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Archive | Life After Bankruptcy

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I Can Prove That After Filing, There Is Life After Bankruptcy

I hope that you have made use of the content on my site to learn about:

If you persevere, and fulfill all the requirements of the bankruptcy process, then you will emerge with a new lease on life, a discharge of your dischargeable debts.

Over the course of my over 20 years in practice, I’ve learned a lot about bankruptcy. The practice of bankruptcy law, the roles of the court, trustees, and creditors. Most of all, I’ve learned a lot about how my clients fared before, during, and after filing bankruptcy.

When a client first talks with me, almost every one of them is afraid of filing for bankruptcy. Many are painfully conflicted over whether it is the “right” decision. Will they regret the decision because they can’t get credit for seven years, or more?

I give an identical reply to each of these clients. I say, “If your bankruptcy filing ends up being a big life mistake. If as a consequence of filing bankruptcy, you lose your job, or your security clearance. If you are evicted from your home, or if you can’t buy or rent a home nor can you buy a car. If any of these consequences happen to you, then please come back and tell me.” In over twenty years, not one single client has ever returned with a tale of post-bankruptcy woe.

I’ve compiled material on my site that will help explain what life after bankruptcy is like, and why it’s important that you understand that bankruptcy, though a process that must be carefully executed according to federal law, is not the end of your life, but is the beginning of a new chapter:

By filing bankruptcy, you can eliminate debt and reduce your expenses. After bankruptcy, you will be in a much better position to manage credit. You can rebuild a solid credit profile that you can manage comfortably as long as you have a steady income. You can look to the future, towards long-delayed goals, like saving money for a better car, or a vacation, or putting away money for retirement.

Most people start by obtaining a secured credit card with a low limit. After six months to a year after your Chapter 7 discharge, your credit score will bounce back enough to make you a viable borrower for a car.

And how about buying a house? In fact, the Federal Housing Administration’s Back to Work – Extenuating Circumstances mortgage loan program shortens the waiting period to buy a home to as little as one year after you’ve had a bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale.
After filing bankruptcy, there is life after bankruptcy

We’re With You. All the Way Back.

I have compiled a record of service to my clients that is based upon my determination to be of help to them long after their case is over. Most of the articles on my site and the newsletters I’ve authored contain financial planning advice, including those linked above. The newsletter archive is posted on my site in case you would like to review previous editions at a later time. I am both proud and humbled by the comments my clients say in person and the reviews they’ve freely left about my staff and I on the web. I am committed to helping my clients resume their lives on a solid footing—all the way back after bankruptcy.

The newsletters and articles I write are free, and will remain so. You can rely on a regular series of updates throughout the year. I am motivated to write new articles that directly address questions asked by clients, to help them clarify questions they have, and relieve some of the worries that they feel. Day by day, I listen to my clients’ concerns and questions, and author articles with what I learn from these conversations.

Introducing Our Annual Financial Review Program

One of the services we are planning to offer our clients in the future is an annual financial plan review for clients who have completed their bankruptcy case. The program is an opportunity for you to schedule an in-person appointment to go over your individual financial circumstances, post-bankruptcy.  We want to help you avoid pitfalls, and to make your life after bankruptcy the best it can be.

We are taking appointments now, during tax season, our busiest season of the year. Each appointment is at least an hour in length, and is offered at a flat rate of $100. During April, we’re offering post-bankruptcy financial review appointments at a discounted rate of $75/hour. Make your appointment by calling us at (253) 383-1001, or by contacting us through our website, and keep the positive energy and momentum going in your life after bankruptcy.

Can your family benefit from California’s unfortunate combination of poverty and aging demographics?

Recent talk at the California Economic Summit was of “two Californias”. Specifically, the more affluent coastal areas form the more economically viable “California”, while the financially struggling Inland Empire that includes cities like San Bernardino, Fresno and the San Joaquin Valley makes up a separate “California” with very different economic prospects.

But how can you benefit from California’s high poverty rate and changing demographics? Is there a lesson or an opportunity? Or both? Continue Reading →

Some comforting news about air travel

Traveling this summer? You may get better medical care than you think on an airplane.

Half of all flights have a doctor sitting somewhere in the airplane, reports Marilynn Marchione of the Associated Press in her article that is sourced from a Thursday, May 29, 2013 New England Journal of Medicine article. More comfortingly, when there is an on-board medical emergency, sick airline passengers almost always survive.

There are about 44,000 medical emergencies out of the 2.75 billion passenger trips per year. Here are some interesting statistics quoted by Ms. Marchione:

  • The odds of a medical emergency are 1 per 604 flights, or 16 per 1 million passengers.
  • Planes had to be diverted for emergency help in only 7 percent of cases.
  • Doctors were on board and volunteered to help in 48 percent of cases; nurses and other health workers were available in another 28 percent. Only one-third of cases had to be handled by flight attendants alone.
  • Most common problems: Dizziness/passing out 37%, trouble breathing 12%, nausea or vomiting 10%.
  • About one-fourth of passengers were evaluated at a hospital after landing and 9 percent were admitted, usually with stroke, respiratory, or cardiac symptoms.
  • Out of nearly 12,000 cases, a defibrillator was applied 137 times, including in 24 cases of cardiac arrest where the heart had stopped. Note: Sometimes defibrillators are used to analyze an irregular heart rhythm to help doctors figure out what to do, not necessarily to deliver a shock, so don’t panic if someone wants to put a defibrillator on you. You might not get the shock!
  • In one study, only 36 deaths occurred out of 12,000 in-flight medical emergency situations, with only 30 occurring during the flight.
  • Pregnancy-related problems were generally rare–61 cases, in this study–and two-thirds of them involved women less than 24 weeks along with possible miscarriages. Air travel is considered safe up to the 36th week or the last month of pregnancy.
  • In one study of 12,000 in-flight medical emergencies, only three cases involved women in labor beyond 24 weeks of pregnancy led to a plane being diverted.

If your summer vacation plans involve air travel this year, then I hope that these statistics bring your a bit more peace of mind.

What you don’t know about “Charge off Dates” can hurt you

You may be able to remove some negative items off of your credit report by disputing old debts that are no longer due, and watch your credit score rise as a result!

Reporting invalid “out of statute” debt as currently collectible obligations is an old bill collector’s scam. If you fall into this trap, you could be tricked into paying money you don’t owe.

Did you know that consumer debt that has been in default for more than six years is not collectible using any sort of lawsuit or legal process, and therefore should not be reported on your credit report? However, there is an important exception to that rule in the case where debt is owed as a result of a lawsuit judgment that was issued at some time within that six-year period. I’ll explain how this exception applies later in this article.

Many Americans have several “out of statute” debts –debts that should not be listed as currently due on their Experian, Transunion or Equifax credit report. These debts are too old to be carried on the credit report. In these cases, you should write to the collection bureau that lists the debt and dispute the entry so that the debt no longer appears on your credit report from that credit reporting bureau.

Q: How do bill collectors get away with this?

A: Once a debt has been in default (unpaid) for six years, the statute of limitations to collect the debt has expired. The creditor cannot file a suit to collect the debt once the debt is too old, as having been in default for six years. However, to trick you into thinking that the creditor has additional time to collect upon the debt, the creditor will (out of thin air) make up a phony date called the “charged off date”, and put that phony “charged off date” on your credit report as the date of default.

Q: Why is my credit score important?

A: The benefits of improving your credit score are undeniable; improved employment prospects, cheaper car insurance, and low-interest rates for future car loans and mortgages are among the perks of a better credit score. A FICO credit score of 700 or higher is ideal for the best of benefits –850 is considered “perfect” credit.

Q: My credit is pretty rocky. Will disputing “out of statute” debts really help?

A: If your credit is already really troubled with many enforceable unpaid debts, then disputing a few here and there might not be that helpful–a bankruptcy filing might be the right call. We can help you determine your best course of action, contact us at www.washingtonbankruptcy.com. But if your credit is reasonably clean, you should make a habit of securing your free credit report each year, and checking it for errors. Even after a bankruptcy filing, you should get in the habit of making an annual review of your credit report. You can obtain your free credit report atwww.annualcreditreport.com.

Q: Why do creditors report “charge off dates” as occurring months or years after the date you defaulted on the debt?

A: It is a trick to fool you into believing that an aged and invalid debt is still valid and collectible. Actually, “Charge off date” is a term of no legal significance. So definitely make a written dispute of all credit report debts that have been unpaid and in default for six years or more, regardless of the “charge off date” reported in your credit report.

Please read the rest of this article on my website. My website also contains many more useful tools and voluminous information on bankruptcy and financial planning that I invite you to browse and learn from at no cost or obligation.

Biggest Loser Turns Biggest Winner. The Little Known History of the Credit Card.

Between 1979 and 1981, Citibank lost over $500 million on its credit card operations. By 1990, this had changed and credit cards were suddenly profit leaders at the bank. What happened?

Easy answer: Citibank (and many other banks) realized that they were pitching credit cards to the wrong market segment. Since nearly the inception of credit cards, banks had been offering credit cards almost exclusively to the financially well-off; but after years of lackluster profit performance with credit card operations, the banks finally realized that the truly big gains were to be made by offering credit cards to lower income and middle income market segments. They began to market to the elderly, the student and to most anyone of modest or lower income, specifically targeting low-wage clerks, young professionals, clerical support staff, struggling teachers and many laborers. The banks saw it as a matter of survival—theirs, not yours!

Banking was at a troubled crossroads in the late 1970s. Bank industry profits were flat or in decline as traditional business and mortgage lending suffered losses associated with the troubled economic times. Compounding the profitability problems, the usually more glamorous and profitable areas of banking business such as third world lending and commercial realty lending were also then of hit-or-miss profitability. The banking industry needed a new profit source. Credit cards issued to middle/lower income borrowers were then introduced to fill the profit void.

The best explanation of this shift in credit card marketing focus to the less well off might be found with Robert D. Manning’s year 2000 book, “Credit Card Nation”, published by Basic Books. ISBN 0-465-04366-6. The following quotes from the book appear in chapter 1, pages 9, 12-13 and 20: “During the 1980s, the credit card industry’s marketing campaigns successfully expanded into middle-class markets, including blue and white-collar workers who suffered unexpected employment disruptions due to corporate downsizing and recession-related layoffs. This profitable linkage with lower-income households early in the decade emboldened banks to target other nontraditional niche markets such as unemployed college students and retired senior citizens in the mid-1980s, then the working poor and the recently bankruptcy with secured credit cards in the late 1980s and early 1990s. The results were impressive. The profusion of credit cards generated rapidly escalating consumer finance charges, merchant discount fees, and, of course, profits. Between 1980 and 1990, the charges of the average U.S. household jumped sharply from $885 to $3,753 per year, or more than twice as fast as disposable income, while average cardholder debt soared from $395 to $2,350. Credit card issuers earned between three and five times the ordinary rate of return in banking in the period 1983-1988.”

“By the end of 1994, the typical American card holder had amassed nearly $4,000 in revolving debt on a total of three of four bank credit cards with an annual interest rate of about 17 percent.”

Credit card marketing budgets concurrently exploded, too. Marketing expenditures by Visa, MasterCard and American Express had climbed to $75 million by 1985. The big three then more than doubled marketing expenditures by 1994, with a 1993-1994 2-year total combined expenditure of $385 million, (plus another $40 million spent by Discover) over the two-year period 1993-1994. Then combined credit card industry marketing budgets doubled again within a mere four-year period, climbing to $870 million total expenditure for 1998.

So, in a mere 14 years ending in 1994, the average household credit card revolving indebtedness had increased by about 1,000 percent (a 10 fold increase!) from $395 to nearly $4,000, and credit card industry marketing budgets had increased by something approaching 400% (a 4 fold increase).

So, does credit card marketing contribute to bankruptcies and indebtedness? Quite possibly.

1998 saw 1,441,891 bankruptcy filings. 1980 filings stood at about 300,000.

So putting it all together, average household revolving debt increased by 10 fold (about 1000 percent) 1980 through 1998 to a high of $4,000 as 1980s and early 1990s marketing expenditure of credit card products (much of which was to lower and middle income households) concurrently increased by a nearly similar 1000 percent (10 fold) 1985 to 1998 to $870 million. Following suit, bankruptcy filings in roughly the same period 1980—1998 increased nearly 5 fold (a little less than 500 percent) from 300,000 to about 1.4 million.

The banks found a way to turn the biggest loser in their stable of operations into the biggest winner of profits. The banking industry turned a broken-down, sway backed and under appreciated old nag of a pony into a Kentucky Derby jackpot winning thoroughbred—in part by feeding it what grew into an $870 million annual diet of marketing. Profits jumped and a whole new industry was created: the modern credit card. This led to an amazing turn around for the banks, mostly at the courtesy and expense of middle and lower-income America.

If you are struggling under a mountain of debt and do not see much hope of completely escaping from the debt within the next 24 months, then you should strongly consider consulting with us regarding a bankruptcy filing. Your initial one-half hour consultation is completely free!

After your bankruptcy filing, get discovered (and rich!) with Kickstarter.com part 2

Kickstarter is no gimmick: Amazingly, since 2009 Kickstarter.com has received pledges of $450 million dollars for more than 35,000 projects.

Kickstarter.com provides a valuable payment platform and portal for people to donate financially to the development of your idea. You promote your idea yourself, and then direct people to pledge funding to it by promising to permit a credit card charge when your idea reaches its funding goal. In todays world of Facebook, email, Linked In and Twitter, there are many ways to get the word out about your Kickstarter.com project, and to seek donations.

But Kickstarter.com is for the proactive inventor – If the project is not successful in reaching its stated funding goal by a stated funding deadline, then the credit card of the donor is never charged and the project terminates off of Kickstarter.com and is never funded. If using Kickstarter.com, you have to get off your duff and promote your project to potential donors, lest the project die unfunded for failing to meet the donation pledge goal by the stated deadline.

Here is how it works: So once you place your project on Kickstarter.com, then you start phoning all of your friends and family and asking them to phone their friends and family to make Kickstarter.com pledges. You also dun your Facebook “friends” to check out your Kickstarter.com project and to make donations…..and the idea is that you create “buzz” about your Kickstarter.com project with twitter posts and other social media, seeking more interested donors.

What do the donors receive for making a donation to your kickstarter.com project? Well, nothing, unless you promise the donors something. They do not receive any ownership interest or share nor rights to dividends or royalties on down the road in your invention or production. The donors have no future claim on you nor your invention or production.

The project to which you donate has a stated promised completion deadline, and donors are to receive RSS updates from you the developer as the project proceeds along, so your donors do learn what is going on with their money.

Also, some project promotors placing their project on Kickstarter will promise “rewards” – such as a free T-shirt saying “I donated to George Washigton nude” or perhaps an autograph of the soon-to-be-famous writer/artist to whom the donation was pledged, once the project is funded.

What do you get from Kickstarter.com? Well, money to pursue your dream project! If you are seeking riches, and should you prove to have a lucky good idea, then you may be “discovered” by an investor, promotor, supporter or backer who offers to further back your project or to buy the rights to continue along with your idea.

Any project you promote for donations on Kickstarter must be a project with a clear goal. “Fund my life” projects for further education or a vacation are not allowed. Whether it be creating a work of art, creating a music album, editing and publishing a book or completing a technology invention prototype, there must be a definable completed product to be eligible.

Examples: Some projects of all different sizes have been suprisingly successful at receiving funding, and some have been done by very local people here in the Pacific Northwest:

– Morgan Stinson of Olympia, Washington is creating a game called “Dracula: Judicial Inquest” for which he has received $340 in Kickstarter.com pledges, and he will thus likely meet his goal of $400 in pledges, for as of February 28, 2013, he still had 15 days left to gather pledges before his project pledge expiration deadline of March 14, 2013. Morgan is offering t-shirts as a reward for pledges over a certain level.

Others are bigger and receive amazing levels of pledges:

-Development of a “nano lightbulb” hoping to be the most efficient lightbulb ever has received donation pledges of $240,967, which is 1,204% of the requested $20,000 in donations – as as of February 28, 2013, there were still 7 days left to pledge.

-Amazingly, the development of an “affordable desktop 3-D printer” received $2,945,855 in pledges, which was 2,945% of what was requested as only $100,000 in pledges was requested. Simply amazing.

Many projects are modest and yet receive suprising levels of funding:

– “Growgarden: a simple hydrogarden in a jar” has received pledges of $6,823, which is 1,364% of what was requested in pledges, and as of 2/28/13, there are still seven days remaining to make a pledge.

Where does bankruptcy come into this? Since this is after all a bankruptcy blog……

If you have an idea, keep it in your head and do not develop it and do not post it on Kickstarter.com until AFTER you file for bankruptcy. Intellectual property like ideas and inventions can be taken away from you in bankruptcy and sold to the highest bidder by the bankruptcy court trustee.

As a precaution, you should list in your bankruptcy papers that you have an idea or a concept for a “growgarden” or other such invention, but that there is not even a prototype. In a bankruptcy case, the court trustee has to quickly decide whether it wants to take away and promote your idea – and if it chooses not to do so, then the idea and all rights to it are returned to your full right and ownership without limitation. I am almost certain that in the overwhelming majority of cases your idea will receive no interference or expression interest. When the bankruptcy court trustee takes a “pass” on taking and promoting your idea then the idea/product is returned to you free and clear.

So, if you have an idea like the “nano lightbulb”, the “growgarden” or “Dracula: Judicial Inquest” you should first get rid of any troublesome debts by way of bankruptcy filing before you further formulate the prototype model and you should certainly file for bankruptcy to get rid of troublesome debts before you post the idea on Kickstarter.com seeking donations towards the prototype development and subsequent marketing.

But returning to the “smartwatch” idea which was promoted and discovered on Kickstarter.com: Mr. Pogue of the New York Times liked the “Martian Watch”. I liked it too: here are a few highlights: eventually, it will have a “find your iphone app” whereby you can make your iphone ring to locate it when lost by activating a function on the watch. Likewise, your smartphone will broadcast (via bluetooth) text messages, facebook posts and e-mails for viewing on your “Martian Watch”.

The “Martian watch” can also be configured to announce and read aloud incoming text messages and it can set off your smart phone’s camera remotely. The “Martian watch” also functions as a speaker phone, so you can really be just like Dick Tracy, the famous comicbook detective, and speak directly into your watch….

And you can use Apple’s Siri function to tell your “Martian watch” to “dial mom’s cell phone” and then have a wristwatch speakerphone conversation with mom… without ever touching your cell phone… pretty cool!

One last thing – the Pebble Watch (a competitor of the “Martian Watch”) raised $10 million in development funds on Kickstarter.com.

Ready to dust off that idea?

Rebuild your credit score after bankruptcy

The Wall Street Journal’s “Smart Money” feature states it clearly: bankruptcy can help improve your credit score over the long term, even if your score hasn’t declined very much.

Just being cautious with your credit after bankruptcy is of number one importance, according to “Smart Money”. There are many consumers who may see quick gains in credit score recovery from a bankruptcy, and other consumers for whom a bankruptcy filing can arrest an otherwise inevitable long term credit score slide.

Consumers who fail to significantly reduce the amounts owed on high balance credit accounts my eventually see a decline in their credit score. Carrying high balances on credit over time can eventually be as harmful to your credit score as late mortgage payments, repossessions, or delinquent accounts placed with bill collection companies.

Some consumers may already have made payments late, missed payments altogether, or have had accounts turned over to debt collectors. These consumers are probably already out of the “good credit” 700+ credit score range. A credit score of 850 is considered “perfect”.

John Ulzheimer, president of Credit.com Educational Services, a consumer credit education group, is quoted in an article entitled “Declaring Bankruptcy Can Improve Your Credit Score” in ”Smart Money” by Aleksandra Todorova. Mr. Ulzheimer asserts that after filing for bankruptcy, consumers who fall into either the high balance or struggling to make payments categories may see their credit scores increase, depending upon the point where they have fallen on the credit decline trajectory. Why? To start with, credit reports are largely wiped clean with a bankruptcy filing.

According to Ulzheimer, many consumers see a fairly quick improvement in credit scores after bankruptcy. Here’s why: When calculating scores, the formulas developed by Fair Isaac (the company that calculates the most widely used credit score, known as the FICO score) are set up to grade someone’s credit standing as compared with that of consumers in a similar financial position. To do that, Fair Isaac divides consumers into 10 groups, using what it calls “score cards”. It then ranks the consumers in each group based on the others in the group. One of these score cards is bankruptcy filers.

With a bankruptcy filing, the FICO score is then determined based on how one does after bankruptcy compared with other bankruptcy filers, explains Fair Isaac spokesperson Craig Watts. The reason? Fair Isaac has found this to predict credit risk better. ”It’s a much fairer comparison,” says Mr. Watts. ”You’re not compared with people with rosy, perfect reports.” Thus with good after bankruptcy credit management, a good score in the 700s isn’t impossible, and when the bankruptcy drops off of your credit record in 7-10 years, you might even then hit that perfect 850.

The “V” Shaped Curve Leads to Inevitable Credit Recovery

In her article on About.com entitled, “How Much Will Bankruptcy Hurt Your Credit Score”, LaToya Irby, Credit / Debt Management Guide, takes us through the decline and recovery of a consumer credit score in various scenarios. The “worst case” scenario for a bankruptcy filing might be a temporary credit score drop of a mere 150 points for someone with an already mediocre credit score of 680-690, and even less than 150 points if a credit score is already in the troubled 500-650 range. If one’s credit score is already coasting down to 680-690, then bigger problems are probably already on the way. The good news is that a bankruptcy filing can 1) end the days of that forever lingering sub-700 mediocre to poor credit score or 2) halt and then reverse a downward-moving credit score trend. The reason is that with a long term credit score of 680-690, you will not receive many low-rate credit offers anyway, so a bankruptcy filing could easily be a step in the right direction to better credit offers in the near future. So consider taking the bankruptcy hit now to strip away the credit disaster, and then begin to rebuild a better financial future.

Ms. Irby does relate that if a consumer’s credit score is really high—a score of 780, for example—a bankruptcy filing could lower the score by 240 points to a poor score of 540. However, starting from that low point, a credit score can recover with amazing speed to the point of qualifying for a home mortgage in as few as two years after bankruptcy. Better yet, the consumer might even be able to comfortably afford the mortgage without the crushing debt burden eliminated after bankruptcy.

Is Chapter 13 better than Chapter 7?

Generally, bankruptcy in Chapter 13 where the debtor makes full or partial repayment of debts according to a reorganization plan is not better for rebuilding credit. A Chapter 7 “straight bankruptcy” filing offers the best financial recovery strategy for most consumers. In Chapter 7, all or nearly all debts are wiped out in a quick and short proceeding without any repayment required. Many people misunderstand Chapter 7, and mistakenly believe that they will lose their house in a Chapter 7 and that their car or 401k savings plan will be taken away. This is not correct. Rarely, if ever, is any property or item taken away in Chapter 7, and consumers can keep a house and car in Chapter 7 if they wish, so long as any mortgage or car loan payments are kept up. Ms. Irby of About.com Guides researched the question of whether 7 or 13 was better for quick credit recovery, and decided that Chapter 7 is better for a quick credit score recovery, relying upon information released by FICO.

In 2010, the Fair Isaac Company, the provider of the popular FICO credit scoring model in which a score of 850 is considered a “perfect” credit score, published information about how bankruptcy can affect a credit score by proving some mock scenarios with different credit profiles. The FICO mock examples did not differentiate between the effect of Chapter 7 and Chapter 13 bankruptcies, so the proprietary and secret FICO formulas do not seem to prefer or favor a debtor who makes full or partial repayment through a Chapter 13 bankruptcy plan. This argument seems to suggest that most consumers might as well file for Chapter 7 when it comes to FICO credit scores, because a Chapter 7 filing is over so much more quickly than a three to five year Chapter 13 full or partial debt repayment plan. LaToya Irby authored an interesting article entitled “What Your Credit Score Is Made Of” that describes the components that make up consumer credit scores in more detail.

Credit Restoration 101

Restoring credit after bankruptcy is not nearly so hard as people might think, and there is an easy rule of thumb to begin the speedy recovery of a FICO credit score. That is, simply maintain a good credit record with any accounts which survive the bankruptcy, including child support payments, utilities, mortgages, and car loans that are kept after bankruptcy.

Ask.com Guide’s Ms. LaToya Irby sums it up: ”You might be surprised to see how soon after bankruptcy you begin receiving credit card offers again. If you file for bankruptcy, know that your credit isn’t lost forever.”

Aleksandra Todorova of the Wall Street Journal “Smart Money”‘s agrees: “[H]ere’s some surprising news: In many cases, the damage done (by bankruptcy) to one’s credit score isn’t nearly as bad as expected. Over the long run, obtaining a score high enough to make you eligible for very competitive rates isn’t out of the question.”

Advanced Credit Recovery

Consumers can turbocharge their after bankruptcy FICO credit score recovery with a little further reading and follow-up action. There are a number of online guides and some great books available to help you learn how to speed up your FICO credit score recovery after bankruptcy. Consumer debt expert Gerri Detweiler, www.gerriderweiler.com, is the author of “The Ultimate Credit Handbook: How to Cut Your Debt and Have a Lifetime of Great Credit, Third Edition,” for example. For starters, the first four credit recovery steps recommended in the aforementioned WSJ’s “Smart Money” column are really easy steps to get a credit score back into the desirable 700s – maybe even within two years. Here’s a summary:

(1) Damage Control. Make sure that all the accounts listed in your bankruptcy are listed in your credit report as $0 balances and/or “discharged in bankruptcy” because if the creditor keeps erroneously reporting it as having a collectible balance, it will slow down or stop your credit recovery progress. You may get your credit report at www.annualcreditreport.com to check for erroneous reporting, and then learn how to dispute erroneous information on your credit report.

(2) Get a New Credit Card. If you can’t get a credit card with a small credit limit, then search for a lender who will issue you a “secured” card. A secured card is one that is backed by a modest cash deposit. Look for a lender who promises to let you “graduate” to a regular unsecured credit card following 18 months or so of on-time payments.

(3) Piggyback. If you have a very trusted friend or relative with good credit repayment habits, ask that person to allow you to become an “authorized user” on one of their credit cards. This may eventually “bootstrap” your friend’s good payment history into your credit report history.

(4) Bigger Loans. I have seen some people get a car loan while they are still in the 4 month Chapter 7 process. For others, a car loan within a few months after bankruptcy is often a possibility. Of course, only finance a car loan if in fact you really need a car. Should the need arise, start shopping for a lender and auto dealer who will work with you. It is important to be choosey about the terms of any car loan. If you are shopping when the auto dealership is under a crunch to make a sales quota, you might find that the auto dealership needs you more than you need them. Do not accept a ridiculous loan interest rate! If the car lot finance manager cannot get you a reasonable after bankruptcy interest rate of 8-14%, then move on immediately. Find a more flexible lender. I have heard tales of some people even getting a 5.0% interest rate car loan—or less—after bankruptcy on a car loan. Be tough, be polite and be fair during your negotiations, and you may be surprised at the favorable outcome.

Gerri Detweiler says that sometimes consumers have to face the music and file bankruptcy. Rebuilding a credit score into the FICO 700s range after bankruptcy isn’t necessarily that difficult, especially by starting with the four good credit restoration fundamentals reviewed above.

Ideas for Action

Saving a credit score in the short term shouldn’t be seen as a good reason to avoid or postpone filing for bankruptcy, particularly if you have either high debt balances or are struggling to make payments on time. If you find after a sober examination of your finances that you are unable to completely clear consumer debts to zero within a couple of years, bankruptcy may be the prudent choice. Even if your credit score isn’t below 700 currently, it is quite likely that it will end up there anyway if your financial resources are stretched too thinly. ”You have to be realistic about your ability to get back on your feet financially by repaying your debts within a reasonable time without an extreme or ridiculously small household budget which is not long-term practical” says Ms. Detweiler.

Articles quoted or referenced in this article:

How Much Will Bankruptcy Hurt Your Credit Score


Credit expert Gerri Detweiler


Amazon.com: The Ultimate Credit Handbook: How to Cut Your Debt and Have a Lifetime of Great Credit, Third Edition (9780452283923): Gerri Detweiler: Books




How to Dispute Consumer Credit Reporting Errors and Fix Your Credit Report – Money Management


Declaring Bankruptcy Can Improve Your Credit Score – SmartMoney.com


After your bankruptcy filing, get discovered (and rich!) with Kickstarter.com

David Pogue, personal-tech columnist for The New York Times, states that 2013 is the year of the “smart watch” in his “State of the Art” column entitled “Dick Tracy, Your Watch Is Ready, Almost”, published February 27th.

The apparent market leader in “smart watches” will be the Pebble Watch. The next products to challenge for the lead will have names like the Cookoo, I’m Watch, Meta Watch, Casio G-Shock GB-6900 and Martian.

Come on! What does a discussion of new “smart watches” have to do with a bankruptcy blog? It has lots to do with bankruptcy!

First, every single one of the “smart watch” products have something on common, says Mr. Pogue. The concept behind each prototype was first floated on Kickstarter.com, a website where people with an idea seek donors who would contribute to their prototype.

Second, if you have an idea for something like the smart watch and you file for bankruptcy, what happens to your idea? Can your idea be taken away from you as intellectual property to be sold with the proceeds distributed to your creditors? If you have an idea, when should you post it on Kickstarter.com for funding requests?

The answer is “yes”, you can lose rights to your great ideas in bankruptcy. Your idea can be taken away by the bankruptcy court trustee and sold to the highest bidder. So if you are on to something big like the “smart watch” at the same time you are struggling with debts, you might want to file for bankruptcy before you do any significant marketing or development work on your invention, and you should certainly file for bankruptcy before you ever post your idea or invention on Kickstarter.com.

Could an idea of yours find funding on Kickstarter.com and even lead to post-bankruptcy riches if you are “discovered” by the right people? Very possibly yes, as Kickstarter.com does not limit participation to technology and physical inventions, but welcomes performance artists, musicians, authors, and fashion designers. Kickstarter.com wasn’t established just to help inventors to make money by finding a financial backer to buy your idea. Kickstarter.com may enable you to develop something of benefit to humankind that you otherwise would not have the resources to pursue. It is a platform for sharing ideas and for connecting ideas with crowd sourced funding.

Don’t discount your ideas. Even seemingly weird ideas might find funding on Kickstarter.com. Venture capitalists and Fortune 500 companies now regularly scan Kickstarter.com to find promising ideas and concepts that they might fund and develop. This is how the “smart watch” idea was discovered, says Mr. Pogue.

Check back soon for part two of this blog post that will include actual success stories from Kickstarter.com and more great ideas!