I have had the experience of many people calling me to find out if I am certified to provide Bankruptcy counseling. I am not, as I try to spend very little time on the subject in hopes of helping people avoid it all together. I used to explain to people that there may be a way to avoid Bankruptcy all together but by the time they call me they've made up their mind and just want to get it over with. My hope is to try to encourage people to at least consider working out their issues and try to avoid Bankruptcy. If you still want to file Bankruptcy, recognize there is still some work required on your part to recover. Keep in mind my objective is to encourage you to use your credit report to overcome your financial hardships and demonstrate strong Risk Characteristics. In other words, use your credit report as your adult report card. It's easier than you think.
Many people are overwhelmed with debt and are tired of the harassing calls from creditors. While I can't answer all your questions or concerns in this one blog, I'd like to attempt to get you to consider some credit or debt issues that may help you make a more balanced decision.
Their are two types of Bankruptcy to consider, Chapter 7 ,which relieves you of all your debt or liability or a Chapter 13, which is a debt consolidation plan managed by a court appointed trustee. You will qualify for one or the other based on your current financial situation and while most people are able to obtain credit afterwards (after their debt has been discharged and sometimes even durring), the terms and conditions are not always desirable and definitely are not going to be competitive. What most people don't know is there may be a good deal of your debt that is noncollectable debt in the first place and while it looks like you have a lot of debt, it could be that you have collectors asking and sometimes harassing your for money they are not entitled to.
For instance, if you had a credit card that you opened up in the state of IL and you stopped paying on it in January 2004 and later it was sold to a collection agency, there are three things you need to do immediately if it is on your credit report and/or your are receiving letters regarding the debt. Before you begin anything get a free (no hidden fees but you'd have to pay if you want your score) copy of your Credit Report from www.annualcreditreport.com and keep it. You can use it for proof if a Collection Agency ever comes along and tries to collect on a debt that you have already fought and won, as they will try to change the dates and the amount owed to keep it on your credit report so they can continue to try to collect. Be mindful just because it is noncollectable in a court of law does not mean it gets taken off your credit report. It can still remain for 7 years as long as the Collection agency and Validate the the accuracy of information. We'll get into that more latter.
First: Determine if they are licensed as a collection agency in the state of IL by going to www.idfpr.com and search License Look Up. In the state of IL and many other states a collection agency must be licensed as a Collection Agency, not just licensed to do business. I'll explain later what to do with this information if you are unable to verify that they are licensed as a Collection Agency. Second: Contact the original creditor and try to get them to give you at minimum the date the account was opened, the last time you made an on time payment and the amount they say you owe. This is like pulling teeth and may require several calls demanding to speak to a live person along with some research on how to get to a live person, but it will save you thousands of dollars considering the grander scheme of things. Once you've confirmed that this is more than 5 years old, be sure to get the name (including either the last name or initial) and if they do not include a reference to their last name ask for an employee ID number and make note of the best number to contact their department. I'll explain later what to do with this information as well. Third: Look up the amount a collection agency can tack on to the original amount owed. Many of them will try to keep the interest rate the original creditor was charging. Look it up for your state. In the state of IL the maximum a collection agency can charge is 5% interest from the time they obtained the debt and 9% if a Judgment has been passed. They can not continue to charge the same amount the original creditor was charging. Now its time to forge all your ammunition together. Consider all conditions of legitimacy (of course there are still others that can help you but again I can't cover everything), then write your letter to the debt collector accordingly. Now this letter should include a request to see either their license number or a copy of their license along with a copy of any documentation with your signature confirming you opened the account and a copy of the last payment statement. If they are unable to produce this information, they are in violation Fair Debt Collection Act laws. Remind them that if they pursue any further collection activity including selling the debt to another collection agency or attempting to file a judgment, you have no choice but to file a complaint with the Federal Trade Commission and the Attorney General. When sending the Collection Agency this letter, be sure to either fax it and hold on to your fax confirmation or mail it, return receipt requested. Be sure to prepare yourself to follow up with the Federal Trade Commission and the States Attorney's Office if they continue to attempt to collect but refuse to respond to your letter. It may seem like a lot of work but if you are sole bent on filing Bankruptcy, you can pace yourself and get this done. If at some point you give up, then at least you gave an effort. Besides, you'll feel empowered once you've won your first few.
If you've decided to file Bankruptcy and think you're going to be more at ease, prepare yourself for recovery. You should be able to have a Credit Score of over 700 within 2 years of discharging from a Bankruptcy but it takes some doing, which I'll have to cover at another time.
If you think this is too overwhelming, please feel free to contact S&C Financial Credit Resolutions Group at 773-383-0849 and visit our website at www.sandcgroup.com.
As Always, Be Blessed,
CC
No comments:
Post a Comment