Secured Credit Cards

Does it feel like your good credit has fled the country?
One credit repair professional told me all about how to get all the bad things off of my credit reports. Most credit repair people operate this way. Sounded great at the time. At some point, however, I realized that based on what I knew about credit reporting, then once the bad stuff was gone, there would be nothing left at all. An old HeeHaw song came to mind, “If it weren’t for bad luck, I’d have no luck at all.” I was pretty sure I was right, but he just kept saying, don’t worry about it. I found out later that I should have worried about it, I should have worried about it a lot, and I should have worried about it a whole lot and a whole lot sooner.

Yes, once the credit repair of my credit reports was done, they were newly baptized and cleansed of the sins of the past. Yet they were newborn babies with no credit history left on them. Tabula Rasa. I had been right all along. At that point I did what so many lawyers do, I got mad and was done with him as my credit repair guy. I didn’t ask and he didn’t offer any way to quickly somehow fix the situation. I should have. Instead, when I realized that I had been right, without the aid of anyone, it took me another year to rebuild my credit scores and rating using traditional methods, and in the mean time, home prices soared and I was punked by my own actions and inactions.

The solution that my wife and I did use was this: which was both simple and effective, and also slow. Not an overnight solution but it worked like a charm. A long slow charm. I went into my own bank, and bought a credit card. It’s called a secured credit card. Give them $300, $500 or $1,000 and they give you a credit card with a credit limit of $300, $500 or $1,000, however much you give them.

As a married couple, or if you have a long time significant other, (don’t do this with someone hardly know) you each go to your bank and ask for a secured credit card, and after a little while, put each other on each other’s card. Then each has two credit cards with which to build a positive credit history.

Of course, if you don’t have that that special someone, just go to a different bank and get a second secured card. 

From there, it’s a matter of creating a favorable credit history. There are several factors that go into that formula but the essential steps are: 1) Never miss a payment 2) Keep Low Balances. 3) Pay more than the minimum payments.

An excellent method of creating this credit history is to only buy something on the credit card when you have the cash already in your own savings account. So, say you want a new gigantic flat screen TV. If the TV costs, $1500, first put the $1500 in the bank, then use the credit card to buy the TV. Now what you do is to pay off the secured credit card in 3rds over 3 months.

Your good credit’s greatest enemy is in most cases, your own family’s dire needs. If someone in your family is having a rough time and says “hey, I need $800 to pay off a gambling debt,” or “pay my rent” or “pay my dentist” or “pay my car payment before it gets repossessed” or . . . Whatever it is, you must tell them to hide from the bookie, hide the car, brush and floss a lot, and wait a while.

Pay your credit card off in 3rds. If you give away your $800 you have poisoned your credit score!!!

And what’s even worse, he’ll probably just gamble your $800 away too. If the car payment is brought up current status, and they still don’t have a job, then in a couple months they’ll be right back where they are today. If they are behind on rent now, next month they probably will be again.

My favorite example is the dentist, if they pay the dentist and the tooth is fixed but because you helped them, your plan to repair your credit gets derailed, then you have ruined your ability to really help your family when things get truly critical. If you can buy your house at a low interest rate, then you’re either buying more house or doing it at a lower payment. Either way, he can move in with you. Perhaps more importantly, with a low interest rate and a more affordable house payment, you can help more people in more ways. And that can make it possible to truly help your family when times are tough and you’re all struggling.

While using the Secured Credit Cards is an effective way to build your credit scores more or less organically, however, it can be done faster. Have a look into the Attorney’s Guide to Credit Repair for details in the links at the right and below.

Don’t be a knave-faced Jackanapes like I was. Exceptional credit can make it possible to help your family in ways that you wouldn’t otherwise be able to do with merely decent or even good credit. Guard it carefully.

So You Might Need to Buy a New Car?

What you need to know before buying a car on credit after a bankruptcy, or after bad credit?

They love to say, they will sell you a car with bad credit, of course they will, at 25%, I might sell you my own car.

After a bankruptcy one of the easiest things to do is to buy a new car, or at least a newer car. A new to you car. It sounds too good to be true but oddly enough, it’s not.

If you filed a chapter 7 bankruptcy, the more common type, then your new car creditor knows that you can’t file again for eight (8) more years from one file date to the next. So, they know that you can’t file again, and if you can’t file again, I’d sell you a car too. If you default on the new car loan (for the new car to you which is probably an older car) then we can sue you for another however many of those eight (8) years are left. Then I can garnish your wages, levy your bank account, and record a judgment lien on your house. Creditors love doing all of those things. Especially car creditors, car creditors love to be the first one to sue you. One attorney who represents car lenders told me that if “we’re the first one to sue, maybe the debtor puts up with one wage garnishment, ignores one judgment lien on the ol’ homestead. However, when the second judgment comes along, they call you. ” In fact I might as well mention, if you need a bankruptcy attorney in Southern California, give me a call, 951-200-3613

If you do have to buy a car, and sometimes you must, then your interest rates will be absolute murder. Don’t do it. If you can avoid it, avoid it. However, with a little effort and just a little time, maybe only a couple of months, you can repair your credit enough to buy a car with a decent-ish interest rate. 

If you do nothing, and you wait long enough, your credit will be rehabilitated on its own rather like a cut on  your finger will get better even if you just do nothing. Keep working in your garden or garage where it’s filthy without washing it, without a bandage, in the filth and dust and dirt and your finger will get infected and in spite of that in the long run, it eventually gets better anyway.

But if you clean it, put some Neosporin or a salve on it and bandage it, and keep it clean, then it gets better a lot faster. And what’s wrong with faster? Nothing of course.

But you just had a bankruptcy, what can you possibly do to repair your credit after a bankruptcy? Bankruptcy is the Credit-Reaper.

There are a few things.

Be sure of course, that whatever credit you still have, whatever debts you still have to pay after your bankruptcy, be sure that credit stays in good condition during the months and years after the bankruptcy is over. Don’t get into any new debt that you cannot handle, if you have reaffirmed any debts from the bankruptcy, make sure that you stay current on those and everything else including your utilities. Utilities won’t report your good payment history but they’ll definitely report your bad payment history if things go wrong.

Good credit is a combination of not too many bad things on your credit reports compared to the good things on your credit reports. Great credit is few or no bad things compared to lots of good things.

You can increase or improve your credit rating by removing bad things and adding good things to your credit reports. One of the easiest things to do to add good credit to your credit score is to buy a car, but you don’t want to do it until you’ve already improved your scores.

Check your credit after your bankruptcy is over. It’s almost a certainty that not all of the accounts included in your bankruptcy discharge are listed in your credit reports as “an account included in bankruptcy” or “bankruptcy” or “bankruptcy discharge”.

Go to AnnualCreditReport.com and check. If even one, just one of the dischargeable accounts that existed prior to your bankruptcy is not listed as included in your bankruptcy, then that account is dragging your score down. You can correct that with the appropriate letters to the creditor or to the credit reporting agencies directly. Prove that they have you listed wrong in your credit reports and they will have to fix it.

Where you do sometimes run into some fun, and by fun I mean it like Michael Jackson did in the 80s when he referred to good things as Bad: What if the account which is bringing down your score is also an account which for some reason was not listed in your bankruptcy in the first place, also called an unlisted or omitted account. Now what do you do?

Unlisted or Omitted Accounts are considered not discharged by the bankruptcy code unless two (2) things didn’t happen. See 11 USC 523 (a) (3). However, you can see from that code section that an omitted debt is nevertheless discharged if those two things didn’t happen. Here’s a hint, there is a case called In Re Beezley in which the Ninth (9th) Circuit Court held that the code section really does mean what it says that it means.

The first thing that had to NOT happen was, 1st) Did the Trustee on your case figure out that you may have assets which means that he would set a deadline called a claims bar date for creditors to turn in a proof of claim? When a trustee finds that you have assets, it’s called an asset case, and if no assets, then it is a no-asset case. In a no-asset case, the Trustee files a report with the court called a No-Asset Report. In the bankruptcy court’s court docket it will probably be listed as a Chapter 7 Trustee’s Report of No Distribution. If the Trustee did impound assets and distribute to creditors and the one you now have found was never listed, then you still owe that creditor his money because under 11 USC 523 (a) (3) it was not included in your discharge.

The second thing that has to NOT happen is 2nd) Even in a no-asset case, did you commit Fraud, Embezzlement or Malicious Injury to Person or Property against that creditor. Then if you committed any of those but you left this debt out of the bankruptcy, then the creditor was never barred from filing a non-dischargeability action against you in the bankruptcy court like would normally happen at discharge time because they never knew that a bankruptcy had been filed. Phew long sentence. Basically, at the beginning of the bankruptcy a temporary restraining order prohibits any collection efforts or lawsuits against you, except for suits in the bankruptcy itself for fraud, embezzlement or malicious injury to person or property. At the end of the case, the discharge order is a permanent injunction prohibiting collections and lawsuits against you even in the bankruptcy court for those same types of actions. A discharge does allow secured creditors to collect cars and houses if you stop paying for them.

If the omitted creditor had been listed in the bankruptcy petition and received a notice of your bankruptcy, and nevertheless, didn’t file that lawsuit in the bankruptcy, then at the end of the case, they would have been included in the discharge. How’s that for irony. Most of them won’t bother once they see how low your income is, how few assets you actually have and they might think that suing you in the bankruptcy court to prove you are a fraudster is throwing good money after bad.  But if you left them out of the bankruptcy then, therefore, they can now sue you if they want to. But they would still have to sue you to prove that you did the fraud, embezzlement or malicious injury, that’s not going to be an automatic.

If you’ve just had a bankruptcy and afterwards, if you have no debts, start by going to your bank with a little money, say $300 to $500 or $1000 and ask for a secured credit card. It may take a while to save up, but go ahead and do it. Using it sparingly and then paying it down or off quickly will help your credit scores immensely.

If you can afford to, get two of them, from different banks. Two accounts is much better on your credit reports than only one. However, unless it’s an emergency, don’t buy something unless you have already saved up the money for it first. Here’s a hint: Most things you think are emergencies are not.

In other words: Don’t Buy Stuff You Cannot Afford.

Once you’ve purchased something with your new card, you can pay it off over two or three months that way, because you already have the money saved. Do this and it will improve your credit scores.

Meanwhile, a couple or a few months after the bankruptcy discharge, go to Annual Credit Report and download your credit reports to see what is on them. If there is anything that was included in the bankruptcy that is not showing as “an account included in bankruptcy,” or “bankruptcy” or something like that, then you can ask the credit reports and even the creditor to correct the situation.

If a creditor was left out of your bankruptcy but it pre-dates your bankruptcy, then you can ask them to fix it too by sending a letter explaining the in Re Beezley ruling and that it applies to that creditor.

For specific forms and language to put into those letters, to go The Attorney’s Guide to Credit Repair for easy, fast, guaranteed Credit Repair advice.

And yes, it’s true, I do get a small commission when you buy the Attorney’s Guide to Credit Repair, but you should buy it anyway.

Once you’ve taken the opportunity to clean your credit first, then you can buy a newer car than you would have been able to, and with a more favorable interest rate than you would have been offered. That means that you can buy a better car, a safer car and more a more reliable car.

Most Debt Statutes of Limitations Are Four Years in California

Your good credit is about to take flight, and you don’t even know it yet. If some of your debts are particularly old, you’re in luck.

In California and in many states, (you can look them up) the statutes of limitation, or the amount of time allowed for another party to sue you, are sometimes shorter than you think.

For most debts in California, the statutes of limitation are only four (4) years from the breach of contract. You are in breach of contract from the first month you stop paying. Now, this is not exactly a great strategy for getting out of debt. If you’re planning to use this as a strategy to get out of debt then you’re probably in for a disappointment. A bankruptcy is a better choice if you have a significant amount of debt and if the debt is not very old yet.

Usually one or a couple of creditors will sue you and obtain a money judgment against you and once that happens, the creditors with judgments have now extended their statutes of limitations to up to twenty (20) years in California.

However, for those that didn’t sue you, or in rare cases, where no one has sued you, then you’re in luck. But as I said, it’s relatively rare that no one sues you at all, if you have had a significant number of credit cards and/or medical bills in the past.

It’s also tough to gauge if you haven’t been sued because you might think, well I’ve never received a summons and complaint before, also known as service of process, so, therefore, you think no one has sued you. Think again. Many times people have been sued and they didn’t even know it. If you were divorced and had to move, if you lost your job and couldn’t afford the mortgage or rent where you were living, if the job you found was required you to move to a different state, if you maybe had that happen more than once or twice, then the creditor didn’t know where to deliver the summons and complaint and probably served the new tenant at your old apartment or served the new owner at your former home. Sometimes even if you tell a creditor your new address, when they send it to their own attorneys, they somehow conveniently forget to tell their attorneys that you told the creditor your new address. At least, that’s what the attorneys will say and it’s probably true.

So you must do a check of the courts where you were used to live to make sure that you haven’t been sued. Most of the courts can be accessed online. Riverside, San Diego, Orange, LA and San Bernardino County courts are available online although some charge fees for name searches but usually it’s a small fee.

Just because a creditor hasn’t sued you and the statute of limitations has passed, does not mean that collection agencies will not blow up your phone and harass you all day begging or threatening you to pay the debts. However, if they have truly missed the statute of limitations, you can send them an appropriate letter and the matter is done.

You do have to be certain of when you quit paying though. If you’re wrong and they still have time left, they may at that point file the lawsuit. I remember one client who had a joint account with his wife, but they divorced, however, she kept paying the account for another six (6) before she quit, so the client had the date wrong by six (6) months. Also, and this is indeed rare, a creditor or collection agent might falsify records to show additional payments later in order to extend the statute of limitations. If you’ve moved a couple times then you might not be able to prove them wrong if you cannot locate your records. At that point a bankruptcy might be the best solution, call me if you need one, Call 951-200-3613 for a free bankruptcy consultation.

But if your creditors and collections truly missed the statutes of limitation then by writing to them and saying: “Hey, you missed the statute of limitations, and stop calling me.” Then they have to stop calling. And if you’re right about the correct amount of time having passed since you last made a payment, then they can’t sue you either.

But sometimes what they’ll do is to sell the account to a different collection agency and you will hear from them in a month or two later instead. Send them the same kind of letter.

For more information I would like to refer you to the best guide on how to write letters like this and no doubt you’ll probably need other letters that you can write and this guide tells you exactly how. I wish I could say that I wrote it, but the information is fantastic, clear, easy to use and affordable. For the Attorney’s Guide to Credit Repair, Click Here.

Yes, I do get paid when you buy the Attorney’s Guide, and yes, you should buy it anyway.