A. Bankruptcy is an inevitable fact of life for many consumers today.  Although the economic crisis mainly is behind us, it has left in its wake a portion of society struggling with debt.

Even though most people may have been perfectly qualified for the funds for which they were approved, circumstances could change suddenly and mean a drastic change in lifestyle and how they look at their financial life.  Loss of employment, illness and other factors are beyond everyone’s control.

Bankruptcy is available in two ways: Chapter 7 and Chapter 13.  A chapter 7 bankruptcy means the court will forgive most debts you have, except for federal & state income tax and student loans.   A Chapter 13 bankruptcy means a schedule of repayment to the creditors, most often at a negotiated amount worked out between the debtor and the courts.  Both bankruptcy types will stay on your credit report for 7 years and will lower your credit rating.

The best thing to do if you have filed Chapter 13 is to look for a low interest credit card.  This is a great way to use a credit card to rebuild credit. These will enable you to purchase items at a small amount, paying the total balance due when the bill comes.  Try to accomplish this consistently to establish a pattern of paying on time and that you can afford what you are purchasing.

Chapter 7 bankruptcies are a little trickier to work around.  You are virtually unable to be eligible for any amount of credit for about a year, maybe even two.  But once you are able to find one, ask for a minimal amount so that you are able to pay the balance off as soon as the bill becomes due.

It is time consuming and will take a while, but you can rebuild credit after bankruptcy, and improve your credit score.

* We were so impressed with Lexington Law that we decided to become a sponsor and put up this website. Get a FREE credit consultation with credit repair experts by calling 1-800-298-4297

We didn’t file bankruptcy – but came close. Instead we used a credit repair attorney to get our finances back on track.

Here are several of the key differences between the old regulations and the new ones put in place:

• Before, banks could raise interest rates on your card at any time, which included the rate on existing balances.  This also included consumers who were never late on payments and had excellent credit.  Savvy borrowers would often call lenders with whom they a good credit relationship to lower their interest rate if the bank wanted to save the relationship.
• New legislation now states the interest rate cannot be raised in the first year after the account is opened unless an introductory rate has ended.So if you are told you are getting a great rate of 2% for three months, after the three month period has expired, the bank has the right to raise it to 21% if they want.  You must be notified 45 days in advance of this rate change.
• If you have an existing account, the rate can’t be changed unless the account is 60 days past due. However, if you make the payments on time for six straight months in a row, the rate must be restored to the original amount.

When it came to disclosures, this was really confusing.  The fine print was hard to read and understand, and any information regarding the fees, rates, and penalties for other things like cash advances was hard find.  It was also just about impossible to find any computation regarding how much it would take to pay the total balance off.

Now, cardholders are shown how many months it will take to pay off the credit card debt, including only paying the minimum amount.  Consumers are now also shown how much it would take a month to pay it off in three months.

This change will help you get your credit card balances down to a range which helps improve your credit score. Many use credit cards to rebuild credit so this is a bonus for those people.

Perhaps the biggest change has come in the way service fees are computed and shown.  Before the new law, banks could charge as much as they wanted.   Annual fees, activation fees and any other fee they seemed to pull from thin air could be marketed.

This type of lender targeted the problem credit card holders, who relied on sub-prime lending and often predatory practices.  Now, all fees must be capped at 25% in the first year – but after that, there is no cap.

Grace periods, which were a easy way for the bank to make money since they shifted the due dates around periodically, causing payments to appear late, now are required to remain consistent.  The statement has to be mailed 21 days before the payment due date, and no charged or fees can be computed before that time period.

Previously over the limit fees were charged when a cardholder exceeded their limits.  The over limit charge could also be put in place if the interest rate charge or late fee brought them over the amount.  This is no longer allowed unless the cardholder agrees to be billed if they go over their limit.  There is also a limit of being billed the over the limit fee to the billing cycle, whereas prior it could be done several times within a month.

Also, before if you were late on paying a utility bill or a loan, it was considered a “Universal Default” and would allow the credit card companies to also raise the interest rate on your credit card.  No longer.  Unless the original agreement spelled out a limited promotional amount with an increase to be determined at a later date, this is now illegal.   Also, if you have older accounts, you must be informed in writing 45 days before a new rate increase is to be applied.  You must be given the option to cancel the card and pay down the balance at the old interest rate.  The card company must review the account once every six months if you want the rate assessed and be dropped back.

* We were so impressed with Lexington Law that we decided to become a sponsor and put up this website. Get a FREE credit consultation with credit repair experts by calling 1-800-298-4297

College students were most often the hardest hit with credit card applications, being given the credit without having income or any background checks.  Now they can no longer be approached until they are 21 years old.  If the student wants to use a co-signor or does have substantial income they have special deals to accommodate them.  But the bottom line is, banks are no longer allowed to just hand them out to students, creating a platform for future financial situations they can’t handle.

-Terry

Dear Terry,

This sounds like more of a bureaucratic oversight than a deliberate attempt to refuse payment. Did you attempt to call them to resolve the issue.

Generally speaking, almost any banking institution will allow another to pay a debt – even if your name is not listed on the account.

-Ben

* We were so impressed with Lexington Law that we decided to become a sponsor and put up this website. Get a FREE credit consultation with credit repair experts by calling 1-800-298-4297

It seems as though Midland is on a rampage to buy up all the junk consumer debt and chase down the debtors. As a result, people with bad debt are completely baffled on how to deal with a collection agency.

When large corporations purchase mass quantities of debt and accounts are sold over and over again, mistakes are inevitable. Unfortunately it’s the consumers who usually get the short end of the stick by way of harassing phone calls and letters and credit report errors.

I found this video where the consumer was able to get Midland to contact the bureaus and remove all the negative credit!

* We were so impressed with Lexington Law that we decided to become a sponsor and put up this website. Get a FREE credit consultation with credit repair experts by calling 1-800-298-4297

This is about as close to an apology from a credit bureau that you will ever see!

However, I felt obligated to share the following secret.

This secret is a 100% legal way to NOT pay your bills. (It isn’t really a “secret” at all yet so few people bother researching it so it is often ignored.)

Ok – here it is: Use the Statute of Limitations to NOT Pay Your Bills

Here’s how it works:

The statute of limitations is a legalism created by our lawmakers. It creates time limits on certain debts.

In other words, you may not have to pay certain debts after a certain amount of time passes. (I think of it like a “shot clock” for creditors).

I don’t want to get into a super detailed explanation here because it could go on for pages and I’m not a statute of limitations credit lawyer.

However,  I can tell you about the basics which include the following:

- The statute of limitations for credit card debt is usually between 4-6 years. (check your local state laws here at bankrate.com)

- A payment or a promise to pay tolls the statute of limitations. So, if you made a small payment towards an old bill, the clock will start from the beginning.

- The statute of limitations eliminates your legal obligation to pay a debt…not your moral obligation to pay that debt.

In other words, if a creditor tries to sue you to collect an expired debt, you could use the statute of limitations as as defense.

- Creditors and collection agencies will keep trying to collect expired debts. They assume (correctly) that most people are ignorant about how to use the statute of limitations to their advantage.

- The statute of limitations will not stop bill collectors from calling and trying to get money from you.

(sorry, it can’t help you in this department – but you can at least feel better knowing that any threats a bill collector makes to sue you are just empty threats)

I’m sure that I’ll get some hate mail because I sent out this information.

However, I’m in no way encouraging you not to pay your bills. My job is to educate you. Laws are created for a reason. It’s not my job to judge whether those laws are fair or not.

My opinion is that these laws were created for some good reasons and that we should use them to our advantage.

If you can use the statute of limitations as leverage when dealing with unethical, unlawful, or rude bill collectors, then I’ve done my job.

By the way, by the time the statute of limitations expires on a debt, it has usually been bought and sold so many times that the current creditor probably paid no more than one or two pennies on the dollar.

Often that same bill collector will try to add ridiculous interest and fees and attempt to gouge you for 150-200% of the original debt.

* We were so impressed with Lexington Law that we decided to become a sponsor and put up this website. Get a FREE credit consultation with credit repair experts by calling 1-800-298-4297

If you have any questions or comments, feel free to post directly below

If you plan on using credit cards to make purchases this Holiday Season, why not kill two birds with one stone? There are a few simple steps you can follow to use credit cards to rebuild a bad credit score.

First, educate yourself on the credit scoring algorithms. Although these formulas are highly secretive, there are some things you know for sure. For instance, credit scoring formulas take your Utilization Ration into account. Your Utilization Ratio is the amount you owe on a card compared to the available credit.

* We were so impressed with Lexington Law that we decided to become a sponsor and put up this website.

See the other two steps to using credit cards to rebuild credit here. Get a FREE credit consultation with credit repair experts by calling 1-800-298-4297

The New York Times breaks down your new credit card legislation. My favorite part of the new laws is that companies can no longer allow charges to go through even though you are at or beyond your credit card limit. Previously companies would allow you to make purchases which pushed your card over its limit so they could ding you with a $39 over-the-limit fee.

* We were so impressed with Lexington Law that we decided to become a sponsor and put up this website.

Get a FREE credit consultation with credit repair experts by calling 1-800-298-4297

Now the new credit card rules prohibit this practice. You must opt-in to get over limit fees. This, along with the other credit card laws make it easier for people to escape credit card debt.