Author: Natalie Sanchez

Marry Your Spouse, Not Their Credit Score

Posted on October 2, 2013 by - Credit Cards, Credit Score

If you are getting married, you might be a little worried about how the marriage will affect your credit score, especially if your spouse’s score is lousy. But right off the bat, let me dispel this rumor: Your credit score and your spouse’s credit score will never be merged together. What your spouse does in his or her own name (past, present, or future) will not hurt your credit score…
As long as you do not join accounts.
When you get married, your behavior still counts toward your credit score, and your spouse’s behavior still counts toward your spouse’s credit score. If you pay your Visa bill late, the late payment will not hurt your spouse, so long as the credit card is in your name only. If your spouse has a mortgage payment and defaults, the default will be on your spouse’s credit report only—so long as the mortgage is in your spouse’s name only.
Most people approach marriage and credit with a one-for-all, all-for-one attitude. They apply for car loans as a couple, open joint credit card accounts, and stop building separate credit histories. After all, they have joined their lives together; why not marry their credit histories?
This might sound like a great idea, but the truth is that you should never vow to join all of your credit accounts. Keeping some credit accounts separate has big advantages. In fact, holding credit jointly puts a couple at even greater risk during times of financial crisis. Here are two common credit pitfalls of marriage.
Marriage and Credit Pitfall #1: Keeping All Credit in One Spouse’s Name
Opening all credit cards and loans in one spouse’s name is not wise, but unfortunately, it happens all the time. This usually happens when one spouse works a nine-to-five job and the other stays home with the kids. The spouse with the paycheck opens all credit in his or her name. Here’s the problem, though…
What happens if something happens to the working spouse? A bankruptcy, death, loss of income, or divorce would make the other spouse vulnerable. Because no credit is the same as bad credit, the stay-at-home spouse would have no ability to secure a loan.
There’s another problem with this strategy. Let’s switch this scenario up a bit and imagine that both spouses work. The wife has a part-time job with a small salary, so all of the credit is in the husband’s name. The couple decides to buy a home. To qualify for a loan, they need both spouses’ income. The couple now has a big problem: The wife has no credit history, so her score is low. Putting her name on the home loan would endanger the loan. And the husband cannot qualify for the loan on his own—he needs his wife’s income for that extra boost. Most likely, the couple would not qualify for the loan. At a minimum, the couple would pay a higher interest rate.
This pitfall can be avoided if both spouses build their own credit scores.
Pitfall #2: Joint Credit Cards and Automobile Loans
Imagine that Jack and Diane are married and have joint credit cards and joint automobile loans. When Jack loses his job, the couple struggles to make ends meet. After a couple of months, they start realizing that they cannot afford all of their bills. So they stop making payments on several credit cards and on one of the two car loans. The credit card bills are sent to collections and the car is repossessed. And both Jack and Diane’s credit scores are trashed in the process.
Now let’s see how the same situation would play out with Peter and Paula, a married couple with separate credit cards and automobile loans.
When Peter loses his job, the couple creates a strategic plan about their forthcoming financial problems. Peter and Paula know they can only afford to pay all their bills for three months; the money will run out after that. Peter searches high and low for a job, but is unsuccessful. After three months have passed, the couple decides to stop paying credit cards and car loans in Peter’s name. They stay current only on bills in Paula’s name. Of course, Peter’s credit score suffers. But Paula’s remains pristine. This means that Paula is able to apply for loans in her name, while Peter learns how to rebuild credit.
One last thing: This isn’t to say you should never hold a single joint account. Sometimes, putting your spouse as an authorized user (at least temporarily) is a great way to help your spouse build a credit score. But be strategic. Make sure that you each of you build your own credit score.

What Are the Credit Cards You Recommend for People With Good Credit?

Posted on October 2, 2013 by - Credit Cards

We went out there and researched the best credit cards on the market, consider things like interest rates, rewards points, fees, and the like. You can see our recommended list of credit cards for people with strong credit here.
And keep the following in mind:
1. In our program, we recommend that you have three to five credit cards. If you are going to apply for more than one credit card to reach this goal, apply for them all at once. Part of your credit score is based on the age of your accounts. If you open one now, and then wait six months to open another, you will lower the average age of your accounts.
2. If you are married, do not apply for credit jointly with your spouse. You and your spouse should each apply for three cards.
3. If you have more than five cards, do not close them. This will hurt your score, and it will never help your score.
4. Don’t put this off! The longer you wait to start building your credit score, the longer your credit score will suffer.

Did You Hear How Tony Raised His Credit Score in Three Months?

Posted on October 2, 2013 by - Credit Cards, Credit Score

Every other week, I hold a question-and-answer session for the students in my credit-education program. Usually, I help people with their specific credit situations, give advice, and answer questions about the program.
The other week, though, I was fortunate to have Anthony join the call.
When Anthony started my program three months ago, his credit report was peppered with collection accounts and a judgment, so his score was about 580. To give you an idea of how that fares, anything below 620 is considered bad credit. So Anthony was considered the highest-risk borrower.
But today, just three months later, his score has jumped 60 points.
I tell my students that they should usually expect to wait about six months before they start seeing a significant jump in their credit score. But Anthony has followed all of my advice to the letter. And his score is on its way up, and fast.
Here’s how he did it:
First, he got a secured installment loan from a credit union. He was denied a few times, but Anthony was persistent. Finally, he found a credit union (Cal Coast) to give him a $600 secured installment loan. He put this $600 into an account at Cal Coast, deposited another $6 to cover the fees on the loan, and he uses the account to pay off the loan–$101 a month for six months.
This is a great tactic because it means the credit unions have no risk—after all, he’s keeping the money in the bank. And it helps you, the borrower, increase your credit score by paying the installment loan on time.
Anthony has made just three payments, and his score is already on its way up.
He also opened three new secured credit cards. He keeps a balance on these cards, but only so that they remain active, and he pays his bills on time.
“It’s amazing how simple it is once you know the rules,” I said to Anthony. “If you don’t know the rules, though, it’s just unfair.”
And that’s when Anthony said something that was my favorite part of the call. He said, “If you take the emotion out of it and you take it for what it is—a numbers game—then you see that there are tactics to it. I appreciate that. We can attack our credit scores more strategically rather than getting tied up in the negative emotions of it.”
Anthony said this perfectly. We get so scared about finances. We get this awful, pit-of-the-stomach, all-consuming feeling.
But if we are strategic and rational, rather than panicked and reactive, we get results.
Sixty points in the first three months! I can’t wait to see what happens to Anthony’s score in the next few months.
If you are feeling scared about your credit score, leave a comment below. Get your fears out of your mind. When you put the fear aside, you can start working on the solution.

What Is the Fastest Way to Build Credit?

Posted on October 2, 2013 by - Credit Score

Question: What is the fastest way to build credit? I am applying for a business loan, and I need to bump my score up by about 60 points.
There are a variety of reasons why you’d want to improve your credit score. You could be getting ready to make a big purchase such as buying a house, or you may want to make sure your options are open in the case of an financial emergency. In fact, in today’s world, your credit score is a key element to financial freedom. In addition to higher interest rates, low credit scores can affect your life in many other areas as well. Companies run credit checks before employment, and low credit scores can affect your auto insurance rates. All of these are great motivators for making improvements, but there isn’t always a great amount of information on exactly how to improve your score.
Fortunately, if you want to learn how to build credit fast, we have a few tricks.
Check Your Credit Report Limits
Credit card companies often omit or inaccurately report credit card limits, and this causes your score to drop. About half of all consumers are missing at least one credit limit on their credit reports. And in other instances, credit card companies intentionally report a lower limit than you have.
Why does this hurt your credit score?
The credit-scoring formula places a lot of weight on something called a utilization rate. The utilization rate represents your credit card balance as a percentage of your limit. If your limit is $1000 and your balance is $300, you have a 30 percent utilization rate. If your balance increases to $500, your utilization rate would increase to 50 percent. In other words, you would be utilizing 50 percent of your available limit.
The credit-scoring formula responds more favorably to people who have a utilization rate that is no higher than 30 percent. Now let’s imagine that you have a $300 balance on a credit card with a limit of $1000. Your utilization rate is 30 percent. Good news for your credit score, right?
Not so fast. If the credit card company is only reporting a $500 limit, you will appear to be carrying a 60 percent utilization rate. And this hurts your credit score. So if you want to raise your credit score fast …
1. Check your credit report and make sure that your limits are being properly reported.
2. If they are not, call your credit card companies immediately and tell them that misreporting limits is against the law. Correcting the error should cause your score to jump quickly.
Become an Authorized User

One of the first pieces of advice I give to people who have suffered severe financial crises is to become authorized users on credit cards. Authorized users are allowed to use credit cards but have no contractual obligation to pay the bills. For this reason, a person does not need to have a high credit score to qualify for authorized user status on a credit card. However, the credit card’s history will often be reported on the authorized user’s credit report, so long as the authorized user is related to the account holder.
Becoming an authorized user on a family member’s credit card will quickly raise your credit score (even after a bankruptcy or other financial disaster) by allowing you to “borrow” the account holder’s clean credit history. However, the account holder—fearful that you will rack up huge charges you cannot or will not repay—might be reluctant to add your name to his or her account. Let the account holder know that she or he can be protected.

  1. First, the account holder should shred the credit card that arrives for you.
  2. Second, the account holder should never give you the account number, credit card expiration date, or card security code.

In this way, your credit score will increase while still protecting the account holder from any irresponsible behavior on your part. Authorized users usually see a quick jump in their score. After twelve or eighteen months, you might be able to remove yourself from the account and qualify for loans on your own.

A Tip for Married People
To build your credit fast, transfer as much of your credit card debt into your spouse’s name. To do this, simply have your spouse “buy” your debt by paying your balance(s) with his or her credit card(s). Assuming you both have individual credit cards, this will cause your score to jump quickly.
You see, the credit-scoring bureaus place a lot of weight on something called a utilization rate. Each of your credit cards has a utilization rate, which is a number that describe how much of your limit you are utilizing. For instance, if a credit card has a $1000 limit and you have a $100 balance, you are utilizing 10 percent of your limit. Your utilization rate, therefore, is 10 percent.
Credit-scoring bureaus respond best if your utilization rate is below 30 percent, so if you want to learn how to fix credit, you should always lower your utilization rate.
Start by transferring balances to your spouse’s credit cards. Of course, this might lower your spouse’s credit score, but you will buy the debt back (thereby increasing your spouse’s score) once you have qualified for the loan.
In short, you will have better loan terms, and your spouse’s score will be lowered only temporarily.
A Tip for Single People
If you are single and also want to know the fastest way to build credit, you can modify this tip and use the same strategy with a family member or a loved one. However, be sure to put some structures in place so that your family member/loved one is protected. For instance, you might want to structure a proper contract by hiring a lawyer or using an online service such as Virgin Money. You might also give your family member/loved one collateral. Is your car paid off? Do you have an expensive piece of jewelry? One way or another, be sure that you never jeopardize family relationships just to raise your credit score!
 
 
 

How Can I Get Credit Cards If My Credit Score Is Terrible?

Posted on October 2, 2013 by - Credit Cards, Credit Score

If you have bad credit, it’s critical that you have and use three to five credit cards. The only way credit bureaus will reward you with a high credit score is if you prove that you can responsibly manage debt. This means: Having at least three credit cards, keeping them active, keeping a low balance (below 30 percent of the limit), and paying your bills on time every single month.
But how can you get credit if you have bad credit?
If you need credit cards, we have researched the best secured and subprime credit cards out there. One of these cards is specifically for people with credit scores that fall below 580. And here are a list of cards for people with scores below 550. That said, I encourage you to keep reading so you can learn about the different types of credit cards we offer on our site.
Secured Credit Cards
There are several ways you can get a credit card, even if your score is low. The first is through secured credit cards. Secured credit cards work like this: Before the card is activated, you will pay a deposit that is usually equal to (but sometimes greater than) your limit. Then, you use the account as you would any other credit card. But here’s the catch: You will also pay the bill, just like you would any other credit card. These aren’t prepaid credit cards. The credit card company will keep your deposit and you will pay your bill.
So imagine that you have a secured credit card with a $1,000 limit. Just to open the account, you will make a $1,000 deposit (at least). Now imagine that you charge $300 to the card. The secured credit card company will not apply the balance to your deposit. You will need to pay the bill, just as you would any other credit card. If you don’t pay the bill in full, you will incur interest, and if you miss payments, your credit card will suffer. If you eventually default, the credit card company will keep your deposit, but only after they have attempted to collect on the debt, and turned you over for collections. If you always pay your bill on time, the deposit will be refunded when you close the account, or when the credit card transitions from a secured to a traditional card.
In short, secured credit cards require you to pay now, buy later, and then pay again, whereas traditional credit cards allow you to buy now, pay later. If you make payments on time and learn how to build credit, you can eventually request that the secured credit card be transferred to a traditional credit card, at which point the bank will refund your deposit. The deposit will also be refunded if you close the credit card account, so long as you have no balance at the time.
Though secured credit cards might not seem like that great of a deal, they are a lifesaver for people who desperately want to increase their credit scores. People with bad credit often cannot qualify for traditional credit cards, so secured credit cards allow them to build their credit scores. Second, many businesses require that their customers have credit cards. For instance, most cell phone companies won’t give you a phone without a credit card—secured or otherwise.
As I mentioned, if you pay the bill on time and keep your utilization rate (the percentage of the balance held against the limit) under 30 percent, then a secured credit card will help your credit score just like any other credit card would. And as your credit card score begins to improve, you can contact the credit card company and ask if it can switch the card to unsecured. While secured credit cards have high interest rates and force you to set aside a sizable amount of money as a deposit, they are an attractive way to rebuild your credit. Use them in the right way—with careful purchases and repaying your debt on time—and you’ll soon be back in the good graces of your credit card company.
This takes us to subprime credit cards.
Subprime Credit Cards
We used to discourage people from getting subprime credit cards. And honestly, we still think that you should try to get a secured credit card before you get a subprime credit card. (We’ll explain why in just a minute.) But we currently recommend a subprime credit card, so we’ve obviously changed our tune. And here’s why …
If you are in financial distress, you might be unable to come up with the requisite deposit to qualify for a secured card. And the truth is: You need credit cards. You need credit cards if you want your credit score to increase, and you probably need credit cards to qualify for some utilities. So by all means, apply for secured credit cards if you have no other options. But keep in mind: Secured credit cards usually come with high fees and high interest rates. Sometimes, the limit is so low on subprime credit cards that you have reached (or exceeded) a 30 percent utilization rate in the first month, just because of the fees.
So if you apply for subprime credit cards, I want you to think of them as tools for reaching a 720 credit score. Keep them active by charging a tiny, tiny bit each month—like a $3 snack at the gas station. The interest rates will be sky high, and I don’t want you to find yourself in a scenario where you are stacking more and more interest on top of a growing pile of debt.
Okay, one more way to get credit cards is by having a family member add you as an authorized user to an existing credit card.
Authorized User Accounts
I encourage you to read our article about authorized user accounts, but I have one additional thing to add. Authorized user accounts are a great way to increase your credit score—and fast. But they should never—never, never, never—be used as a source of credit. Never.
Did we make it clear? Using a family member’s credit card could hurt your relationship with your family. So protect yourself and your family member by getting yourself added in name only. If your family member abuses the account, you can have your name removed, and your score will be no worse off. But if you abuse the account, your family member’s score could drop permanently, and your relationship could be irreparable.

How Many Credit Cards Should I Have?

Posted on October 2, 2013 by - Credit Cards

Question: “How many credit cards should I have if I want to earn the best possible credit score? I receive a lot of credit card offers in the mail. Should I apply for them?”
Answer: Having the right number of credit cards is a big part of your credit score. Ideally, you should not have any retail store credit cards, but you should have between three and five revolving credit card account. This includes Visa, American Express, MasterCard, or Discover.
One of the biggest factors in determining your credit score is the number of credit cards you have. If you do not have enough credit cards, the credit-scoring bureaus will not know enough about your payment history to feel comfortable that you will pay your bills on time and in full. As a result, they will lower your credit score.
In fact, we always say that no credit is just as bad as poor credit. If the credit-scoring bureaus do not have enough information about you, they give you a lower credit score. Better safe than sorry, they figure!
On the other hand, if you have too many credit cards, the bureaus worry that you might be overextended. People with lots of credit cards can more easily dig themselves a big hole of debt. The credit-scoring bureaus respond to this threat by lowering your credit score.
To answer your question—How many credit cards should I have?—the ideal number of three to five gives the bureaus enough information about you to evaluate your credit card payment history, but it also tells them you are conservative about opening new credit cards.
If you do not have three credit cards, you should open some!
Here are credit cards for people whose scores are below 550.
Here are credit card offers for people whose credit scores fall between 550 and 719.
And here are offers for people with credit scores about 719.
If you have more than five, do not close the extra accounts! Doing so will not help your score as it might lower the average age of credit cards. Instead, stop opening new accounts and be sure to keep the proper credit card balances so you can show the credit-scoring bureaus that you are responsible with all your credit cards.

What Should I Do If I’m Deeply in Debt?

Posted on October 2, 2013 by - Bankruptcy, Debt

One of my friends just told me that he owes $68,000 in credit card debt. He’s 26 years old. And he has that feeling in the pit of his stomach—you know that feeling. He can’t ever truly relax because he’s so worried. All these questions start racing through his head…

  • How I will ever pay all these bills?
  • Will I ever have fun again?
  • Are they going to sue me? And if they do, will my wages be garnished.

As I was talking to him, I was reminded of the last time I felt that way. Several years back, I carried a loan for a friend of mine. He was making a fortune, but he had declared bankruptcy a few years prior, so he didn’t qualify for the loan. So I foolishly agreed to carry the loan on his behalf. He would pay me; I would pay the bank. I knew he was good for it.
Until one day he wasn’t. The market took a nosedive, and so did his business. Suddenly, he couldn’t pay me one month. And his loan skyrocketed to $9,841 a month. I got that feeling. That terrible feeling. How was I going to absorb an extra $9,841-a-month when my own income was down?
The next month, he couldn’t pay me again. So I remember how it feels. It’s terrible, to put it mildly.
The trouble with that feeling is that it stops people from taking rational steps. They just want the feeling to go away. They’ll do anything to make the feeling go away. For some people, that means ignoring it entirely. Others start worrying so much that they cannot focus on the solutions in front of them. There’s so much emotion packed into financial problems that it’s hard to be clear-headed and strategic.
But here’s the truth: There’s always a way out. I’ve had clients who have owed hundreds of thousands of dollars in debt that cannot be discharged during bankruptcy—like most student loans and some back taxes. And there’s always a way out. Yet, you aren’t necessarily going to see it if you are panicking.
So here’s something I want you to try this week. Go sit somewhere peaceful and calm. Give yourself permission to feel that panic for five or ten minutes. Then ask yourself a question. Ask yourself: “If I were to consider every single opportunity for resolving this situation, what would be on that list?”
Then start making a list. It might include things like declaring bankruptcy, selling your house, or getting a second job. It might include things like dipping into your children’s college fund or selling your car and taking the bus.
These are things you might be thinking that you would never, ever consider. But don’t judge the things on your list. If you pile more fear on top of the fear you already have, you aren’t going to find a solution. The key is that you want to allow your mind to open up to all of the possibilities. Let it wander. Invite it to consider the absurd.
And see what you come up with. There are always options. In fact, the universe is filled with infinite possibilities. The question is: Can you see the options?
So take a deep breath. Believe that there is a way. And let me know what you come up with by leaving a comment below.
And one other thing because I want to give you an example of a solution that you might be afraid to think about.
Most people are terrified when they think of bankruptcy. Considering filing bankruptcy just makes them feel worse. But is it really that bad? I don’t think so. Bankruptcy allows people an opportunity to wipe the slate clean. It gives them the chance to start over, without having to feel financial stress day in and day out. And it also allows them to start rebuilding their credit score a while lot faster than if they just keep struggling to stay afloat for years on end.
But you won’t see options like this if you do not allow your mind to consider them. So if you would like a referral to a bankruptcy attorney, send an email to Info@720creditscore.com and we will put you in touch with a bankruptcy attorney in your area. Otherwise, keep us posted on your progress by leaving a comment below!

The Faces of Identity Theft

Posted on September 26, 2013 by - Credit Report

About 80 percent of people have errors on their credit reports, and many of these are a result of identity theft. Identity theft can be a devastating event that gets in the way of learning how to build credit. Once a thief acquires your personal information s/he can quickly suck your account dry or steal your identity, resulting in not only a tremendous financial loss but a considerable outlay of time to put your affairs back in order.
Now, more than ever, you have to be careful about leaving any scrap of personal information available to scheming identity thieves. Take safeguards to avoid leaving yourself open to identity theft, and be aware of the many ways identity theft might occur.
Dumpster diving. One of the more common forms of identity theft is when thieves find pieces of personal information is to rummage through a victim’s rubbish. For example, the credit card offers that you discard without a thought might be used by a dumpster diver to set up credit accounts in your name. Bank account statements that have your credit card number or bank account might even be used to purchase items online or over the phone. To prevent this, purchase a shredder and use it on anything with your personal information.
Open-access mailboxes. If you have a mailbox that is not secured or is a community mailbox, beware of identity thieves snatching your mail and setting up bogus accounts in your name. If you’re going to be away on vacation, protect yourself from identity theft by asking the post office to put your mail on hold so no one can grab it.
Pickpockets and purse-snatchers. Make sure you never leave your purse or bag unattended. Having access to your credit card and driver’s license is an identity thief’s dream. For that reason, never, ever carry your Social Security card in your wallet.
Phishers and Phreakers. Be especially wary of phishers and phreakers, the newest form of identity theft. Phreakers are people who search for personal information by eavesdropping on telephone calls.  Phishers send cleverly disguised emails that ask you to provide personal account information. Using anti-virus software and a firewall is a good way to cut down on malignant attempts by criminals to access your information. Do not share your password with anybody and change it often to decrease the possibility someone may hack into your computer. Also watch out for spyware, which is often installed on your computer without your consent. It can monitor your computer for personal information, such as credit card numbers.
Keep a close lid on your Social Security number. This is your most sensitive personal information, and when an identity thief gets your Social Security number, s/he can easily steal your identity. Do not give out your number unless you started the call and can confirm the identity of the person/company you are calling.
Always keep track of your credit report. Regularly checking your credit report is the best weapon you have against identity theft. Request copies of your credit report at least four times a year. You can get a free annual credit report once a year, but remember, never buy your credit score from www.annualcreditreport.com. If you believe you are a victim of identity theft, you can start by placing a freeze on your credit report. Contact the three credit-scoring bureaus (here, here, and here) to request this credit freeze. Then make a police report, and submit this, along with all other evidence, to the credit-scoring bureaus.
If the credit-bureaus refuse to correct the errors on your credit report, fight back by hiring an attorney.

The Credit Card Companies’ Dirty Little Secret

Posted on September 26, 2013 by - Credit Cards, Credit Score

People already know that bankruptcies, foreclosures, repossessions, and collections will hurt their credit scores. And it’s no big secret that late payments are one of the causes of bad credit. But I bet you don’t know about some of the things that hurt credit! Today’s blog is about the the dirty little secret that will hurt your credit score. Here is is …
Credit card companies often omit or inaccurately report credit card limits, and this causes your score to drop. About half of all consumers are missing at least one credit limit on their credit reports. And in other instances, credit card companies intentionally report a lower limit than you have. Why does this hurt your credit score? Well, the credit-scoring system places a lot of  weight on something called a utilization rate. The utilization rate represents your credit card balance as a percentage of your limit. If your limit is $1000 and your balance is $300, you have a 30 percent utilization rate. If your balance increases to $500, your utilization rate would increase to 50 percent. In other words, you would be utilizing 50 percent of your available limit.
The credit-scoring formula responds more favorably to people who have a utilization rate that is no higher than 30 percent.
Now let’s imagine that you have a $300 balance on a credit card with a limit of $1000. Your utilization rate is 30 percent. Good news for your credit score, right? Not so fast. If the credit card company is only reporting a $500 limit, you will appear to be carrying a 60 percent utilization rate because the credit-scoring bureaus will think you are using $300 of a $500 limit. And this hurts your credit score.
There are a lot of theories as to why the credit card companies do this. One is that credit card companies buy lists of borrowers whose limits are, for example, more than $10,000. The companies then send credit card offers with enticing interest rates to the people on these lists. Their goal is to encourage borrowers to switch cards. Your credit card company does not want your name on that list. They want to make sure that you remain a loyal customer. In an effort to keep you as a client, some experts say credit card companies report a lower credit limit than you actually have, or they do not report your limit at all. This makes you less appealing to other credit card companies. This might be good news for their client list, but it is bad news for your credit score.
Are you a victim of this scam? If so, take the following steps:
1.     Pull your credit report from www.my720ficoscore.com.
2.     If the credit card companies are inaccurately reporting any credit limit of yours, immediately begin the process of correcting this mistake. Remember, if you cannot get this mistake fixed, you can and should fight back!

Protecting Yourself From Common Bankruptcy Scams

Posted on September 23, 2013 by - Bankruptcy, Debt

If you are facing the pressure of mounting bills, creditors calling your home all day, and compounding interest payments pulling you more and more underwater, hiring a bankruptcy attorney might be your best option, but beware of bankruptcy scams!
Filing for bankruptcy can be a tricky process, and seeking the help of a bankruptcy expert is not a bad idea. Still, know that some unscrupulous companies will try to take advantage of your financial stress. Knowing what to look for will help you avoid these bankruptcy scams.
Some dishonest companies target people who are undergoing a bankruptcy. But instead of offering legitimate services, these bankruptcy scams profit from the desperation of people in the throes of financial crisis. These companies usually advertise on the Internet, in the newspaper, or directly contact people whose bankruptcies are indicated by public-record notices.
Some companies may charge you for services that you can do yourself. For example, these companies may charge you for finding a lawyer, something you can definitely do on your own.  Click here for an introduction to a bankruptcy attorney that we work with.
Even worse, many disreputable companies might make unlikely promises. For example, some will promise to remove your bankruptcy by working out a compromise with your creditors. You pay them a chunk of cash, which they promise to distribute to your creditors. When and whether they pay those bills is up for question. And more importantly, no one can remove a bankruptcy from your record!
The number one sign of bankruptcy scams is when the offer sounds too good to be true. There is no magic cure for bankruptcy. If the company is over-promising by saying they can make your bankruptcy disappear, they are not disclosing the full truth.
Also beware of any company that takes your money without informing you of your rights. These might be fly-by-the night bankruptcy scams who will disappear with your cash in their pockets. Call around and ask for referrals from bankruptcy attorneys and industry experts before settling on a bankruptcy company. You will likely have much more luck if you do the research rather than waiting for the company to find you.