have suffered a job loss or who is facing some other financial crisis; but it is critical.  If you can’t pay your credit card bill on time then you may need to consider bankruptcy.  That takes is to our last tip.
5. Consider bankruptcy.  If you find that you are unable to handle your credit card debt or any other type of personal debt, you may want to consider bankruptcy.  Remember, if your financial situation is prolonged, delaying a bankruptcy may just be making it worse.  Chapter 7 bankruptcy will allow you to discharge unsecured debt such a credit card, while Chapter 13 bankruptcy will allow you to repay your debts under reasonable terms in 3 to 5 years.

Debtor’s Credit Card Debt Ruled Non-Dischargeable

In the Chapter 7 bankruptcy case of (Jenks, Louise E.; In re (GE Money Bank v. Jenks)), the bankruptcy court ruled that the debtor’s credit card debt was non-dischargeable because she misrepresented her income when applying for the credit card.
The details of the bankruptcy case:

“The 74-year-old debtor applied for a Lowe’s credit card on March 15, 2008. She said she had an annual income of $48,000. In fact, her only income was $667 in monthly Social Security payments. Her credit application was approved with a credit line of $12,500. Between May 13 and May 16, the debtor used the card to purchase ap­proximately $5,000 worth of gift cards. There was a balance of $6,039 on the account when she filed for Chapter 7 relief on Aug. 29, 2008. Prior to filing for bankruptcy, the debtor made three payments on the account totaling $160.”

The bankruptcy court ruled that the debtor’s intention of repaying the cards was not based on any real ability to repay and that since the creditor had relied on the debtor’s false income statement the debt should not be discharged in bankruptcy.
The court said:

“The facts, as presented, support the plaintiff’s contention that any intent that the debtor had to repay the debt was not well-grounded, based as it was on her minimal income and on the supposed promise of her former husband whom she described as being in financial straits. She knew when the gift cards were purchased that the debt was beyond her ability to repay.”

The credit card company also provided proof via the credit card application that the debtor had lied about her income.  She clearly stated on the credit card application that she had $48,000 in income.  This is an important bankruptcy case for all debtors because it demonstrates that the courts are willing to hold debtors accountable for providing false information on their credit card applications.  Remember “liar loans”?  Well, we all know that many debtors add imaginary income to their credit card applications.  If you lie about your income on credit card applications you’re taking a huge risk.  If it comes to light that you lied you might be denied a bankruptcy discharge.

Credit Card Debt and Bankruptcy: When You May Want to Wait to File

Credit card debt is one of the most common forms unsecured debts to be discharged in bankruptcy. If you used your card recently for large purchases it is possible they may be reviewed to make sure they can be successfully discharged. This is due to certain charges that may not be eligible for elimination, and in this case you may want to wait to file your case.
Credit card companies can dispute big charges made on the card if you decide to file too soon. If you delay your filing you may be able to avoid such accusations. Unfortunately, some debtors have been known to make large extravagant purchases within days or weeks of filing for bankruptcy. This can be considered fraudulent if you know you intend to file for protection when such purchases are made.
Large purchases (such as luxury services and goods) completed within 90 days of filing or cash advances (over $900) made within 70 days of filing may seem fraudulent to the court. It can give the impression the debtor had no intentions of repaying the debt.
In many situations the above circumstances may not apply but it can be helpful to review charges you may have concerns about with your bankruptcy attorney in Dallas or Fort Worth. If you have made payments on the card in the past and used it for necessary living expenses, it may be easier for debts to be discharged and the credit card company may find it more difficult to prove any fraud was committed.

Winning The Credit Card Game After Bankruptcy

One of the unfortunate realities of our credit conscious society is that having and maintaining a credit card is necessary to every adult’s financial life. But how does a debtor just out of bankruptcy, learn to win the credit card game?
Let’s take a look at a few tips:
Keep your balance at zero. Carrying a balance on your credit card is what credit card lenders want. Credit cards that have a balance incur interest charges and when credit cards incur interest charges credit card lenders make money. If you want to win the credit card game, make sure that you pay off your balance every month.
Avoid paying any fees. Many credit card lenders with annual fees and other fees target borrowers just out of bankruptcy. Unfortunately, many of these fees can add up to hundreds of dollars per year. Protect your future income by only applying for credit cards that do not have annual fees.
After a year or so of paying on your credit card successfully, talk to your lender about lowering your interest rate. Even if you never carry a balance, you never know when you may need to carry a balance for a month or two in the future. It’s better to have a lower interest rate that will save you hundreds of dollars a year.
As we said in our first tip, don’t keep a balance on your credit card. However, if you are forced to carry a balance make sure that you pay more than the minimum payment required. Paying the minimum payment required will leave you in debt for years and have you paying sometimes double or more in interest charges over the life of the loan.

Five Signs That Your Credit Cards Are Pointing You Towards Bankruptcy

Credit card debt can be a useful indicator of how well you are handling your debt load.
Signs that your credit cards are pointing you towards bankruptcy:

1. Your credit cards are maxed out.  If your credit cards are charged to their limit, then it is a clear sign that you may be heading towards bankruptcy.  Maxed out credit cards are clear indicators that you have been relying heavily on debt and that you are unable or unwilling to pay off the balance in a timely manner.
2. You miss payments or pay late.  Late and missed credit card payments are another sign that you may be heading towards bankruptcy.  The inability to pay your credit card bills and pay them on time is a sign that you are financially stressed and may need bankruptcy relief.
3. You refuse to open your credit card bills.  If you avoid reviewing your credit card bills on a monthly basis then it is a definite sign that something is amiss and that you could soon be looking at a bankruptcy filing.
4. You use cash advances from one credit card to pay another.  Robbing Peter to pay Paul is another very clear sign that you are probably on the road to bankruptcy.  Remember, credit cards are not cash; they are debt instruments which must be repaid with interest.  Using one credit card to pay another is a fool’s game that only ends with more impossible to repay debt.
5. You consider applying for new credit cards so that you can better juggle the debt you have on your existing credit cards.  When you get the feeling that you need more debt just to manage the debt you already have, it is a sure sign that you may need to file bankruptcy soon.

Post-Bankruptcy Survival: Don’t Let Credit Card Changes Take You By Surprise

There is good news and bad news for post-bankruptcy debtors searching for credit card offers in the coming year. The good news is that more credit card issuers are willing to lend to more consumers, even those who have filed bankruptcy. Credit card solicitations have nearly doubled in the past year and many of them target the sub-prime market, those with little credit, poor credit and those debtors who have filed bankruptcy.
Changes that might not be good news for borrowers:

1. Credit card issuers have raised their interest rates across the board. It doesn’t matter how good your credit is, studies reveal that the interest rate is going to be at least 10 points higher than the prime rate. That means that credit card debt just got a lot more expensive. Debtors exiting bankruptcy will be wise to work on improving their credit score before trying to get a credit card so that they can get the best interest rate available.
2. Credit card issuers are now focusing on variable rate cards. This means that as the prime rate goes up or down, the interest rate on your credit card will change. For debtors exiting bankruptcy, a variable rate can be risky especially if they are keeping a balance and paying only the minimum required. To avoid the pitfalls of a variable interest rate credit card make sure you pay off your credit card balance every month.
3. Credit card issues have implemented new fees, which will make up 48 percent of all their revenue. That’s up from 31 percent ten years ago. There will be fees on cash advances, paper statements, paying your bills too late or even making “too many” calls to their customer service center. If you can think of it, there will probably be a fee attached to it. Debtors exiting bankruptcy need to take the time to read the terms of their credit card to make sure that the fees are not excessive.

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