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Rebuilding Credit After Filing For Bankruptcy Relief In California

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Even if the economy is on the road to recovery, in recent months many people suffered debilitating debt and sought relief through bankruptcy filings.

Although bankruptcy can negatively impact a filer’s credit score, these proactive steps can help to rebuild it.

Tips on rebuilding a credit score

Steps that can aid in rebuilding a credit score include:

  • Examine credit report for errors
  • Use a credit card
  • Buy a house or finance a car
  • Watch out for scams

Those attempting to rebuild their credit score should start by getting a copy of their credit report and taking the time to carefully review it. It is important to make sure there are no mistakes and that all information is accurate. If, for example, the residence listed on the report is incorrect update it.

It is also important to use a credit card. This may seem counterintuitive, but using a credit card correctly can actually help build a credit score. This requires the user to make payments on time every month. Making these payments builds a positive credit history and helps to establish that the user can manage debt.

In a similar fashion, properly managing a larger amount of debt can also build one’s credit score. As a result, those with the ability to afford mortgage payments or car payments should consider financing one of these larger purchases. These purchases can have an additional positive impact on a credit score, much like a credit card, but only if payments are made in full and on time.

Avoid traps

Financial experts also advise those who recently filed for bankruptcy to be on the lookout for predatory lenders and payday loans. Predatory lenders provide loans at a very high interest rate while payday loans charge high fees. Credit counselors report payday loans have required consumers to pay up to 400 percent more than borrowed. As a result, those cashing a $100 check through a payday loan operation could end up paying as much as $40,000 to the payday company in fees.

In addition to predatory lenders and payday loans, it is also important to avoid scams promising to rebuild credit quickly. Rebuilding credit can be done, but it takes time and effort.

Bankruptcy in California

For those considering filing for bankruptcy protections, it is helpful to know some basics. Generally, bankruptcy begins by filing a petition with the bankruptcy court. Bankruptcy cases are filed in federal courts. In California, there are four U.S. Bankruptcy Courts: the Central, Eastern, Northern and Southern Districts of California.

A bankruptcy filing includes a statement listing all assets, income, liabilities and a list outlining the amount of debt owed and who the creditors are. Once filed, creditors are legally required to stop collection efforts against the filer, a process referred to as a “stay.” Depending on the type of relief requested, bankruptcy either results selling assets to pay off creditors or development of a repayment plan.

Bankruptcy law is complex. As a result, if you or a loved one is considering filing for bankruptcy relief it is important to contact an experienced bankruptcy attorney to help you decide if bankruptcy is right for you.

Medical Debt Can Be Debilitating, Bankruptcy May Offer Relief

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Medical costs are one of the main factors contributing to the need for bankruptcy relief in the United States. In fact, according to a study by researchers with Harvard Law School, medical debt accounts for over 62 percent of all bankruptcies.

The researchers surveyed over 2,000 individuals who filed for bankruptcy in 2007. Filers accumulated the debt either due to unaffordable medical bills or a loss of income due to an inability to work because of a disease or disability. Common medical causes for debt included multiple sclerosis, diabetes, injuries, stroke and heart disease.

The study also found most filers were middle aged, middle class, college educated adults. In addition, three quarters of these individuals had health insurance at the time the debt accumulated.

Tips to avoid medical debt

A strong health insurance plan can help provide a buffer against debilitating medical debt. Those in the study who had insurance but still needed to file for bankruptcy often had an inadequate level of coverage. This can be avoided by researching health insurance plans and choosing one that best suits your medical needs. It is also wise to choose a plan with National Committee for Quality Assurance accreditation.

Once the right plan is in place, follow the rules. Insurance companies often provide full coverage to in-network providers. Review the plan before scheduling appointments to make sure the provider you choose to see is fully covered.

If medical bills still become unmanageable, contact the provider and attempt to negotiate the amount owed. They may be willing to set up a payment plan or even reduce the bill.

Finding relief through bankruptcy

Even after these precautions are taken, medical debt can become debilitating. In these instances, bankruptcy may offer a needed fresh start. Bankruptcy laws are designed to protect people that can no longer manage their bills, either by liquidating assets to pay debts or developing a more manageable payment plan with creditors.

There are two main types of bankruptcy used by individuals who need help managing their debts: chapter 7 and chapter 13.

A chapter 7 bankruptcy petition liquidates all of the filer’s assets in order to pay off the debt. In situations where the debt is based in medical bills, the debt is discharged.

A chapter 13 petition creates a repayment plan that spans three to five years. The debt is categorized and paid in order of importance. Typically, medical debt falls low in the order of importance, similar to credit card bills, while child support payments and home mortgages are some of the first debts repaid. Debts that are not paid off upon completion of the court approved repayment plan are generally discharged.

Determining if bankruptcy is the right step for your financial future is difficult. Contact an experienced bankruptcy attorney to discuss your situation and better ensure your legal rights are protected.

Bank Of America Institutes a Policy Of Lies And Deceit; Employees Reveal The Disturbing Truth

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In June of 2013, homeowners all over the country were stunned when seven former Bank of America employees declared under penalty of perjury before the District Court of Massachusetts that Bank of America had made lying, deceiving, and bribing part of their home loan department policy.

Each employee described various deceptive practices Bank of America required of them when dealing with customers who were facing foreclosure and/or trying to obtain a loan modification. For example, one employee described denying modifications for hundreds of homeowners all at once simply because their applications had been on file for more than 60 days. Another employee stated that they were instructed to tell homeowners that they did not receive their email, fax, or FedEx even though their paperwork was entered in their file. Still more Bank of America employees were told to tell homeowners that their loan modification application was being reviewed even though no work had been done on it. Most shocking of all, some employees described receiving cash or gift cards for Bed, Bath, & Beyond, Target, and other retail outlets for meeting their quota on the number of loan modifications they denied in a period of time. The declarations further stated that for every ten homeowners they put into foreclosure, a bonus of $500.00 would be awarded.

This conduct is unquestionably reckless and cruel and amounts to fraud on a grand scale. United Law Center has been alleging the existence of this disgusting behavior for years, based on the testimony and other evidence presented by our clients. We encourage everyone to read through each of the statements linked below. If you read anything in these declarations that has happened to you in your communication with the bank, please contact United Law Center immediately! The actions described in these declarations are in violation of the Home Affordable Modification Program and the Homeowner Bill of Rights and can be used against the bank to stop your foreclosure and/or sue for fraud. Even if you have already been foreclosed on, you still have rights available to you to recover significant monetary damages for the injustice committed against you. Contact us today to schedule a free, no-limit consultation at 916-367-0622!