Cleveland Bankruptcy Lawyer Blog

Ohio residents considering filing for bankruptcy should give serious thought to hiring an experienced bankruptcy attorney. Although it is possible to file your own bankruptcy petition, there are many risks to doing so and you will probably find that the peace of mind you get from having an attorney to guide you through the process is well worth the legal fees you pay. Some important reasons you should hire an attorney include:

1. Hiring an attorney is more affordable than you might think. Our firm charges a flat fee and offers payment plans to our clients so we can usually make arrangements that will work for just about anyone.

2. An attorney can protect you from creditor harassment. For example, once our firm is retained you can refer your creditors to us when they call. Our firm will field the phone calls from your creditors and verify that we have been retained to represent you. After this, your creditors will stop contacting you and, instead, contact our firm for progress updates on the filing of your case. Once your case is filed creditors are prohibited by federal law from contacting you. To some debtors distressed by relentless creditor calls at all hours, this relief from creditor harassment alone may be well worth the legal fees you pay.

3. Hiring an attorney will protect you from making mistakes. Your attorney will make sure you comply with the often confusing bankruptcy laws, requirements and deadlines so you do not risk having your case dismissed or your discharge denied. Certain aspects of the new Bankruptcy Abuse and Consumer Protection Act, such as the "means test," can be extremely difficult to navigate alone and even a little mistake can result in dismissal of your case.

4. Your Attorney will make sure your bankruptcy paperwork is completed correctly. Many people make incorrect assumptions about how to prepare their bankruptcy petition. One of the most common assumptions is that you simply leave out things you want to keep, such as car, instead of properly scheduling it. In fact, a mistake like this could actually result in loss of the car or even dismissal of your case. It is important to realize what you do not know and, unless you have a strong understanding of bankruptcy practices and procedures, you probably should not risk filing your own case.

5. You may have to go to court. In some instances a bankruptcy case will involve motions, such as a motion for relief from stay, that will be set for hearing before a bankruptcy judge. If you do not understand the motion, the customs and procedures of the court or the legal arguments necessary to protect your interests, you could find yourself losing your rights to property, money or your discharge. An experienced attorney can make sure this does not happen and can handle most routine hearings (other then your meeting of creditors) without you even needing to be present.

6. You will need to understand how bankruptcy procedures, such as reaffirming a debt, will impact your rights and responsibilities so you do not get yourself into trouble or undertake an obligation you cannot handle, which defeats the purpose of filing for bankruptcy protection. Additionally, if you do not properly prepare your paperwork then a judge may not approve your reaffirmation and you could end up losing property you wish to keep such as a house or car.

In summary, I believe most people will find that the time you save, the relief you will get from creditors and the peace of mind that comes with knowing your interests will be protected and your case will proceed smoothly will more than make up for the reasonable legal fees you will pay for an attorney to handle your case. If you would like to learn more about how an attorney can help, please feel free to contact our law firm for a free consultation.

Posted by Justin M. Smith | Permalink | Email This Post | Comments (0)

Posted In: Chapter 13 Bankruptcy , Chapter 7 Bankruptcy , Consumer Credit & Credit Reporting , Foreclosure

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Last week Fair Isaac Corporation began offering what they claim is a new and improved FICO credit score dubbed "FICO 08." TransUnion, LLC (one of the three major credit bureaus) also announced it will begin offering the new FICO score with the two other major credit bureaus expected to follow soon. The FICO score is a score developed by the Fair Isaac Corporation in an attempt to evaluate a borrower's likelihood of default.

Fair Isaac claims the new FICO 08 score will give lenders a "predictive boost where lenders need it most." The score will retain the same credit range, from 300 to 850 (the higher the better). However, according to the Wall Street Journal, the new score is supposed to be more forgiving to those that have just one slip-up or late payment and significantly harder on repeat offenders. Fair Isaac also claims the new score is also supposed to provide a more thorough or "deeper" analysis of poor credit borrowers and borrowers with little or "thin" credit history. Fair Isaac has said that consumers with accounts in good standing may see their score rise slightly and that the overall accuracy of credit decisions should increase by up to fifteen percent.

Ultimately, the new FICO 08 will probably not have a significant impact on most Ohio consumers for quite some time. The Wall Street Journal reports that it could be "months or even years before the score is widely available to consumers" because most lenders will want to take time to evaluate the score and determine how well it works with their processes before implementing it and some lenders may even choose not to use the new score.

To learn more about your credit score, please see the prior entry Get to Know Your Credit Score Ohio. For information on where and how to get your credit report, please see the prior entry Ohio Credit Concerns: How Long Will a Bankruptcy Filing Stay on My Credit Report?

Posted by Justin M. Smith | Permalink | Email This Post | Comments (0)

Posted In: Consumer Credit & Credit Reporting

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You live in Ohio, perhaps Cleveland or Akron. On a random Tuesday you get a credit card offer in the mail, probably one of dozens you get regularly. The card promises a great rate on balance transfers so you decide to apply online for a "sixty second decision." You wait anxiously for what seems like far more than sixty seconds while staring off into space and thinking about what you will use your new card for. Sadly, when you look back at the screen you see a notification saying "I'm sorry, you could not be approved at this time."

Time to check your credit score and find out why. For information on where to get your credit report, check out this earlier blog entry Ohio Credit Concerns. Next, when you get your report, you will need to know what is bringing down your all important credit score.

The most widely used credit score is a "FICO score," named after the Fair Isaac Corporation that created it. The FICO score is a three digit number (ranging from 300 to 850) intended to gauge a person's creditworthiness when they apply for credit.

The FICO score, according to Fair Isaac Corporation, is composed of several different factors that are weighted as follows:

• 35% is based upon timely payment to a lender that reports to one of the three
major consumer credit bureaus.
• 30% is based upon the amount you owe or the amount of available credit you
have vs. the balances you carry (i.e., if your credit cards are all “maxed-out” this
part of your score will be low).
• 15% simply reflects the length of your credit history, with a longer history being
preferable because it shows lenders your track record.
• 10% represents the type of credit used, such as student loans, credit cards, car
loan, mortgage, etc.
• 10% represents new credit, how many accounts you've applied for and/or
opened recently.

If you are denied credit, you will be mailed a written statement citing the reasons you were declined. The notice will also state that you can obtain a free credit report and you should take advantage of the opportunity to review your credit report. When you do, use the information above to see what you can do to improve your score. You should also check for any inaccurate information such as accounts that are more than seven years old that should be removed, closed accounts that are still being reported as opened, or information that does not pertain to you. In general, it is a good idea to review your credit report at least once a year so you are not unpleasantly surprised when you need credit. You can obtain a free credit report once a year at AnnualCreditReport.com.

Posted by Justin M. Smith | Permalink | Email This Post | Comments (0)

Posted In: Consumer Credit & Credit Reporting

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Ohio, like most of the nation, is likely to see an continuing rise in the number of mortgages in default in 2009. The Wall Street Journal reported that nationwide, the number of defaults is expected to rise from 4.67% in 2008 to as high as 7.17% in the fourth quarter of 2009. Adjustable rate mortgages are mostly to blame. Many of the notorious "teaser" rates that lured homeowners and new buyers in are expiring, causing the loan to adjust to a higher interest rate and a new higher payment that the homeowner can no longer afford. The Journal reported that there are a lot more loans that will reset in 2009 through 2011, so the level of defaults is likely to continue to climb for several years. Unfortunately, even when the economy rebounds it will take some time for consumers to respond. This is because even if business improves or an unemployed consumer finds a job, it will still take time to build up the funds to start repaying.

If you are in an adjustable rate mortgage and are no longer able to make your payment there are options available. If you decide you are simply unable to afford the mortgage and your situation is not likely to improve, you can use a Chapter 7 bankruptcy to cancel the mortgage, return the house to the lender and end your responsibility for payments on the first mortgage as well as a second mortgage or home equity line of credit. If you have significant equity in your house and would like to keep it, but need a way to catch up on payments that have fallen behind and prevent foreclosure, a Chapter 13 bankruptcy will help. If you are behind on your mortgage or your mortgage has adjusted and you are no longer able to meet your payment you should contact an experienced bankruptcy attorney right away to discuss your options.

Posted by Justin M. Smith | Permalink | Email This Post | Comments (0)

Posted In: Consumer Credit & Credit Reporting , Foreclosure

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In July of 2010, Ohio credit card holders will see some changes that may help them bring their credit card debt under control. On December 18, 2008, the Federal Reserve Board approved rules designed to help protect credit card holders from the unfair acts and practices employed by many credit card companies. The changes are also aimed at making credit card statements and billing practices more straight-forward and easier for customers to understand. The changes were adopted under the Federal Trade Commission Act. Along with other changes, the rules will:

• Forbid banks from imposing interest charges using the confusing “two-cycle” billing method (a method of calculating a customer’s average daily balance by using two billing cycles instead of one. This typically causes finance charges to be higher and eliminates grace periods for customers that carry a balance. In this method, if the bill is not paid in full at the time of the first billing, interest becomes retroactive all the way back to the first purchase date).

• To stop creditors from imposing unexpected interest charges or increasing the interest rate during the first year the account is open or increasing the interest rate charged on pre-existing credit card balances.

• To require creditors to provide customers with a “reasonable” amount of time to make their payments.

• To prevent creative payment allocation methods that maximize interest charges to the detriment of customers.

• To combat predatory subprime credit card practices by limiting the fees that can be charged to reduce the available credit.

The Federal Reserve Board has indicated that these reforms, the "most comprehensive and sweeping reforms ever adopted by the Board for credit card accounts" according to Federal Reserve Chairman Ben Bernanke, are intended to increase transparency, fairness, competitiveness and to help consumers better manage their credit accounts and avoid unnecessary costs. These changes take effect July 1, 2010. For more information you can visit the Board of Governor's of the Federal Reserve System. If you are struggling with credit card debt, making only the minimum payments and carrying high balances you should contact a consumer bankruptcy attorney to learn your options and find out how you can eliminate credit card debt and get a fresh start.

Posted by Justin M. Smith | Permalink | Email This Post | Comments (0)

Posted In: Consumer Credit & Credit Reporting

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If you live in Ohio and are planning on filing for bankruptcy then a credit report can help you in several ways. Some of these include:

1. Ensuring that all creditors are listed and that the creditor names, addresses, type of debt, balances due and account numbers are accurate. This is important so that all creditors are given proper notice and all debts are accurately listed so they are covered by your bankruptcy filing.

2. A credit report may help us find creditors that you have overlooked or forgotten about. In order for a debt to be discharged, it must be properly listed, so it is important that we are aware of all of your debts.

3. Credit reports can alert our firm to judgments or pending lawsuits against you that need to be addressed and that you may not be aware of.

4. Credit reports can also alert us to liens against your property for which we may need to seek lien avoidance in order to protect your property.

5. The credit report could alert us to co-signers on some of your debts, which are important to list in your bankruptcy.

6. If you are married, then we might find items on your credit report that you are unaware of and the report will also help us determine if you should file individually or jointly with your spouse.

7. We may find out about debts that were incurred by a prior spouse, possibly without your knowledge.

8. The credit report may alert us to mistakes on your report and you can then take action to correct the mistakes.

9. The credit report often provides information on the collection agencies representing creditors for debt collection. This allows us to notify the collection agencies of the bankruptcy so that collection efforts stop.

10. If the Internal Revenue Service has a tax lien on your property, the credit report will alert us so that it can be dealt with properly.

11. Knowing what is on your credit report can help you take steps to improve your credit and get back on track to a better credit rating for important purchases after your debts are discharged.

Our law firm can provide Clients with a three bureau credit report that includes all information for the last ten years and is specifically prepared for use in preparation for bankruptcy filing. Our firm will provide you with a copy of the report for your review. To learn more about how a credit report can help you in bankruptcy, contact an attorney now.

Posted by Justin M. Smith | Permalink | Email This Post | Comments (0)

Posted In: Chapter 13 Bankruptcy , Chapter 7 Bankruptcy , Consumer Credit & Credit Reporting

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A commonly asked question about bankruptcy is how long will it affect a debtor’s credit report. A bankruptcy filing will generally be reported on your credit report for seven to ten years. A Chapter 13 (repayment plan) will usually be reported for seven years, while a Chapter 7 (fresh start) will usually be reported for ten years. However, the actual length of time depends somewhat on the individual consumer credit reporting agency.

Your credit score will drop when the bankruptcy is first reported and then will gradually improve over time once you have received your discharge and as potential creditors begin to view you as someone with little or no unsecured debt (i.e., credit cards) that cannot file bankruptcy again for a while, rather then someone with a lot of debt that might file bankruptcy at any time.

You should also be aware that the bankruptcy court does not have any influence on your credit report and does not report any information directly to the credit bureaus.

After filing bankruptcy and receiving a discharge it is a good idea to obtain a credit report to make sure that the bankruptcy has been properly reported and that your debts are showing the proper status and/or have been removed. If your credit report has errors or discharged debts have not been removed, your bankruptcy attorney should be able to help you get your report corrected or guide you in what steps to take.

Under a recent federal law you are entitled to one free credit report per year from each of the three consumer credit reporting agencies. Each of the bureaus may have different information so you should check all three and correct any inaccuracies.

To get your free credit report you can write or call:

Annual Credit Report Request Service
PO Box 105281
Atlanta, GA 30348-5281
1(877) 322-8228

You can also contact any of the credit bureaus directly by clicking on the links below or calling the number listed:

Visit Equifax or call 1(800) 685-1111
Visit Experian or call 1(888) 397-3742
Visit TransUnion or call 1(800) 916-8800

Contact a bankruptcy attorney to learn more about how a bankruptcy may help you and how it will affect your credit.

Posted by Justin M. Smith | Permalink | Email This Post | Comments (0)

Posted In: Chapter 13 Bankruptcy , Chapter 7 Bankruptcy , Consumer Credit & Credit Reporting

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Many people in Ohio struggling with the decision to file bankruptcy are understandably concerned that it will hurt their credit.

While it is true that filing bankruptcy will lower a high credit score, if you are one of the many people that have maxed-out credit cards, several late payments or your credit score is already poor, then filing for bankruptcy protection may actually help you improve your credit more quickly.

Better yet, it will do this with the added benefit of stopping harassment by creditors and giving you a fresh start. Part of the reason bankruptcy may improve your credit score (after you receive a discharge) is that you will eliminate your high balances and improve your debt-to-income ratio. Before filing, creditors may view you as an extreme credit risk due to a lot of consumer debt, little income and the possibility that you may file bankruptcy at any time after they extend you credit. Once you have filed and recieved a discharge, creditors will view you as having little debt, more disposable income and unable to file bankruptcy again for several years all of which make you less of a credit risk. For this last reason it is important that you use credit carefully and responsibly after you receive your fresh start through bankruptcy.

On the other hand, if you currently have excellent credit then you should consult with an attorney before you fall behind on payments to discuss your options and determine if a bankruptcy alternative, such as debt settlement, might work for you. Keep in mind that if you wait until you are already behind you may reduce the options available to you.

Posted by Justin M. Smith | Permalink | Email This Post | Comments (0)

Posted In: Consumer Credit & Credit Reporting

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