Philadelphia Credit after Bankruptcy Lawyer

Bucks County & Montgomery County Pennsylvania using Credit wisely after Bankruptcy Law Firm

Life after bankruptcy can present its own challenges. By making informed choices and responsible decisions, however, it is possible to meet these challenges and restore your financial health. Talking with an experienced lawyer about your case is an important step in the process.

I am Philadelphia, Pennsylvania, lawyer Joshua Z. Goldblum. For more than 25 years I have helped clients find effective solutions to difficult financial problems, often through Chapter 7 or Chapter 13 bankruptcy. While various debt relief options can offer the fresh start you need, it is important to begin rebuilding your credit score and using credit wisely after bankruptcy.

I can help you navigate the waters of life after bankruptcy, providing sound advice about applying for new credit cards or the truth behind many financial schemes aimed at recent bankruptcy filers that seem too good to be true. Contact me to discuss how the assistance of a skilled attorney can continue to protect your interests after your bankruptcy proceedings have been finalized.

Beware of Credit Offers Aimed at Recent Bankruptcy Filers

Carefully read any credit card or credit offer from a company that claims to represent a lender you listed in your bankruptcy or own a debt you discharged. This may be from a debt collection company that is trying to trick you into reaffirming a debt. The fine print of the credit offer or agreement will likely say that you will get new credit, but only if some or all of the balance from the discharged debt is added to the new account. This is illegal.

Another type of credit marketed to recent bankruptcy filers as a good way to reestablish credit involves ''secured" credit cards. These are cards where the balances are secured by a bank deposit. The card allows you a credit limit up to the amount you have on deposit in a particular bank account. If you can't make the payments, you lose the money in the account. For some individuals, a secured credit card may be a good first step to obtaining new credit.

Credit Repair Companies

Beware of companies that claim: ''We can erase bad credit." These companies rarely offer valuable services for what they charge and are often an outright scam. The truth is that no one can erase bad credit information from your report if it is accurate. If there is old or inaccurate information on your credit report you can correct it yourself for free.

Avoid High Cost Predatory Lenders

Be wary of auto dealers, mortgage brokers and lenders who advertise: ''Bankruptcy? Bad Credit? No Credit? No Problem!" They may give you a loan after bankruptcy, but at a very high cost. The extra costs and fees on these loans can make it impossible for you to keep up the loan payments, ruining your chances to rebuild your credit.

Don't assume because you filed bankruptcy you will have to get credit on the worst terms. If you can't get credit on decent terms right after bankruptcy, it may be better to wait. Most lenders will not hold the bankruptcy against you if, after a few years, you can show you have avoided problems and can manage your debts.

Mortgage Loans: If you own your home, some home improvement contractors, loan brokers or mortgage lenders may offer to give you a home equity loan despite your credit history. These loans can be very costly and can lead to serious financial problems and even the loss of your home.

Small Loans: It is always best to save some money to cover unexpected expenses so you can avoid borrowing. But if you are in need of a small loan, avoid the following high cost loans such as payday loans, auto title loans, tax refund anticipation loans and rent-to-own offers.

Proactively Preventing Problems

If you don't want it, don't get it. If you have doubts about whether you really need the loan or service, or whether you can afford it, don't let yourself get talked into it by a salesperson using high-pressure tactics. You can always walk away from a bad deal, even at the last minute.

  • Shop around. You may qualify for a loan with normal rates from a reputable bank or credit union. Don't forget that high-cost lenders are counting on your belief that you cannot get credit on better terms elsewhere. Do not let feelings of embarrassment about your past problems stop you from shopping around for the best credit terms.
  • Compare credit terms. Do not consider just the monthly payment. Compare the interest rate by looking at the annual percentage rate as this takes into account other fees and finance charges added on the loan. Make sure you know exactly what fees are being charged for credit and why.
  • Read before you sign. If you have questions, get help from a qualified professional to review the paperwork. A lender who will not let you get outside help should not be trusted.
  • If you give a lender a mortgage in a refinancing deal, remember your cancellation rights. In home mortgage refinancing, federal law gives you a right to cancel for three days after you sign the papers. Exercise these rights if you feel you signed loan papers and got a bad deal. Don't let the lender talk you out of canceling.
  • Get help early. If you begin to have financial problems or you are thinking of consolidating unmanageable debts get help first from a local nonprofit housing or debt counseling agency.

Ten Things to Think About Before Getting a New Credit Card

1. Don't apply for a credit card until you are ready. Unfortunately, bankruptcy may not have permanently resolved all of your financial problems. It is a bad idea to apply for new credit before you can afford it.

2. Avoid accepting too many offers. There is rarely a good reason to have more than one or two credit cards. Having too much credit can lead to bad decisions and unmanageable debts and it will lower your credit rating. This can make it harder for you to get other lower interest rate loans. Avoid accepting a credit card just to get a discount at a store or a free gift.

3. Remember lenders are looking for people who run up big balances because those consumers pay the most interest. You may find credit card companies are pursuing you aggressively by mail and phone even though you filed bankruptcy. Do not view this as a sign that you can afford more credit. The lender may have a marketing profile telling them you are someone who is likely to carry a big credit card balance and pay a good deal of interest. Or they may see you as a good credit risk because you cannot file a Chapter 7 bankruptcy again for quite a few years.

4. Interest rate is important in choosing a card but not the only consideration. You should always try to get a card with an interest rate as low as possible. But it is rarely a good idea to take a new card just because of a low rate. The rate only matters if you carry a balance from month to month. Also, the rate can easily change, with or without a reason. Remember that even the best credit cards are expensive unless you pay your balance in full every month. And, other credit terms can add to your cost, such as: annual fees, late charges, over-the-limit fees, account set-up fees, cash advance fees and the method of calculating balances. Sometimes a credit card that appears cheaper is actually more expensive.

5. Beware of temporary teaser rates. A teaser rate is an artificially low initial rate that applies only for a limited time. Most teaser rates are good only for six months or less. After that, the rate automatically goes up. If you build up a balance under the teaser rate, the much higher permanent rate will apply when you repay the bill. This means the permanent long-term rate on the card is much more important than the temporary rate.

6. If your rate is variable, understand how it may change. Variable interest rates can be very confusing. Some variable rate terms can make your rate go up steeply over time. Read the credit contract to understand how and when your rate may change. And don't be misled by advertisements that claim "fixed rate" as this may mean the rate is fixed only until the lender decides to change it again.

7. Check terms related to late payment charges and penalty rates of interest. Most credit card contracts have terms in the small print for late charges or penalty interest rates that increase if you make a single late payment. Try to avoid cards with late fees or penalty interest rates. Even if you are not having financial problems, these terms may become important, because they apply equally to accidental late payments.

8. Get a card with a grace period and learn the billing method. It is important to understand how you will be billed. Look for a card with a grace period that lets you pay off the balance each month without interest. If the card does not have a grace period and interest will apply from the date of your purchase, a low interest rate may actually be higher than it looks. The terms of the grace period are also important, as it may not apply to balance transfers and cash advances. Look out for different interest rates that may apply depending upon the type of charge. These usually include a higher rate for cash advances.

9. Don't accept a card just because you qualify for a high credit limit. It is easy to assume that because a card offer includes a high credit limit, this means the lender thinks you can afford more credit. In fact, the opposite may be true. Lenders often give high credit limits to consumers hoping they will carry a bigger balance and pay more interest. You must evaluate whether you can afford more credit based on your individual circumstances.

10. Always read both the disclosures and the credit contract. You will find disclosures about the terms of a credit card offer in small print on the reverse or at the bottom of the offer. Review these carefully. The law does not require that all relevant information be disclosed. For this reason, you must also read your credit contract, which comes with the card. This will include terms such as late payment fees, default rates of interest and a description of the billing method. Since these terms are not easy to understand, you may want to call the lender for an explanation. Or better yet, refuse credit with too many complex provisions, because those terms are likely to work to your disadvantage.

If you have questions regarding securing new credit after bankruptcy and using it wisely, contact my firm for a free consultation at 215-322-2745.

My firm is a debt relief agency. I help people file for bankruptcy relief under the Bankruptcy Code.