Wednesday, January 25, 2012

Establishing Your Credit After Bankruptcy

When considering bankruptcy because of serious financial hardships, the number one question that I hear as a bankruptcy attorney in Miami is, "What will happen to my credit?" And the truth is that your credit will be affected by a bankruptcy filing, be it chapter 7 or chapter 13. However, most people filing for bankruptcy have spent many months paying their bills late or not at all and therefore already have a low credit score to begin with. Once the bankruptcy has been discharged, the slate has been wiped clean and now you can begin to rebuild your credit with a fresh start.

Rebuilding credit happens slowly over-time and is an accumulation of one good action after another. Below are some basic steps to get you started in the right direction:

#1  Recognize the Problem that led to the Bankruptcy:

If you've come to the bankruptcy law offices of Ariel Sagre, you've probably been through a difficult life event such as divorce, job loss or sudden medical illness. Carefully considering and understanding what led to your bankruptcy filing is half the battle in assuring that you won't find yourself in the same situation again. Developing a budget and living below your means will allow you to save money that you can reserve the next time a rainy day comes your way.

#2  Obtain a Secured Credit Card

There are credit card companies that will take a small deposit and extend you a small amount of credit so that you can begin establishing a credit history once again. The key here is charging very little every month and paying off the credit card in full at the end of each month.

#3  Pay all your bills on time

Timely bill pay weighs heavily on your credit score. Every bill must be paid on time, including the electric and water bill. All of your creditors have the ability to report late payments to your credit report.

#4  Stick to your credit cards for a long time.

Part of your credit score is dependent on how reliable you are over a long period of time. Sticking with the same credit cards, home and employer over many years helps to demonstrate that you are steady and lenders are more likely to extend you credit in the future.

#5 Don’t get Scammed!

There are many people out there trying to take advantage of people in desperate situations. Remember, if it sounds too good to be true, it probably is!  Watch out for people who offer to fix your credit overnight or people willing to lend but at astronomical interest rates. Always do your homework and read all fine print before signing up for any new loans or lines of credit.

#6 Protect Your Identity

I can't tell you how many people come to our law firm to file bankruptcy because their identity has been stolen and they cannot fix the situation. Take precautions. These are just some of the ways you can help to protect your identity: Shred your mail, pay with cash as often as possible, shop online through secure sites, never give your social security number out over the phone etc. 

Following these basic steps will put you on the right path towards establishing excellent credit so that you can once again take out a car or mortgage loan. 

Remember Sagre Law Firm is here to help you at every step of the way. If you have any questions about Bankruptcy and what it entails please call us at (305) 266-5999. 

Wednesday, January 18, 2012

Good Morning, dusting off the old blog in order to bring you the most relevant information regarding Bankruptcy and Foreclosure in Miami-Dade, Broward and Monroe county.

Did you know many people decide to file bankruptcy in late January? Here is an article from that explains the late January Bankruptcy phenomena that we typically see.

Bankruptcy: End of January a Popular Time to File
Jan. 17, 2012
Lauren Boyer

At the end of January, Springettsbury Township, Pa., bankruptcy attorney Timothy Baker sees an influx of clients hoping to clean financial house.

By this time, the tree is down. The holiday splurge is over.

"All of a sudden, there's this shift. Like, 'Oh my god. I have all these bills to pay,'" Baker said.

Somehow, those bills, wind up on his desk -- a last resort for new year's resolutions with no place else to go.

When all else fails, bankruptcy, a legal elimination of debt, can provide peace of mind.

But those who owe, he said, often go through years of contemplation before taking the plunge into bankruptcy court.

"People tell me they wish they had done it sooner," Baker said. "They're afraid somebody is going to yell at them or be judgemental."

And they often fear the worst.

"People think, 'Maybe I'll go to jail,'" Baker said. "I have to remind them that they did away with debtors prison in the 19th century."

Q: What is bankruptcy?

A: You're getting an order from the bankruptcy court effectively eliminating allowable debts.

Q: What kind of debts can I eliminate through filing bankruptcy?

A: Any unsecured debts, which are not backed by assets. This includes things like credit card debt and medical bills.

Q: What kinds of debts won't be eliminated through bankruptcy?

A: Student loans, child support or alimony, most taxes, court fines.

Q: Who typically files for bankruptcy?

A: It's mostly middle class people. All it takes, if you're living paycheck to paycheck, is one stroke of bad luck. Life happens.

Q: How does filing for bankruptcy affect my credit score?

A: It can stay on your credit report for up to 10 years. Most people bounce back fairly quickly in terms of credit.

Q: If I file for bankruptcy, is someone going to take back my car or my house?

A: In 98 percent of cases, you don't give up anything. No one is going to take your car, your house, your bank account or retirement. But if you want to keep your house and your car, you need to continue making payments. Bankruptcy relieves additional debt, so you can focus on those priority items.

Q: Who can file for Chapter 7 bankruptcy?

A: Generally, people who makes below the median income. In York County, for a household of four, that's in the high $70,000s per year.

Q: What if I make above the median income? Can I still file for bankruptcy?

A: Generally, yes. Under Chapter 13, which requires a partial repayment plan of debts over a period of three to five years.

Q: So, I'm going to eliminate my debt. Does that mean I can go crazy on my credit cards beforehand?

A: Terrible idea. You really ought to pay for what you buy. Bankruptcy is for honest people who want an honest fresh start. This is not for people who want to go on shopping sprees.

Q: How often can I file for bankruptcy?

A: Use sparingly. If there's another way out, I don't encourage people to file.

Q: What's the age range for people who file bankruptcy?

A: From college aged to late 90s. A growing segment is the elderly.

Q: How do I avoid bankruptcy?

A: Have good luck. All it takes is one illness, one job loss, or one family member with a health problem. And try to manage prudently as best you can. Try to be aware of what you're spending and what your priorities are.


1.5 million households filed for bankruptcy last year.

25 percent of residential properties nationwide are "underwater," meaning more is owed on the property than it is worth.

20 percent of U.S. families reported problems paying medical bills in 2010. Baker Law Firm has seen credit card statements that would take 2,669 years of minimum payments to pay the balance in full.

SOURCE: Timothy Baker, Springettsbury Township bankruptcy attorney


-This is going to ruin my credit forever.
-I'm going to be publicly humiliated.
-This is a personal failure. It's morally wrong.
-I'm going to go to jail.

Source: (c) 2012 York Daily Record (York, Pa.)