Credit and Credit Solutions

In April 2005, Congress made sweeping changes in U.S. bankruptcy law that will go into effect on October 17, 2005. It's called the "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005," and it means big trouble for Americans struggling with debt problems.

Credit Card Debt Solution What effect will the new law have on the practice of Debt Settlement (also called Debt Negotiation)? Will creditors still be willing to negotiate with consumers seeking to avoid bankruptcy? Will lump-sum settlements for 30%, 40%, 50% still be possible now that this tough new law has been passed?

When you declare bankruptcy, you are taking an official legal action — essentially saying, "I cannot repay all of my outstanding debts and want to make a fresh start." Unfortunately, a Chapter 13 bankruptcy filing will remain on your credit record for at least seven years, and Chapter 7 bankruptcy filings can stay there for 10 years. Either of these bankruptcy filing can affect both your credit score and how lenders perceive your credit worthiness.

Home Equity Line Of Credit The short answer is "YES." It will be "business as usual" in the collection industry. People that choose to file bankruptcy will definitely be affected for the worse, as I'll outline below, but those who choose to privately negotiate their way out of debt will notice very little difference. Creditors will still negotiate. Deals will still be made. And nothing much will change in the world of collections. In fact, there will be more need than ever for a viable alternative to bankruptcy.

debt solution of last resort. The effects of a bankruptcy filing are felt for 10 years (as it stays on your credit report for that long) and can make it difficult, if not impossible, to rent an apartment, buy a house, receive insurance, credit and, as mentioned earlier, even a job. Cash Central ® strongly advises its cash advance Missouri customers to seek alternate means of improving credit and escaping debt before considering bankruptcy.

Bad Credit Personal Loan The credit card banks lobbied with millions of dollars to get this law passed. They've been working at it for about a decade. Now they are celebrating. These are the folks that think the bankruptcy system has been abused by wealthy individuals, who have defrauded creditors when they could have repaid their debts.

Aside from Americans declaring bankruptcy at alarming rates (one in every 100 families are affected by a bankruptcy), Americans also carry $683 billion in revolving credit card debt. Remember, that’s not what’s charged every month, rather what Americans owe currently on their credit cards. These are outstanding, unpaid balances. Even more frightening, according to the Cambridge Consumer Credit Index, 47% of Americans pay only the minimum payment each month.

Credit Solution Of America The facts tell a different story:

1. During the period from 1995 to 2004, bankruptcy filings doubled, while in that same period, credit card industry profits TRIPLED.
2. Credit card companies have not been held accountable for their targeting of "easy credit" to individuals who could not afford such loans, which in turn has contributed to the wave of bankruptcies over the past decade.
3. For people 60 or older, 85% of bankruptcies are caused by medical bills or job loss.
4. A divorced woman is 300% more likely to file bankruptcy than a married woman.
5. African-American and Hispanic homeowners are 500% more likely to file bankruptcy than white, non-Hispanic homeowners.

Auto Financing. Auto Loans for people with bad credit, bankruptcy, repossession, high risk, terrible, or no credit for the purchase of new or used car from participating car dealers nationwide. Auto Loan Bad credit auto loans and car loans financing for people with bad credit, bankruptcy, poor credit, slow credit, bankruptcy or credit problems even first time buyers for the purchase of a new or used auto.

Credit 6. Approximately HALF of all bankruptcies are filed because of medical expenses due to lack of health insurance, or lack of adequate coverage leading to uncovered expenses.

1. The median income of bankruptcy filers is $25,000. (So much for the "rich" abusing the system.)

Nevertheless, Have you paid your bills on time Payment history typically is a significant factor. It is likely that your score will be affected negatively if you have paid bills late, had an account referred to collections, or declared bankruptcy, if that history is reflected on your credit report. What is your outstanding debt Many scoring models evaluate the amount of debt you have compared to your credit limits. If the amount you owe is close to your credit limit, that is likely to have a negative effect on your score.

Bad Credit Debt Consolidation The new law was a GIFT to the credit card banks, pure and simple. Some estimates show that it will add another $5 BILLION to the industry's bottom line. In other words, the bill is about profits and not much else.

Credit Card Solution Since my whole approach is about AVOIDING bankruptcy, I won't go into a detailed analysis of the provisions of the new law. But just to summarize, the net effect is that many (if not most) people seeking relief under Chapter 7 bankruptcy will be forced to file under the Chapter 13 version instead. In plain English, that means that most filers will be forced to pay back a portion of the debt over a 3-5 year schedule set by the court.

Credit Union One of the worst aspects of the new bill is the use of IRS "allowable" expense schedules for determining your monthly budget. In other words, your actual living expense are thrown out the window in favor of the IRS standards (and we all know how generous the IRS can be!). So if your actual rent is $1,300 per month, and the IRS says it should be $1,045 for your county and state, that's TOUGH! The court will only allow the $1,045, period.

Bad Credit Credit Card In short, people attempting to file bankruptcy after October 17, 2005 are in for an extremely rude awakening! Goodbye cell phones, cable TV, high-speed Internet access, movies, meals with the family, and anything else beyond the minimum allowable expenses as determined by the IRS and the courts.

Credit Card Processing So what makes me so certain that the banks will be as eager as ever to settle with consumers for 50 cents on the dollar or less? Simple. Two words: stealth bankruptcy.

Apply Online For Credit Card Hundreds of thousands of Americans are going to discover the new reality of this tough law, and they are going to forgo the court system of filing bankruptcy in lieu of what I call "stealth bankruptcy." A stealth bankruptcy is when you move (with no forwarding address), change your phone number, and drop off the radar screen to live on an all-cash, no-credit basis. Many people already choose this path rather than deal with the invasion of privacy that comes with formal bankruptcy. After the new law goes into effect, HUGE numbers of people will go this route.

Bad Credit Car Loan The banks will settle as they always have. They will be more starved than ever to take a good deal when you offer it to them. Consider these points:

Credit Solution Corp A. The creditor doesn't know whether or not you'll still qualify under Chapter 7 or Chapter 13. They still face the risk that you will qualify for Chapter 7 and end up discharging your debt in full, which means they get NOTHING.

Credit Repair B. Even if you file Chapter 13 under the new guidelines, the creditor will still only receive 30-50% of the debt on average (much less in some cases).

Bad Credit Loan Mortgage C. Under Chapter 13, it will still take the creditors 3-5 YEARS to recover that 30-50%.

Solution Credit Counseling D. A lump-sum of 30-50% TODAY is far better than the same amount collected over 3-5 years.

Credit Score Of course, I certainly expect debt collectors to use the new law to harass and intimidate people who don't know and understand their rights. You can expect them to say things like, "You can't file bankruptcy under the new law, so you'd better pay up today!" They will bully and threaten as always, but at the end of the day, they will still accept reasonable settlements. As I said, it will be "business as usual" in the world of collections.

Bad Credit Auto Loan Charles J. Phelan has been helping consumers become debt-free without bankruptcy since 1997. A former senior executive with one of the nation's largest debt settlement firms, he teaches consumers a do-it-yourself method of debt negotiation & settlement. Expert training via audio-CD plus personal coaching helps debtors achieve professional results at a fraction of the cost. To learn more, please visit http://www.zipdebt.com

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