Time Frame

• Per the FHA Guidelines, a debtor must wait at least two years after a Chapter 7 or 13 is discharged before you can qualify for a mortgage.
• FHA makes an exception to the two-year waiting period for Chapter 7 filings. If you had to file due to extenuating circumstances beyond your control, such as a medical condition or physical disability that kept you out of work, you may qualify after a 12-month waiting period post discharge. FHA requires you to document responsible financial management in the interim.
• You must obtain court permission to enter into the mortgage transaction after a Chapter 13, according to the FHA Handbook. Chapter 7 filings have no such requirement, although you must have reestablished good credit without incurring new credit obligations.

In closing, while bankruptcy will significantly impact your credit, you are able to obtain a mortgage within two years if the above requirements are met.

Randy M. Creighton, Esq.

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The latest figures on personal bankruptcy filings in the U.S. have been released and it looks like 2010 will see the most bankruptcy cases since 2005, when the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) took effect.

Bankruptcy cases filed in federal courts for fiscal year 2010, the 12-month period ending September 30, totaled 1,596,355, up 13.8 percent over total FY 2009 bankruptcy filings of 1,402,816, according to statistics released today by the Administrative Office of the U.S. Courts.

While non-business bankruptcy filings continued to rise in FY 2010, business filings dropped slightly for the first time since 2006.  The bankruptcies reported today are for October 1, 2009 through September 30, 2010.

In FY 2010, filings rose for most bankruptcy chapters:

• Chapter 7 filings in FY 2010 totaled 1,146,511, up 15.9 percent from the 989,227 chapter 7 filings in FY 2009.
• Chapter 11 filings fell 3.8 percent, decreasing from 14,745 in FY 2009 to 14,191 in FY 2010.
• Chapter 13 filings rose 9.2 percent, from 398,210 in FY 2009 to 434,839 in FY 2010.
• In FY 2010,chapter 12 filings totaled 707, up 45.2 percent from the 487 chapter 12 filings in FY 2009.

Nevada Statistics

Bankruptcy cases filed in Nevada federal courts for fiscal year 2010, the 12-month period ending September 30, totaled 28,871, up 8% over the total FY 2009 bankruptcy filings of 26,569, according to statistics released today by the Administrative Office of the U.S. Courts.

If you are thinking of filing bankruptcy make sure to speak with an experienced Las Vegas Bankruptcy Attorney.

Randy M. Creighton, Esq.

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I have a client from Las Vegas, Nevada and he told me that a creditor, which was a collection agency, kept calling him at work.  My client responded by telling the creditor to stop calling at work or he will get fired.  The creditor continued to call him at work, and he finally came to see me to discuss bankruptcy.  I told him Chapter 13 and Chapter 7 bankruptcy stops these types of calls.

If a creditor calls one of my client after he filed bankruptcy I always recommend that the debtor give the creditor his case number, the date the case was filed and let the creditor know you have a Las Vegas Bankruptcy Attorney and provide my name.  If this creditor calls again the debtor should ask the creditor for permission to record the conversation so that your Las Vegas Bankruptcy Attorney can use the recording against the creditor when he seeks damages in court for violating the automatic stay that went into effect as soon as your case was filed.

Randy M. Creighton, Esq. Las Vegas Bankruptcy Attorney

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The most common deterrent for someone filing bankruptcy is the negative effect it will have on their credit.  Many of my clients assume that, since your credit report will list a bankruptcy for ten years, they’ll be unable to obtain any kind of credit at all.

It is true that your bankruptcy will be on your credit for ten years but be rest assured it is not as bad as you think.  The older your bankruptcy becomes, especially after the first two (2) years since you have filed bankruptcy, the less important and damaging the bankruptcy will be to potential lenders.  

However, you can take active steps to immediately repair your credit.  The months and years that follow the filing and discharge of your bankruptcy are very important to re-establishing your credit.  You have two options on improving your credit:

(1) Do nothing and hope your credit returns over a 3 to 4 year period; or

(2) Take active steps to improving your credit. 

By taking active steps to improve your credit, and by being responsible with any new credit you receive, you will see significant increases in your credit score. 

There are two important reasons to rebuild your credit score.  First, a bankruptcy hammers your credit score which reduces your chances of availing credit in the future. Hence, unless you bring your credit score up to an acceptable level, the chances of you getting the credit you need to rebuild your life are quite low. Secondly, it is well-known that people with a better credit rating can get a loan at a lower interest rate than those with a bad credit rating. Hence when you improve your credit rating, not only do you become eligible for a loan again, but you can get it at a lower interest rate as well.

The following is a list of recommendations to immediately improve your credit score:

1. Find A Credit Union;
2. Clean up your credit report as much as possible;
3. Establish and Apply for New Credit;
4. Become an Authorized User on a Friend’s Credit Card;
5. Obtain a Secured Credit Card;
6. Get an Installment Loan;
7. Get a Store Card; and
8. Keep the Accounts Active And PAY ON TIME

In some respects, bankruptcy will affect you for the next ten years. By being financially responsible, though, you can minimize these effects, and get back to a normal life surprisingly quickly.

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According to new statistics released by RealtTrac the number of foreclosure filings nationally climbed over 4% in the month of August in comparison to July.  A foreclosure filing includes a default notice, notice of trustee sale and the actual sale of the subject property.  Thus, a property will have at least three foreclosure filings before it is officially foreclosed.

Not surprisingly, Nevada continues to hold the dubious honor of having the highest foreclosure rate, a trophy this state has held for 43 consecutive months.  In Nevada one in every 82 housing units received a foreclosure filing in July.  July saw nearly a 7% increase from the previous month in foreclosure filings with a total of 13,727. 

There is some good news though; July 2010 saw a 30 percent decrease in foreclosure filings from July 2009.  Further, July 2010 was the 10^th consecutive month that the number of foreclosure filings in Nevada decreased.  These factors are pointing to a stabilization of the housing market.

The reasons for decreased foreclosure filings include many homeowners avoiding foreclosure via either a short sale or bankruptcy.

In a short sale the lender voluntarily agrees to accept less than what is owed on the promissory note.  Further, in some instances, the lender will even forgive any deficiency that may result from the short sale.  A deficiency is the difference between the sale price and the outstanding amount due and owing on the promissory note.  This release of deficiency is especially important in Nevada as Nevada is a recourse state, and without the deficiency release, the lender will have six (6) years from the date of the closing of the short sale to pursue the homeowner for the deficiency.

In a Chapter 7 bankruptcy an individual can erase all of the debt associated with the home as well as any unsecured debt, such as credit cards.

In a Chapter 13 bankruptcy an individual may be able to keep her home while also stripping, or in lay terms, removing the second lien from the property.  Also, in a Chapter 13 all unsecured debt will be extinguished.

Randy M. Creighton is an experienced Las Vegas Bankruptcy attorney and has helped countless individuals decide whether to short sale or file bankruptcy.  If you are contemplating a bankruptcy and/or short sale, he can assist and navigate you through the entire process.

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Here is the process a creditor must go through to garnish your wages.  First, the creditor must file a lawsuit against you.  You then have to be served with the lawsuit and you will at that time be able to defend yourself.  If you lose, either after you defend yourself or just don’t file an answer, the creditor will ask the Court and receive a judgment against you.  After the creditor has received the judgment he can petition the Court for a writ of garnishment of your paycheck. The Court generally signs this writ (another word for an Order) when the creditor files it. The Writ of Garnishment is then sent to your employer (and the creditor may or may not know who the employer is).

When the employer gets the writ of garnishment, they are bound by the Court’s Order to withhold money from your paycheck and send it to the creditor. Nevada law protects 75% of your wages in order to leave you enough money for the necessities of life, but needless to say you will be left with very little to survive.

In the end, the wage garnishment process can take months to pan out.  Thus, if a creditor/collection agency has told you that they will garnish tomorrow if you don’t pay today, and you haven’t been served with a lawsuit/there is no judgment existing, then you may have an excellent case to sue the creditor for violations of your state and/or federal debt collection laws.

If however a creditor has gone through the necessary steps and properly obtained a wage garnishment order all is not lost.  Bankruptcy will immediately stop all wage garnishment orders and allow you a fresh start.  So, if you are served with a wage garnishment I highly recommend you seek.

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So what types of excuses have we used in order for us to fool ourselves into using that credit card, just once more? Here is a short list of ten common excuses for unplanned charges on our credit cards:

1. There is a bargain you just can’t turn down.

You are at Best Buy and the TV you have always been dreaming of is on sale.  You think to yourself that you are in the right place at the right time.  As you begin to think about whether you can buy the TV and whether it was in your budget a sales person approaches you with the kicker, 0% interest for 12 months.  But you really have to think, do you really need this item now and are you really saving enough to justify this spontaneous purchase?

2. The rewards from credit card purchases are worth it.

I try and only use credit cards that offer bonus points/cash back from certain purchases such as gas and groceries. I have to tell you, it has been working out great. In the end, you have to remember that there is a reason why credit companies offer these types of reward programs because people usually don’t pay off the entire balance and instead rack up significant interest charges. They want your business and your interest, plain and simple.

In order for you to really capitalize on the rewards is to avoid any and all interest charges by paying off your balance each month. If not, you’re falling into the ‘free’ rewards trap.

3. The 0% introductory rate is big help when making big purchases.

Remember that new shiny TV we talked about earlier.  We both know the TV was not in your budget, well at least the sticker price isn’t.  But if you buy the TV interest free for 12 months your payment will only be $125.00 per month.  You think to yourself that TV is now affordable.  Up front, we say we’ll pay off the balance, but in reality, we get sucked into buying even more until the period is over and you’re stuck with massive finance charges.

The same goes for 0% balance transfers. Sure, some people can avoid paying any interest by transferring credit debt from card to card, but if you forget for any period of time and you’re stuck with more high interest debt. Avoid the 0% interest trap!

4. It’s for an emergency!

So you have an emergency fund, or maybe not, but there comes along a purchase, such as a home repair, that you decide might be best to charge it instead of tapping into your emergency fund. You’d like to keep your emergency fund intact and cheat just this once into charging the expense. It’ll only happen once, right?

5. We’ve been good, so time to treat ourselves.

It’s been a long month on the job and you and the wife are just tired of staying home for the weekend.  Instead, lets go to California for the weekend and enjoy the beaches. Maybe you had that eye on the latest iPhone that Apple released. You’ve worked hard for you money and now it’s time to buy something for yourself. By charging it, you almost taking away a little of the guilt since you don’t see the immediate impact of seeing the funds quickly disappear from the bank account.

Just because you think you deserve it, it doesn’t mean that suddenly you are immune to any finance charges on your credit card you may incur.  The $2,500 trip to California will end up costing you $4,000+.  Budget for your vacations and treats for yourself. 

6. I’ll start paying off my debt next month.

Why waste your fun money by starting to pay off your debt, the debt can wait.  But, while the debt waits the interest charges accumulate.  Every so often you can justify a purchase by saying to yourself that you are going to make changes to your budget to have the additional funds to pay down that debt. Months go by and it never happens. You need to have the attitude to start NOW or you may fall victim to the continuous cycle of credit card debt. It’s time to follow through to the promise you made to yourself to achieve your goals of being debt free.

7. I’m going to get a raise soon.

Let’s be honest with ourselves, you are lucky to have a job let alone be expecting a raise and/or bonus.  In today’s economy bonuses and raises are a thing of the past.  Plus, even if you do get that raise in three months you want to be able to enjoy it THEN and not be paying of credit card debt from months ago.  You work hard and you deserve to splurge your bonus and/or raise but WAIT to get it.

8. This is the last time.

You have your plan of not using your credit cards until you pay off the balance. But wait, before that, I just need to make one more additional purchase. One more purchase won’t hurt, right? Hook, line and sinker; you’ve just avoided following through with your plan of paying off your debt. Next time is always the last time until you cut up your cards for good until your debt is gone.

9. The payments are small.

You see the signs everywhere around you. ‘You can have this TV or computer for only $40 month!’ What the sign won’t tell you is that you could be ending up paying 25% for the TV because of all the finance charges you’ve racked up by paying the minimums each month. If you can’t afford it now, you really shouldn’t consider any of the gimics stores try and lure you in with.

10. It’s only for a small purchase.

You have that time where you don’t have enough cash on you, so you are forced to use your card. Time after time, the small charges will be adding up. If you already had a balance on your card to begin with, you are fighting the uphill battle again by becoming debt free. You don’t want that $6 lunch to turn into a $7 lunch month after month. Try and use cash for small purchases as much as possible, especially if there is no gain in making the credit card purchase.

In the end, credit card debt can do nothing but bad for your financial health.  While the rewards are enticing the risk is too great.  What excuses have you used in order for us to fool ourselves into using that credit card?  Please share!

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1. 1. Establish a personal budget. This is essential for families and individuals and can be the fastest way to save money. You will instantly see your incomings and outgoings once you create your budget. You will not be able to save money unless you know how much money you have coming in, and how much money you have going out. Once you have prepared a budget of incoming money and outgoing money, you WILL be able to identify areas where you can save. It is MUCH more difficult to save money over a long period of time (the rest of your life?) without a budget.  See budget calculators.
2. Slash the incidentals. Carefully read through one of your credit-card statements, staying on the lookout for ongoing monthly fees that you may have utterly forgotten about. Cancel any club memberships you don’t use and magazine subscriptions you don’t read. And if necessary, resolve to stop spending hard-earned money on lottery tickets.
3. Master the thirty day rule. Whenever you’re considering making an unnecessary purchase, wait thirty days and then ask yourself if you still want that item. Quite often, you’ll find that the urge to buy has passed and you’ll have saved yourself some money by simply waiting. If you want, you can even keep a “thirty day list” where you write down the item and the day you’ll reconsider it, but I prefer just to keep this one in my head – that way, I often just forget about the unimportant things.
4. Write a list before you go shopping – and stick to it. One should never go into a store without a strong idea of what one will be buying while in there. Make a careful plan of what you’ll buy before you go, then stick strictly to that list when you go to the store. Don’t put anything in the cart that’s not on the list, no matter how tempting, and you’ll come out of the store saving a bundle.
5. Call your credit card company and ask for a rate reduction. Take any of your credit cards that are carrying a balance, flip them over, and call the number on the back. Tell them that you want an interest rate reduction or you’ll take your business elsewhere. If the first person you talk to won’t do it, ask to talk to a supervisor. If you have a $5,000 balance, even a 3% rate reduction saves you $150 a year.
6. Pay off the credit card with the highest interest rate first.  Instead of paying the minimum payment on all of your credit cards think about socking away a $100 or so to the highest interest rate card.  By paying a little extra per month you can reduce the total interest paid by hundreds, if not thousands.
7. Plan your meals around your grocery store’s flyer. Instead of just planning your meals based on a cookbook or whatever you can dream up, plan all your meals around what’s on sale in your grocery store’s flyer. Look at the biggest sales, then plan meals based on those ingredients and what you have on hand, and you’ll find yourself with a much smaller food bill than you’re used to.
8. Pay ahead on your mortgage. By paying an extra $100 a month toward the principal on a $150,000, 30-year mortgage with a fixed interest rate of 6.5 percent, you’ll save more than $51,000 in interest and be able to retire your mortgage nearly seven years early. An extra monthly payment of even $20 or $25 can make a surprising difference. Granted, you’d stand to benefit more if you could invest that extra payment in an interest-bearing account offering a guaranteed higher rate of return than your mortgage rate. And paying off your mortgage early means you won’t have the tax benefits of home ownership for the same number of years. But if you’re after the psychological benefit of owning your home outright and spending far less on interest over time, then the extra-payment approach is the way to go.
9. Dig into your community calendar. There are often tons of free events going on in your town that you don’t even know about. Stop by the local library or by city hall and ask how you can get a hold of a listing of upcoming community events, and make an effort to hit the interesting ones. You can often get free meals, free entertainment, and free stuff just by paying attention – even better, you’ll get in touch with what’s going on around you.
10. Hit the library – hard. Don’t look at a library as just a place to get old books. Look at it as a free place to do all sorts of things. I’ve used it to learn a foreign language, meet people, use the Internet anonymously, check out movies and CDs, grab local free newspapers, and keep up on community events. Best of all, it doesn’t cost a dime.

Do you have any additional money savings tips that have worked for you?  If so, please share!

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