Archive for the ‘ Credit Cards ’ Category

Who Really Owns Your Debt?

I deal a lot with bill collectors.  Here is an eye-opening description of how their business works.

Settling a debt can be . . . .unsettling.  If some unknown company collects on a credit card debt that’s five years old, how do you know that the collector actually has the right to collect that debt and declare it done with?  I always ask for a written settlement contract specifying that the collector has the right to collect.  It’s also important to get a company name and physical address.

Unlike these “investors,” I would never pay a cent for debt that was more than three years old.  The statute of limitations runs out on it, and the collector no longer has the legal right to collect.  The debt collector, though, sees a moral right to collect, and no law stops him from collecting on a debt that is decades old.

Education is the best defense against these people.  If you need help from debt collectors, give me a call.

A couple recently asked me how to rebuild their credit after filing bankruptcy and I would like to share some of the information that I gave them as it may be helpful to you in improving your credit score after bankruptcy.

First, for those who are worried about a bankruptcy being on your credit report for at least 7 years, please realize high debt and failure to make your monthly payments on time is already hurting your credit score.  Although bankruptcy is not for everyone, for those who do file, bankruptcy is meant to give you a “fresh start” by discharging debt and high balances.

Here are 5 simple things you can to help rebuild your credit after bankruptcy.

1.       Get a secured card.  A secured card works essentially the same as a debit card, you pay the bank a security deposit before using it, but all the payments made will be reported as credit.

a.       Make sure the transactions are reported to the three major credit bureaus.

b.      Try to get the card at a bank you would want to continue using, as you can eventually inquire about an unsecured card.  After several months of managing the secured card, you should inquire about switching to an unsecured card.

c.       Stay away from cards with high “start-up” fees so that you do not go back into debt again.

2.       Build a budget. As obvious as it may sound, it is important to make a conscious effort to stay within your budget so you can make your monthly payments without a hitch.

a.       Make notes of your essential expenses so you can get an idea of where you are financially.

b.      Make cuts where you can.  For instance, downgrade your cell phone plan, eat out less often, or try to find alternate, less expensive means of transportation etc.

3.       Get a gas or retail credit card. These cards give the opportunity to report good credit at places where you would normally be spending money.

a.       Once again, make sure the transactions are reported to the three major credit bureaus.

b.      Make sure you are responsible with your retail card and only spend what you can pay off each month.

4.       Pay off your balance every month…. ON TIME. By paying your balance on time at the end of each month, you are proving to the bureaus that you are a responsible spender and in control of your finances.

a.       Try to keep your balances low and manageable so you can pay them off in full, on time, by the end of the month.

b.      Avoid charging up to the limit.

c.       DO NOT pay the minimum monthly payment.

5.       Check your credit report from the three major bureaus. It may seem like the last thing you want to do, but this is an important step. Each of the nationwide credit reporting companies [Equifax, Experian, and TransUnion] is required to provide you with a free copy of your credit report once every 12 months, if you ask for it.

a.        To order, click on or call 1-877-322-8228[1].

b.      It is important to see where you stand, and what you need to do to get to your goal.

c.       Notify the credit-reporting agency of any inaccurate or incomplete information. It is their responsibility to correct any mistakes, which may lead to an improved credit score.

The road to rebuilding your credit after bankruptcy takes some discipline.  Although the list is not exhaustive, following these simple steps will help you on that road. Remember that after discharging debt and high balances through bankruptcy, improved credit is a real possibility.

Credit: Daniela Romero, bankruptcy attorney in Pasadena

Why the FreeCreditReport.Com ads are a scam

When is FREE not FREE?

In a world seemingly driven in all matters by credit reports, getting that report for nothing ought to be a good thing,

But the commercial entities beat the federal government to the web address

And they also got a better ad agency that wrote catchy tunes promoting their product, under the guise of free credit report.

But provides you a free credit report only if you surrender personal information, wait for it to come by snail-mail  and sign up for a monthly service billed to your credit card.

They bank on you not cancelling that subscription.

Cha ching!

It’s not really free.

There is a free credit report

The three big credit reporting agencies do provide a no-strings attached credit report to everyone, once a year.

Unfortunately, the URL doesn’t mention free, and doesn’t come with a catchy, banjo driven jingle;

But it does provide simple, and free, access to your credit file.

The right to know

Federal law enacted in 2003 gives everyone the right to request a free credit report each year from each of the three national credit reporting agencies:  Experian, Equifax, and Transunion.

For nothing (that is: free) you can examine your credit report once every four months, if you request your free report sequentially from the CRA’s.

Repeat after me:

What to do if you find errors

The Federal Trade Commission website walks you through how to challenge inaccurate information on your credit report.  They’ve even included a sample dispute letter. sorts out your remedies if the CRA doesn’t correct the information.

Sing the chorus

Here’s the game plan:

  • Click on
  • Order a copy of your report from one agency
  • Look for errors and inaccuracies
  • Challenge bad information
  • Mark your calendar for 4 months to order a report from one of the other national CRA’s




Credit: Cathy Moran of Redwood City

How to Deal with Debt Collectors

Pasadena attorney Daniela Romero has a good article on how to handle calls from debt collectors.  I invite you to read her post because I don’t have the time today to write this myself, and I can’t do it better than her.

Business credit cards

Many of my clients come to me with credit card debt on a business card.  Here are some of the ins and outs about getting a business card, from Cathy Moran in Redwood City.

34 Things Not to Do before Filing Bankruptcy

1. Do not leave out any Bank, Checking, Savings, Brokerage, Credit Union accounts from your schedules.

2. Do not file if your income is greater than your expenses.

3. Do not use your credit cards.

4. Do not take Credit Card Cash Advances.

5. Do not use convenience checks offered from any credit cards.

6. Do not do balance transfers between credit cards.

7. Do not pay money owed to Family Members.

8. Do not pay money owed to Friends.

9. Do not tell a creditor that you intend to pay.

10. Do not leave assets off of your paperwork.

11. Do not file if you are about to receive a tax return or an inheritance. Discuss the timing with your attorney.

12. Do not fail to tell your attorney about your small business, sole proprietorship, partnership, LLC, LLP, LC, corporation, or hobby.

13. Do not purchase a home shortly before filing bankruptcy without consulting your attorney.

14. Do not give away or gift any property to anyone.

15. Do not pay more than $600 on any past due bill without first consulting your attorney.

16. Do not transfer (title or deed) property to anyone.

17. Do not cash out retirement plans or 401k’s.

18. Do not take out a second mortgage.

19. Do not gamble.

20. Do not hide your assets or debts.

21. Do not take out “payday loans.”

22. Do not put your money in your kids’ bank accounts.

23. Do not omit or ‘save’ a credit card for you to use after your bankruptcy.

24. Do not fail to list debt to family or other “insiders.”

25. Do not write bad checks.

26. Do not borrow money.

27. Do not forget to tell your attorney about liens you may have on your home or unpaid judgments. They may be avoided.

28. Do not make major financial decisions without talking to your attorney.

29. Do not get married before filing if your spouse has a high income.

30. Do not misrepresent facts to your attorney.

31. Do not run up your credit cards in advance of filing bankruptcy.

32. Do not fail to appear at State court hearings, trial or proceedings; coordinate this with your attorney.

33. Do not hide from your attorney. Keep them up-to-date with your address, phone number and email address.

34. Do not bank where you owe money. Close the account and reestablish an account somewhere else. Social Security debtors who do this have a lag time of a few months because it sometimes takes that long for SS to get it done. If you are pressed to file then clear out the account as soon as the deposit hits the bank. This also happens with payday loans. Many of these companies will have a debtor sign a form to permit them to withdraw money from the account on a regular basis and these are nearly impossible to stop.

Note: Ask your attorney about accounts that might get frozen whether or not you owe that institution money or not.

Credit: National Association of Consumer Bankruptcy Attorneys

Guest opinion on cancellation of debt income

You are a person who can’t pay your bills.  One day, a disheveled guy comes to your door, asks whether you answer to your name, and when you say “yes,” he hands you a summons in a state-court lawsuit seeking a money judgment for an unpaid debt.

Once you get the summons, you have 30 days to answer it.  You’re not going to answer, because it will cost you $400 to do so and you don’t really have a defense; you owe this money, you just can’t pay it.

If you don’t answer in 30 days, then the attorneys may file a request for a default judgment.  That usually takes about a month to get.

After they have the default judgment, they may take collection action.  That includes placing a lien on your house, garnishing wages, levying accounts, and dragging you down to their office for deposition to find out your social security number and your intimate financial details.

A bankruptcy filing will stop this process at whatever stage it has gotten to.  You won’t be able to recover money already levied or garnished, but you will be able to set aside a lien.