It’s quite an obvious fact that Americans always carry their credit cards while they walk out of their home. But they seem to be quite irresponsible in handling their cards. Thus, they frequently fall in debts. If you’re in the same situation, then you must look for some credit card debt elimination methods that can help you repay your debts soon. You can enroll in a debt consolidation program that can help you repay your debts as well as build up your credit score.

• How a debt      consolidation program works?

When you’ll approach a debt consolidation company, the representative of the company will assess your financial status and suggest you some ways to save your hard earned money. They will negotiate with your creditors to reduce the interest rate on your cards and consolidate your debts into single monthly payment. Now, you have to make only one monthly payment to the consolidation company and the company will accordingly distribute it to your creditors. This way you’ll soon be able to repay your debts.

• Can this process help      you build your credit score?

Debt consolidation program is the only debt relief option that can boost your credit score. It’s because, in this program as the interest rate on your cards will be reduced your monthly payments will become affordable. This will help you stay regular with your payments. As a result, you’ll be able to prove yourself as a responsible debtor to your lender. Initially when you used to make your payments, maximum part of your payment was utilized to pay the interest. Thus, reduction of your debt amount was negligible. After enrolling in the program, since the interest rate on your credit cards will be reduced, maximum part of your monthly payment will be utilized to repay the principal amount. This will reduce your debt amount soon. Your credit utilization ratio will also increase and as a result your credit score will get boosted.

Lastly, though a debt consolidation program can help you repay your debts, but you must remember one thing that you have to stay current with your debt payments. If you miss a single payment, then this program will become inactive for you and you’ll seriously hurt your credit score. Thus, try to save as much as you can. Lead a frugal life or look for passive earning options to boost your savings which you must utilize to stay regular with your debt payments.

Author: Sidney Terrell

Bankruptcy, however, does have some alternatives. A debtor who is aware of his incapacity to pay debts as they become due should consider entering into a compromise with the creditor and have an informal arrangement to schedule payments. But as it is informal and not legally binding, the creditor on a whim, could renege on the arrangement and demand the full payment of the debt.

Another alternative is the administration order. Instead of paying directly to the creditors, this court-based procedure would require the debtor to make regular payment to the court. However, this is only applicable to debts not more than £5,000 and a regular income is necessary to make the monthly repayments. Irregular payments would result to the cancellation of the court order. In such case, the debtor will be subjected to the restrictions imposed on a bankrupt individual.

IVA is another bankruptcy alternative. In an individual voluntary arrangement, the debtor, with the help of an insolvency practitioner will apply to the court and make a proposal to the creditors to pay all or part of the debt.

What are the workings of an IVA and how is it done? First off is to enlist the help of an authorized insolvency practitioner. The court and the local Receiver’s Office can provide you with a list of names of said practitioners. The court, upon your application will issue an ‘interim order”. This order will prevent creditors from proceeding with any bankruptcy petitions against the debtor.

The insolvency practitioner, acting in your behalf will present to the court the debtor’s proposal. The insolvency practitioner may deem it necessary for the debtor and the creditors to have a meeting to discuss the proposal. The creditors will then vote on the acceptance of the proposal. It is important therefore that all creditors be informed because the arrangement will not be binding to the creditors who were not able to vote.

An IVA gives a debtor the chance to decide on what to do with his assets and on how to pay the creditors. He may even persuade the creditors to let him retain assets such as the house or the car. This is not so in a bankruptcy order. Unlike in bankruptcy, the debtor will not be asked to pay certain fees so that the overall cost of an IVA is lesser.

An individual voluntary arrangement is an opportunity for the debtor to avoid bankruptcy. But if the IVA is disapproved and rejected by the creditors, the debtor will still be faced with bankruptcy. It is therefore necessary to know if the creditors are likely to approve the proposal.

One note of caution if you choose the IVA route. The payments may be unsustainable and you could still be made Bankrupt if you miss a repayment!!

After filing for bankruptcy, people will get a copy of the bankruptcy records which includes the date that the bankruptcy was discharged.  This is important for several reasons.  One reason to keep bankruptcy records is so that people can still buy a house.  The mortgage company will ask for a copy of the discharge records in order to decide on if they will even finance the loan and if they decide to finance it, they need to decide on the interest rate for the term of the loan.

Also, if people need to buy a new car, the finance company will ask for a copy of the bankruptcy records in order to make the new loan.  For almost everything that needs financing, the bankruptcy records will most likely be asked for by the company willing to make the loans.  So for this purpose, it is important to keep the bankruptcy records in a safe place that is easily assessable.

Filing Bankruptcy Records

It is important for people to file away their bankruptcy records so that they can be found and occasionally looked at.  When people find themselves heading towards bankruptcy again, they can look at what happened before and maybe make changes that will steer past a coming problem.

If people would look back at bankruptcy records before they decide to finance something, they may be slower to go into debt a second time.  Everyone has debt because if a house is financed, it can take many years to pay it off.  The same is true for cars.  Cars cost enough now that most people must finance it in order to pay for it.  Other than these two things, everything else can probably be paid for with cash.

Even if people need to save for several months before buying something, it is still much better than going into debt for it.  It can be difficult to hold back on financing something that people really want, but if they file the bankruptcy records so that they can be easily gotten and looked at, people will be less likely to find themselves in the same type of trouble that they were originally in.

A bankruptcy loan is useful for bill consolidation (if you have any bills left to consolidate!), and it can also be useful in the long road of repairing your credit rating. If you can afford it, you should consult a financing expert to help you get bankruptcy loan because this kind of professional can negotiate better loan terms – and if successful, better loan term will likely more than pay for the expense of a financing specialist.

No doubt about it – most lenders automatically refuse a loan application from somebody who has recently filed for bankruptcy, because the risk is too great. But a few lenders will consider such an application. You will have to accept that the terms will not be favorable, though. Your credit rating will not be very good, but a lender will nevertheless be likely to ask for your credit report. The last few months will need to be perfect. If you are approved you will be subject to high interest rates and a short repayment schedule.

Since most lenders will not even consider a loan application within two years of a bankruptcy, your best way to get a bankruptcy loan may be to search the web. But let the creditor beware – the web is a jungle and there are many sleazy outfits. This is where a financing specialist might turn out to be useful.

Only you can make the decision. Some would rather avoid all debt after a bankruptcy, but this will only delay the process of credit repair.

Furthermore, only a Chapter 7 bankrupcy will stay in your credit report within 10 years. If you filed under Chapter 13, the period is shorter – about five to seven years. Worst case scenario: You can get a new loan but with high interest rates or fees. Now, that’s not so bad, is it? Especially after considering that even people with good credit can get bad loan deals. The fact remains that no matter how bad or good your credit line, it is not a guarantee that you are going to get approved for a loan or get low interest rates. In other words, a bankruptcy may damage your credit but only to an extent. It does not necessarily mean that you will never qualify for a new credit. What damage there is, you can always rebuild. And that is what you should be focusing on, instead of wallowing in the pits of Credit Doom.

#1 CAN DO: Keep a Credit Card out of the Bankruptcy

When filing for bankruptcy, the rule is that you have to make a schedule. A schedule is a list of all assets and liabilities that you are required under the law to disclose before a bankruptcy case could commence. If you owe money on a credit card at the time you file for bankruptcy, you have to include that in the schedule. Otherwise, you may be sued for perjury and penalized under federal law. What’s worse, if you fail to disclose unpaid credits like this, you may be denied discharge of all your debts.

The rule, however, only applies to unpaid credits. So if you do not owe any money on your credit card, then you can go ahead and keep that one out of the bankruptcy. You are not obliged to inform the credit card company of the bankrupcy case. Note, however, that your credit card company may still find out about it through other means and cancel your card as a precaution. If your credit card company gives you notice of cancellation of your credit card, don’t give up yet. Many credit card companies allow their credit card holders who are filing for bankruptcy to keep their credit card on condition that they agree to reaffirm the balance on the card and enter into a new agreement. Try to re-negotiate the terms with your credit card company and see if you can settle for a situation that is beneficial for both you and the company. While the decision is up to the creditors, keep in mind that what they want is to avoid the loss incurred when the debt is discharged and to have your future business.

#2 Get New Credit after Bankruptcy

If there is one thing you can count on in today’s competitive lending environment, it is that credit is always available, even to the recently bankrupt. The catch? Credit may be more expensive than before and available with lower limits. But all that is secondary only to the fact that credit does exist and you can get it. One of the easiest credits available to the recently bankrupt is a secured credit card. As opposed to an unsecured credit card, in a secured card, you must make a deposit of a certain amount of money in exchange for a card that you can use just like a regular credit card. Your credit limit is equivalent to the cash deposit you made. Now, the good thing about a secured credit card is that it is usually available post bankruptcy at lower rates than unsecured cards.

What’s more, the fact that these credit cards are secured are not often indicated in your credit report so creditors have no way of knowing whether your credit card is secured or not. All they will see is that you have been approved for a credit card, which ups your credit score a bit and puts you back in the game fairly quickly. Note, however, that credit experts are not quite in agreement concerning the impact of secured credit cards on your credit rating. So if you do decide to open a secured credit card post bankruptcy, be sure to do it slow.? While your rush at rebuilding your credit is understandable, making mistakes that could significantly affect your credit score like this is not worth it.

Rebuilding your credit worthiness after bankruptcy is a matter of getting a toe-hold in the world of credit. The balance is often precarious and needs delicate treatment. Use credit cautiously and pay on time.

#3 Buy a House after Bankruptcy

Absolutely. In fact, there are many studies that show bankruptcy debtors can qualify for a home loan on the same terms as if they had not filed bankruptcy within 18 to 24 months after a bankruptcy discharge. You see, what the creditors are concerned here is not your past financial troubles but your current financial status – e.g., your down payment, the stability of your income and the relationship between the loan payments and your monthly income. That said, take note of the following things that you might want to do in preparation for your first house purchase post bankrupcy:

• When purchasing a home after bankruptcy, the key is the discharge date, since there is usually a waiting period. If your loan was an FHA loan, you usually have a 2-year waiting period for that. For other conventional loans, the waiting period is four years. Now, during the waiting period, you need to do two things: re-establish at least 4 lines of credit (auto loans or credit cards, for example) and maintain an excellent payment history.

• Make sure that there aren’t any delinquencies on your credit report that should have been cleared off with the bankruptcy. If you find any, contact your creditors immediately. Include a copy of your “Schedule of Creditors” in your letter so that your creditors can indicate the debt was included in the bankruptcy and update your credit report.

• The more money you have in your savings or checking account, the better and stronger your file is going to look to a lender when you apply for a home loan. Remember that your ability to make a down payment bears great significance in your approval rating. If you have money in your savings account, your creditors will naturally conclude that you have the money to make a down payment.

#4 Get New Wheels after Bankruptcy

A common misconception people have after a bankruptcy is that getting new credit like a car loan is virtually impossible. Well, note that the word used is “virtually.” That is not the same as saying that you are certainly never going to qualify for a new car loan. Because the truth is you can and you should, if you need to. If you can get a house after bankruptcy, then there is all the more reason for you to be able to get a car. In fact, you can even start going through some dealerships as soon as your discharge papers are in. Just remember that the interest rates are not going to be cheap. Here are some tips to help you deal with that one tiny tangle:

• Check with the Special Financing Department
Most car dealerships have this special financing department that handles would-be car purchasers who are going through some financial trouble. Since these buyers would not be able to qualify for a conventional auto loan, some dealerships are willing to offer you a different deal to help you get that car you want and at the same time overcome the hurdle of credit after bankruptcy.

• Credit Unions
If you are a member of the credit union at your workplace, contact them and see if you can get a car loan through them. Often, credit unions offer lower interest rates than banks, which in addition to charging you higher interest rates, may also require you to deposit your paycheck directly with them. If your workplace does not have a credit union, your neighborhood may have one. Some are available to people based on organization or church affiliation, or even residence in a certain community.

• Charities
Not many people are aware of this but charities are actually a good place to look for inexpensive cars. You may have heard of charities that ask you to donate your working or non-working cars to them. In order to raise money, they repair these cars and sell them for a price that is significantly lower. Try those charities found in your neighborhood and see if they sell cars that are more along your price range.

#5 Have a 700+ Credit Score Two Years after Discharge

You might find this statement suspect, which is understandable really when you consider the many stories of how one bankruptcy can thoroughly damage the credit rating you’ve been building up for years. Expert after expert has said that new credit is near impossible to get after filing for a bankruptcy. However, in almost the same breath, the experts likewise say that it is not impossible to rebuild your credit worthiness after bankruptcy. And this is bolstered by the fact that you had good reason for the bankruptcy, such as unemployment, medical, business failure, etc, and that you immediately took steps re-establishing credit after receiving the discharge.

So why then, despite complying with these two requirements, your credit score remains way below average? The answer lies in your credit report. Your credit report contains everything about your finances. All of the information contained in your credit report, when added up, result in your three-digit credit score. Hence, any errors in your credit report, such as a fraudulent credit line or a debt that remains even though it was supposed to be discharged after bankruptcy, can aversely affect your credit score.

Common sense tells you that if you correct these errors and mistakes, you can improve your credit score. Also, some creditors make various inquiries into your credit report. This act could lower your credit score. What’s more, after a discharge, they are allowed to make only one inquiry into your credit report. After that, you are entitled to ask for $1,000 every time they look into your credit report. Make certain that your creditors are not making any more inquiries into your credit report. Write them a letter explaining that the debt has already been discharged. Include a copy of the discharge order as well as a copy of the ‘Schedule of Creditors’ from your bankruptcy papers as proof that the debts have already been discharged.

You don’t believe me? Here are some ways that you can lessen your debts straight from the expert’s minds. Read on and you will find that they are actually quite easy and in some ways fairly logical. You don’t even need a degree in economics or in business in order to understand the principles behind them.

1. Set a budget
Having a clear cut way that you will spend your money will leave little room for expenses that you do not really need. It will be hard to curb the spendings during the first few months but you can actually get the hang of it if you keep doing it. Sticking to something is easy especially if you are the one who did it.

The same goes with your grocery list. Having a list of products that you will be purchasing in a store will help you curb the temptation to buy things that you do not really need. This is especially true if you are the type to buy things on a whim. This will help make you stop and think of your purchase for a while.

2. Set aside a portion of your salary for debt payment
If you get your money on a monthly basis, it is good to set aside a portion of your money as debt payments. That way, you will be more or less forced to pay for your loan. This will also help you religiously pay for your debts even if you have no extra money to speak of. This is also a great way to ensure that you have money that you can’t touch because it has already been set aside for something else.

3. Save some
Try to cut down on your spending. You can do this by saving on electricity and water. That way, your bills will not be as expensive. You can also lessen your expenses in clothes, food and partying. If you can, cut down on services that you can actually do yourself. This includes laundry, pool cleaning, gardening and plumbing. This way, you will have more money to pat for your debts. You will also be able to set aside more money just in case you will need it during emergency situations.

4. Prioritize debts with higher interest rates
If you have multiple loans, pay first the ones with the higher interest rates. That way, you will be able to avoid being charged with higher interest fees. You will also be able to save more to pay for your other debts. Some debt management experts even suggest that you loan the amount that you owe at a lower interest rate. That way, you will be seemingly exchange your debt for one with a lower rate of interest.

5. Pay more.
Don’t just stick to paying the required amount. If you have the money, pay for everything. That way, you will have one less worry and you will have more leeway to pay for your other debts.

Debt management can be a pretty big word however and most people are intimidated with the prospect of doing it. After all, it sounds like your situation is already desperate and that you are about to turn into a homeless individuals. This is not so. Debt management does not mean that you have to look for investment experts or those experienced in debt management. This will only add to your costs and you don’t need that additional expense in your budget. You can do debt management on your own just as long as you know what you are doing and you are determined to see all your debts disappear.

Below are some tips that can help you do debt management on your own. They are simple suggestions that you can do on your own or with your family. Look into each one and you might find one technique that you feel you can do.

1. Set aside a percentage
Countries that have debts to pay will often set aside a portion of their national budget for debts payments. Individuals can also do this with their salaries or with their combined household budget. It is actually a good idea to prioritize payment of debts and putting aside a part of your money monthly will ensure that you will be remembering to pay for the debts. This will also help you cut down on your expenses as little money will already be left for incidentals. In fact, as soon as you get your salary, pay for the debt right there and then. Don’t hesitate. That way, you will not be tempted anymore to use the money for other things.

2. Prioritize the debts with higher interest rates
Debts that have higher interest rates will mean that you will be paying a higher monthly fee for them than the usual. As much as you can get rid of debts that have high interest rates. You can do this by paying for them first or making sure that you are paying for it monthly.

3. Pay more and pay more often
If your bank requires you to pay a certain amount of your debt monthly, it does not mean that you can only pay that amount monthly. If you have the money, pay for everything or pay more often. That way, you will incur less interest charges plus, you will be able to get rid of the debt faster.

4. Cut the Credit card
Credit cards may be convenient and it may be able to save lives in emergencies but in the hands of the wrong person especially one who do not know how to handle their money, credit cards can be evil. Leave it at home or better yet, throw it away. that way, you won’t be tempted to use it and incur more debt than you can ever pay for.

You see, debt management can be easy. You just need to know what to do.

Bankruptcy law provides for the development of a plan that allows a debtor, who is unable to pay his creditors, to resolve his debts through the division of his assets among his creditors. This supervised division also allows the interests of all creditors to be treated with some measure of equality. Certain bankruptcy proceedings allow a debtor to stay in business and use revenue generated to resolve his or her debts. An additional purpose of bankruptcy law is to allow certain debtors to free themselves (to be discharged) of the financial obligations they have accumulated, after their assets are distributed, even if their debts have not been paid in full.

There are six types of bankruptcy under the Bankruptcy Code, located at Title 11 of the United States Code:

Think carefully about Bankruptcy, for some people it is a god send and a weight lifted from your shoulders but for others Bankruptcy may not be the solution!

Although there is a stigma when it comes to debt management, many people don’t realize that this can be a good thing too because it signifies that that person is still capable of getting and paying for that debt.

One of the things that people are afraid of in terms of debt management is through credit cards. This is because they think that because of the hidden dangers and charges of credit cards, they will not be able to sustain it and worse, they can even fall into a swirling pit of debt.

While it is true that these things may happen, people should not close their doors to credit options because credit cards can be a powerful tool in managing their finances. Whether they decide to get one or not, managing finances still takes a sense of good budgeting, willingness to change spending habits, and the humility to avail low interest consolidation loans when you are already burdened by too much bad credit.

Of course, there will always be glitches such as bad credit when a credit card is not used properly but still, it still pays to have bad debt than not to have any debt at all.

Why managing debt is a good thing

Having debt is always better than having no debt at all because this means that there is still something for banks or mortgage firms to look at. If you don’t have debt, debt firms would automatically assume that you:

- lost job or unexpected lost of income. Today, one of the major reasons for you to have no credit is to have lost your job. Because you have an uncertainty of when and how you’ll pay off your bills and everything the first thing could go is not to push through with a credit card application.

- not included on the Electoral Register. If you are not a registered voter at the time of your credit application chances are you’ll end up with no credit. This can be a bad thing for you because it means that you are hiding something that can be illegal in a country where you are staying in.

- have unstable living condition. Having debt is much preferable than having none at all because it can somehow determine a person’s stability or instability. Even if you have numerous credit applications that are either declined or approved, having credit application records is still preferable because it signifies that despite the person’s desperation, the person is still willing to obtain a credit and somehow repay it.

- undergoing separation or divorce. Separation and divorce can also dramatically affect you with having no debt, when a spouse is in charge of paying all your credit card and credit transactions, separation from your spouse can also lead to termination or discontinuance of your credit card contract. This also leads to having no debt at all.

- have been bankrupt before. If you have been bankrupt before, your statement of bankruptcy goes to the file of the federal institution for banking. It is a permanent stain on your credit rating and can bring you debt management problems because there are instances that when you are trying to reapply for a new credit scoring, this file will come out and will haunt your credit rating.