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16

Nov 2015

In January, Harold and Linda were ten days from foreclosure

Posted by / in After Bankruptcy, Weekly Posts /

When they came to see me in January, Harold and Linda were ten days from foreclosure.  Today their mortgage is current and their bad debts are all gone.

Harold had a career change due to medical reasons, lost income, got into credit card debt, had a car repossessed and got behind on the mortgage.  He had tried to get a HARP loan mod and had been turned down.  (Probably because their debt to income ratio was too high.)  This was January 23 and his foreclosure sale was set for February 3.

We filed Chapter 7 bankruptcy on January 29.  We stopped the foreclosure and discharged $57,000 in debts.  ($30,000 in credit cards and $27,000 repossession.)

On January 23, Harold and Linda were ten days from foreclosure, their house payment was $3215 and they were seven months behind. They filed Chapter 7 bankruptcy, got approved for a loan mod, their payments is $450 less and they are current.

Harold and Linda dropped in to see me last Friday, November 15.  With their debt to income ratio better–since the debts were gone–and three more months of paystubs on Harold’s new job, they had been able to get a loan mod.  Their interest rate had gone from 7% to 4.25.  Their monthly payment is $450 less–and they are current.

This is why I love being a bankruptcy lawyer.  I help people be happy and debt free.  

 

 

 

 

 

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13

Sep 2015

Fred’s after bankruptcy credit score is 707

Posted by / in After Bankruptcy, Weekly Posts /

Fred’s after bankruptcy credit score is 707

Fred M was a small business owner.  Because his business was dragged down by the recession, he has $50,000 in credit cards that had gone bad. Last fall Bank of America sent him a warrant-in-debt in a $17,000 credit card. So, Fred filed bankruptcy with me in October 2014.  It was discharged in March 2015.

Fred M after bankruptcy credit score 9-13-2015 2-08-00 PM

Six months after bankruptcy, Fred’s credit score is 707.

Credit Karma shows his credit score is 707!  That’s six months after bankruptcy discharge. The median credit score in Virginia is 694.   Six months after bankruptcy, Fred has a better score that half the people in Virginia! Not everybody recovers as fast as Fred.  He’s obviously been working hard at it.  But this tells you for sure, bankruptcy does NOT mean ten years of bad credit. 

In fact, most people who file bankruptcy have a “sharp boost” in their credit score.  (That’s not me, saying that.  That’s a study of after bankruptcy credit scores by the New York Federal Reserve.)  

 Fred Wasn’t Bragging When He Sent Me His Credit Report

Fred sent me his credit report because he wanted to make sure it was right.  

Ten years ago most people’s after bankruptcy credit reports had three or four creditors still reporting them as late.  About fifty lawyers around the country, I’m one, have sued them for ten years.  And they have gotten a lot better.  I’m thinking now that only about one third of people still have one or two “charge off” or “collection” instead of “bankruptcy discharge” on their after bankruptcy credit report.

It turns out Fred is one of those.  Capital One left “collection/charge off” on page 9 of his report.  I’m just guessing that’s costing him ten points on his after bankruptcy credit score.

This afternoon, I’m showing Fred how to dispute that.  (Fred has to do a dispute because you do NOT have the right to have your credit report right. You only have the right to an investigation.)

If they investigate, Fred’s dispute will fix it.  If they don’t, we’ll sue.  (This promise to protect your after bankruptcy credit score is part of my exclusive five year bankruptcy warranty.)

 

06

Sep 2015

Maria’s credit score after bankruptcy is 640

Posted by / in After Bankruptcy /

In just thirteen months, Maria’s credit score after bankruptcy was above the national average

Are you one of the people who still thinks bankruptcy hurts your credit score?  

Maria M was worried about her credit score when she came to talk to me in November 2013.  That’s part of the reason she put off filing bankruptcy until spring 2014. But a second mortgage on a foreclosed home was suing her for over $50,000.  She knew she had no choice.

Fast forward to August 2015. Maria brings in a family member who has also been putting off filing bankruptcy.  And Maria tells me her credit score is back up to 640.  She was so happy that her credit score after bankruptcy was moving up so fast.

 

Your credit score after bankruptcy

Your credit score after bankruptcy is your road to a better life. A 640 score can be good enough to get an FHA mortgage.

Now 640 is not a great score. But it can be good enough. Although 640 above the 630 national average of scores, it just gets you out of the bottom third of people. (Some people have really, really bad scores.) 

That 640 score is the threshold for getting approval on an FHA mortgage loan.  And 640 can get you a car loan at close to 10% interest-especially if you shop very carefully.  

I urge people, if as all possible, to wait three years after bankruptcy to finance a car. (In three years, your credit score after bankruptcy can be well above 700.) But for people who have been dragging bad credit around for years, people who’ve been paying upwards of 20%, a car loan at 11% or 12% would look mighty good. 

Let me put it another way.  One third of the country have credit scores below 640.  Charge offs, collections, repossessions!  Nearly everybody in that group would see their scores improve if they filed bankruptcy–but most of them wait until they get court papers, or even until they get garnished.  

Bankruptcy is in the law to help you–and to help the country. The country is better off if you can fix your credit.  The country is better off if you can get a car loan at a payment you can afford.  The country is better off if you can save up and buy a house.

What does a low credit score mean?  A low credit score means the lenders know you need to file bankruptcy.  And that you are going to, sooner or later.  The only person who doesn’t know it, is you.

Why wait? 

Your credit score after bankruptcy is your road to a better life.  

 

 

 

 

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