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Mandatory Credit Counseling Before Bankruptcy
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Repairing Your Credit Report
Are you confused by what you have read and want straight answers on repairing your credit report? Credit repair isn't difficult but it can be confusing. A credit repair specialist is the best resource person to have on your side when fixing your credit. The Frequently Asked Questions that follow will be a big help to point you in the right direction to get started.
How long does it take... Read credit counseling article
Bad Credit Home Loan To Get You Out Of Debt
A "bad credit home loan" can help you climb your way out of debt and get you started back on the road to upstanding, good credit. There are many lenders who are willing to make bad credit home loans to you - a loan based on your equity in your home even if your credit has slipped or isn't as perfect as it could be. By taking out a bad credit home mortgage or home equity loan, you can consolidate a... Read article
Mandatory Credit Counseling Before Bankruptcy
In a study released in October, 2006 by the National Foundation for Credit Counseling (NFCC) on the eve of the one year anniversary of the 2005 Bankruptcy Reform legislation, there were a number of unanticipated results of the now mandatory pre-bankruptcy credit counseling.
The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 requires all debtors to get mandatory credit counseling before they are permitted to file a chapter 7 or chapter 13 bankruptcy.
One of the most surprising results of the study are that consumers filing for bankruptcy have a huge amount of debt, with average unsecured debt being almost $12,000 greater than their average annual income, and this ratio is getting progressively worse. In addition, consumers filing for bankruptcy protection are more likely to have mortgage delinquency problems, than those debtors who received non-bankruptcy related credit counseling.
Although phone and internet based counseling are the most common type of service delivery, as opposed to in person counseling, the time required to complete pre-discharge education sessions is taking more than 25% more time than aniticipated. These higher than anticipated costs mean that the cost of providing services exceeded the fee income collected by NFCC agencies. The study states that "Based on current estimates of 600,000 bankruptcy filings in 2006 and assuming the same delivery mix, an annual funding shortfall of $7.52 million appears likely for pre- filing counseling services delivered by NFCC agencies."
NFCC agencies waived the fee for services provided for all consumers unable to pay for them, meaning that 16 percent of pre-filing sessions and 13 percent of consumers attending pre- discharge education classes were provided free of charge. The big worry here is that if the costs of providing mandatory credit counseling becomes excessive, the entire credit counseling system may become difficult to continue, so stay tuned for further information.
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Build Credit from No Credit
Are you someone who has not established credit yet? Are you being denied the same access to credit cards, loans and other credit ways simply because your credit score is too low from not having enough credit or no credit at all. Don't fret, because help is on the way!
If you are planning on getting a personal loan, owning a car, having a home of your own, working in a bank or finally acquiring the furniture you've been longing for a long time then establishing a credit is the answer.
Here are a few ways you can start building up your credit report and get on the road to good credit!
- Start to apply for a guaranteed approval credit card that reports to the credit bureaus. Take your time and always read the fine print in order for you to find the best deal for yourself. These cards are similar to debit cards but they have the Visa or Mastercard logo on them and they report to the credit bureaus.
- Another option might be to check if the lending institution of your choice has a secured credit card being offered. The interest may be higher but you may be able to upgrade to an unsecured card within 12 months if you maintain your payments on time.
- Another type of credit card with easy approval requirements is the merchandise credit cards and department store credit cards. These are an excellent source to start to establish a line of credit. Make sure it's a store where you can purchase a lot of your shopping needs. This way, you don't need to apply for a multiple cards at once which can be seen as a negative on your credit report. One word of caution. Department store credit cards tend to have high interest rates, many of their interest rates start at 15%. So keep an eye on your balance and try to pay as much as you can each month. NEVER make just the minimum payment, especially on a department store credit card.
- Don't forget to fill up any application for a loan or credit card completely. If something doesn't apply put N/A on that line. Include your checking and savings accounts and any accounts you pay for on a monthly basis even if they do not appear on your credit report. If they do not appear on your credit report, please make sure you include a way for your prospective lender to contact them for a trade reference.
If you are thinking about applying for a car loan, it's good to do research on the dealership or car lot where you want to make the purchase. Most dealers will provide a source of financing. Some may carry their own loan and payment plans. Be on the lookout though and read contract carefully if you don't want to get stuck with an interest rate that is through the roof. This venture is where a good cosigner may come into play.
Use these tips to help jumpstart your credit history and get approved for the credit that you deserve!
Copyright (c) 2006 Liz Roberts
Liz Roberts is consultant with NewHorizon Finance & has been providing consumers & business owners with financing since 1989.
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