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Articles Posted in Restoring Credit

If you are currently considering bankruptcy, chances are that your credit score is not very good. Going through the bankruptcy process—while freeing you of the crippling debt that burdens your daily life—will likely have a further impact on your credit score.

money-641083-mHowever, there are some things that recent bankruptcy filers can do to help rebuild their credit scores. In some cases, people who follow these guidelines are able to attain a higher credit score than they had before they filed bankruptcy.

The first thing to consider before filing for bankruptcy is to consult with an experienced bankruptcy attorney to help you along the way. The experience that comes along with hiring an attorney is an invaluable resource to those who want to quickly get their life back on track after their bankruptcy.

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handshake-1065245-mIf someone is in over their head with debt, loan payments, and other financial obligations, bankruptcy may be a good alternative for them because it can discharge most or all of a filer’s debt upon completion. However, the government does not let borrowers out of their commitments without making them jump through a few hoops first.

One such requirement, and the focus of this blog post, is that anyone applying for bankruptcy must first complete credit counseling.

Credit Counseling in Kentucky

Kentucky, like other states in the country, requires that any person filing for bankruptcy go through credit counseling before they apply for bankruptcy. The purpose of credit counseling is to see if, with the proper budgeting assistance, it is feasible for the applicant to get out of debt without declaring bankruptcy. This requirement does not depend on whether a person is seeking a Chapter 7 or Chapter 13 bankruptcy; credit counseling is required in both cases. Continue reading

Just about everyone relies on credit cards these days. It’s difficult to make large purchases without them.

Yet they can lead to major debt for consumers who get hit by late fees or incur high interest rates that kick in after certain stipulations detailed in the fine print of a contract kick in.
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Our Louisville bankruptcy lawyers recognize how useful credit cards can be when used wisely. But we also caution consumers that credit can be dangerous. In fact, credit card misuse is one of the leading causes for debt problems in America.

As such, many people who opt for the protections of a Louisville bankruptcy note that it was credit cards that encouraged them to make the decision to go through with bankruptcy.

Apparently, credit card companies know that many people who sign up for their card will one day miss a payment. They may also be relying on those consumers who pay only the minimum amount due each month. Whether it’s a job loss, a medical issue or another circumstance, some consumers fall into these traps.

Creditcards.com reports some staggering statistics about Americans’ use of credit cards.

The website states that the average U.S. household has about $15,799 in credit card debt, for a nationwide total of $793.1 billion as of May 2011. It’s likely to have increased since then. That debt has been put on more than 600 million credit cards.

By 2008, the average person had 3.5 credit cards, on average, in their name. The average APR on a new card was 14.89 percent and the average APR on a card with a balance was 13.10 percent.

The total amount of consumer debt in May 2011 was $2.43 trillion, including other types of loans, not just credit cards. Through 2010, MasterCard had issued 171 million credit cards, Visa 269 million and American Express 48.9 million.

There’s quite a bit of money locked up in credit cards in this country and it won’t be going down soon. Many people are tied to their cards and are having difficulty breaking free.

A Washington Post columnist advises consumers to try the “Debt Dash,” by putting any extra income, from a second job or reduced expenses perhaps, into credit card debt. The method is designed to get rid of debt as soon as possible. The plan is to pick the debt with the lowest balance and knock that off first while making minimum payments on the others. The plan is to move on to the next biggest debt and up until it’s gone. The problem is that making minimum payments adds fees to the debt.

The only surefire way to get out from credit card debt is filing for bankruptcy in Louisville. Filing for bankruptcy allows consumers to rid themselves of all credit card debt. And once the process is over, the consumer can begin the process of trying to repair his or her credit.

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With recent news that Kentucky’s divorce rate is much higher than the national average, it’s important to note that while a divorce can cause severe emotional issues, there are also obvious financial issues that can arise.

It’s certainly possible that considering filing for bankruptcy in Louisville could help couples who are in the processes of filing for divorce or whose divorce has been finalized.
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Especially in this current economy, our Louisville bankruptcy lawyers have been able to help many people who have fallen on hard times after having to split assets and begin living with one income instead of two. Alimony payments, child support and other expenses may have made money tight.

The Louisville City Examiner recently reported that Kentucky’s divorce rate is 33 percent higher than the national average, according to census figures. The state’s rate works out to roughly 13 per 1,000 people. Nationwide, the average is 9.5 per 1,000 who end up getting divorced.

Residents of the South have had higher divorce rates, in general, than other regions of the country in recent years as well. As recent as 2009 data, the rates were 10.2 per 1,000 for men and 11.1 per 1,000 women. At the time, the national numbers were 9.2 for men and 9.7 for women. In the Northeast, divorce rates were lower — 7.2 for men and 7.5 for women.

Experts believe that divorce rates are higher because marriage rates are higher. People in other parts of the country also wait longer to get married, while Southerners are more apt to get married at a younger age. Education and employment are also factors in the numbers being higher.

So, what does this have to do with money? Any time a couple splits up, their lives change. If they have purchased a house together and now are getting divorced, it’s likely that neither wants to keep the house because what once was considered a good investment is now a losing proposition.

Other assets will have to be divided and debt will be split up as well. There are tax implications that can come back to haunt divorcees as well.

It’s possible that a couple could decide to file a joint bankruptcy before they get divorced in order to eliminate debt before the split is final. That will allow them to eliminate one more problem they need to deal with after the divorce.

But oftentimes, the breakup is so difficult they are unwilling to consider that. If a divorced person comes out of a split with mounds of debt and less cash than he or she had before, it’s possible that bankruptcy could help. Filing for bankruptcy stops debt collections and allows the person to eliminate debt.

If you have just gone through a divorce or you are in the process, take a look at your finances. A divorce provides the chance for a fresh start. So, why hang on to the financial baggage, too? Consider a bankruptcy to get rid of your debt and wipe the slate clean as you start a new life.

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As a result of the housing bubble and the poor economy, home foreclosures in Kentucky and Indiana, as well as elsewhere across the country, have become an epidemic. Suffering a foreclosure can have a devastating impact, not only from the obvious hardship of losing one’s home, but from the extremely negative impact it can have on one’s credit.

Like most negative information, such as repossessions and judgments, foreclosures stay on one’s credit report for 7 years. From a credit standpoint, however, a foreclosure is one of the hardest things from which to recover. For someone trying to finance the purchase of another home, a foreclosure is the worst piece of information that can appear on the credit report. In order for someone to qualify for a conventional home mortgage loan who has had a foreclosure on his record, the foreclosure must be more than 7 years old. What makes matters worse is that the 7 years runs from the date the foreclosure sale is complete, that is the date the new purchaser takes title to the property. Because the foreclosure process can drag out for months if not years before a new owner takes title, it can often take much longer than 7 years from the start of a foreclosure before one can obtain a loan.

Filing a Chapter 7 Bankruptcy, on the other hand, actually speeds up the time frame for obtaining new credit. Although the bankruptcy filing itself will stay on one’s credit report for up to 7 years, the rules for obtaining a mortgage loan are much more lenient for someone filing Chapter 7 Bankruptcy than they re for someone with a foreclosure on his record. For example, a conventional mortgage loan can be obtained 4 years after a bankruptcy discharge and an FHA or VA loan can be obtained 2 years after the discharge.

YOUR DIVORCE DECREE MAY NOT PROTECT

YOU FROM YOUR SPOUSE’S CREDITORS

In most divorce cases, both parties have a substantial amount of debt. In fact, it is frequently debt that is one of the major causes of the divorce. Therefore, one of the issues that often arises in divorce cases is how that debt is going to be divided between the parties. While dividing up assets is fairly straight forward, dividing up debt can be much more complicated.

There is Life After Bankruptcy

Part II

As I discussed in Part I, filing bankruptcy is not the end of the world as far as your credit is concerned. In this article, I discuss some specific actions that you can take in order to help get your credit back on track.

There is Life After Bankruptcy

Part I

So you are considering filing bankruptcy but are afraid you’re going to be blacklisted forever. Let me assure you, filing bankruptcy is not as horrible as you might have heard, and in fact, can actually put you in a better position credit wise than you currently are in, especially if your credit score is already poor.

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