Tag Archives: credit cards

What Is the Automatic Stay and How Does it Protect Debtors in Chapter 7 and 13 Bankruptcy?

The Automatic Stay against collections is one of the quickest and most immediate benefits of filing a Chapter 7 and Chapter 13 bankruptcy. It will stop your creditor harassment instantly upon filing, with no need to wait for your final discharge for relief.

To read more about the Automatic Stay in Bankruptcy, click here to read our full post on this topic on the new Michigan Bankruptcy Blog of The Hilla Law Firm, PLLC.

If you are a southeast Michigan resident and are considering filing for bankruptcy, please contact us at (866) 674-2317 or john@hillalaw.com to schedule a free, initial consultation.

What Do the New Credit Card Laws Mean to Detroit Consumers?

At the end of February, some key changes to the way that the credit card industry bills and charges interest went into effect as part of new legislation signed by President Obama.  Although touted by the President and by supporters of legislation in Congress as a significant step forward in protecting consumers, this legislation is, in fact, a very minor step forward from the previous credit card billing and financing status quo.

There are, to be sure, some improvements worth noting in the new legislation—but not without some accompany areas in which there is a distinct lack of improvement:

  • Credit card issuers can no longer raise interest rates on existing balances. This is why your credit card issuer may have raised your interest rates earlier this year, regardless of your payment history. They were slipping one in while they still could, or, in some cases, canceling the card. What the legislation did not do is set a rate ceiling for new customers or for debt incurred for future purchases.
  • Credit card issuers can no longer impose a fee upon you when you exceed your credit-limit. However, card issuers can still charge all kinds of other fees, including annual and “inactivity” fees.
  • Card issuers are now required to apply your payments to the part of your balance with the highest interest-rate first. Previously, if you had a cash advance balance on your card with a high interest rate, that would be the last place the card issuer would apply your latest payment. Now, it is required to be the first. However, some bad news if you are among the many paying only the minimum payment each month: when you make only the minimum monthly payment,  card issuers are still inexplicably allowed to apply this payment to the lowest rate debt on the card!
  • Your due-date must now be the same date every month, you must receive your bill at least 21 days before the bill is due, and a practice known as “double-cycle billing,” in which the card issuer uses an average daily balance over 2 months to calculate your interest rate, is now prohibited. You may have also seen on your most recent statement or two a disclosure revealing the amount of time it would take you to pay off the balance making only the minimum monthly payment and how much you’d need to pay monthly to eliminate your debt within 3 years.
  • Card issuers are now required to give you 45 days’ notice before making certain account-changes, such as interest rate hikes, charging allowed fees, and other things. However, card issuers are still allowed to close your account or lower your credit-limit for any or no reason at all without any advance notice.

Source: USA Today.

In short, the legislation does take some positive steps forward, but, in my opinion, it doesn’t go far enough in protecting consumers from credit card issuers’ most egregious practices. The problem with “halfway” legislation of this sort, in my opinion, is that it allows the President and legislators to claim that “signifcant reform” has taken place, when, really, a few of the practices of the credit card issuers have simply been modified slightly toward the betterment of consumers. When the politicians involved can successfully make that claim, it is unlikely that further reform will come our way anytime soon.

While it is important that card issuers are now required to give you the information you need to be a better consumer and to make sound financial decisions, what is plain is that, when you click that link on your online statement that tells you how long it will take you to pay off your balance, you will see that your debt is not going anywhere anytime soon as a result of these new laws.

However, other solutions remain viable. A Chapter 13 bankruptcy can still force card lenders and other debt purveyors into a court-ordered payment plan, and a Chapter 7 bankruptcy can still liquidate most debts entirely. If your debt-load is keeping you from caring for your family, from keeping a roof over your head, or from getting to the place you need to be in life, please contact me at john@hillalaw.com or (866) 674-2317 to schedule a free, initial consultation so that I can help you find a legitimate path toward a financially sound future.

What Happens if I Forget to List a Creditor in My Bankruptcy Petition?

When you are filing for bankruptcy, it’s all too easy to forget to list a creditor or to discover, after the petition has been filed, a creditor that you did not even know existed. When debts are bought and sold by creditors and collection agencies faster than a credit report can often account for the exchanges, it’s a commonplace phenomenon for a filing debtor to receive, after filing the petition, a collection letter from one of the seemingly endless fly-by-night collection agencies for a debt that the debtor did not know had changed hands. (As a consumer bankruptcy attorney working in a specific geographic area, the Detroit area of southeast Michigan, I am often amazed at the sheer number of these companies that come and go like schools of fish … Outside of a few larger agencies, each petition I file brings a slew of collection agencies I have never seen before and will likely never see again!)

Other times, leaving a creditor off of a listing is just a matter of simple error. No big deal. It happens. I try to avoid such error with my clients by working with them to obtain their latest credit report prior to filing their petitions. Most of the time, this nets all of the creditors swimming around them, and it will usually ensure that at least the original debts owed by my clients are successfully listed in the petition, even if a debt happens to have been recently sold off to some random collection agency.

So long as the error or omission is caught early enough in the roughly 4 month bankruptcy process, it is a simple matter to add a missed or missing creditor to a filed petition. The court charges a $23 fee for such amendments, but it is worth the cost. Although, in a Chapter 7, a non-listed debt will still be discharged, if the creditor has a claim against the debtor for fraud, theft, some willful or malicious act against the filing debtor, or if the creditor would have received funds from the filing debtor’s bankruptcy estate if they had been listed, that debt may not be discharged.

Additionally, it goes without saying that all debts and creditors must be disclosed. When you file a bankruptcy petition, your signature on the petition in several places indicates that you have completely and accurately disclosed all of your assets and liabilities. At the 341 Meeting of Creditors, about halfway through the bankruptcy process, you likewise will swear under oath that you have completely disclosed all of your assets and liabilities. A missing creditor that you are aware of or should have been aware of means that this cannot be true.

It is, thus, very important to work closely—and patiently—with your attorney when filing bankruptcy to ensure that all of the necessary information (especially creditors!) gets included. If your attorney works as I and most other bankruptcy attorneys that I am acquainted with do, you will be required to fill out a lengthy questionnaire at the beginning of your bankruptcy process from which your attorney will create your bankruptcy petition. It is not fun to fill out these questionnaires, but it is extremely necessary. Bankruptcy, like every legal process, is only worth doing if it is done right. It is always worth taking the time and effort up front to ensure that your bankruptcy filing is completely accurate in every way.

If you are a southeast Michigan resident and are considering filing for bankruptcy, please contact me at (866) 674-2317 or john@hillalaw.com to schedule a free, initial consultation.

How Long Will It Take to Rebuild my Credit after Bankruptcy?

While it is true that filing for bankruptcy is a serious blow to anyone’s credit-report, it is no longer completely true that, after a bankruptcy, it is impossible to rebuild your credit standing within a reasonable amount of time.

For more on rebuilding your credit after a Chapter 7 or Chapter 13 bankruptcy, click here to read our full article on this topic on the new Michigan bankruptcy blog of The Hilla Law Firm, PLLC.

If you are a southeast Michigan resident and are considering filing for bankruptcy, please contact me at (866) 674-2317 or john@hillalaw.com to schedule a free, initial consultation.

Michigan Bankruptcy Lawyer: Best of the Bankruptcy Basics

I began this blog only last December, and, although six months is not a lot of time to assess the effectiveness of anything, one thing that has become clear to me is the number of people interested in very basic information about bankruptcy. The ground-level hows and whys and whens remain a mystery to many people, despite the huge amount of information about bankruptcy available on the internet and elsewhere. The posts I’ve written here that address some of these basic questions are among the most-viewed, far exceeding the readership of my posts addressing very specific issues within the framework of bankruptcy.

Therefore, for the benefit of any new readers who may stumble upon this blog, I’d like to take the opportunity, to point toward some of my previous posts that have touched upon the very basic basics of bankruptcy. Wondering where to get started? Try reading these first, below, first.

If you are a southeast Michigan resident and are considering filing for bankruptcy, please contact me at (866) 674-2317 or john@hillalaw.com to schedule a free, initial consultation.

Can I Still Use My Credit-Cards if I am Considering Bankruptcy?

The use of credit cards before filing for bankruptcy can be considered fraudulent, endangering the dischargeability of the debt in question, your Chapter 7 or Chapter 13 discharge entirely, or even carry with it criminal fraud consequences.

To read more, click here to read our full article on credit card usage prior to filing for bankruptcy on the new Michigan bankruptcy blog of The Hilla Law Firm, PLLC.

If you are a southeast Michigan resident and are considering filing for bankruptcy, please contact us at (866) 674-2317 or john@hillalaw.com to schedule a free, initial consultation.

Is Debt Consolidation a Good Alternative to Bankruptcy?

Many consumers question whether “debt elimination,” which would occur under, for example, a Chapter 7 bankruptcy filing, is a better or worse option with regard to their future credit-scores than “debt consolidation,” a non-bankruptcy-related procedure. The answer is that it depends.

What it depends upon is, first, your current credit standing. A bankruptcy will always be detrimental to your credit-score and will remain on your credit-report for 10 years. However, there comes a point for consumers who have suffered financial set-backs where the impact of a bankruptcy upon their credit-score is not as harmful as lingering in a state of financial decline. This occurs when they have already missed multiple payments, are in arrears on home or auto payments, or possibly have been foreclosed upon or had a vehicle repossessed. At this point, the bankruptcy filing is actually, effectively, an improvement. That is, when you file for bankruptcy and your debt is discharged, you are at least in a state of rebuilding your financial well-being and credit-score rather than treading water in a state of steady decline and suffering incessant collection attempts and late-fee charge application.

Even more to the point, whether debt consolidation is a good option, depends greatly upon the means by which you are consolidating your debt. For the most part, however, debt consolidation is not a good deal for the consumer in need.

There are legitimate credit counseling agencies who provide the pre-bankruptcy petition credit counseling that is required by bankruptcy law. These agencies sometimes recommend a debt management plan, which, for some debtors, may provide a non-bankruptcy solution to their debt management problems. Often, however, such plans are not a good idea as they usually do not reduce the principal owed by the debtor and don’t help with secured debt, such as home mortgages or auto loans.

Worse, there the other “debt consolidators” that debtors considering bankruptcy tend to run into. These are for-profit companies that claim to be able to negotiate with a debtor’s creditors. These companies do not have any legal means of convincing a credit card issuer or other creditor to reduce a debtor’s debt, and, often, they simply take the debtor’s money in the form of a monthly “lump” payment and hold onto it. Very few debtors end up completing the “consolidation” programs offered by these companies, and, in my experience, they often end up being just another creditor listed in the bankruptcy petition when the debtor ends up filing for bankruptcy anyway.

In short, be very careful of which company is offering you a “debt consolidation” plan. For the most part, it is not a good deal and may even be harmful to many consumers, regardless of whether they go on to consider filing for bankruptcy as an option.

If you are a southeast Michigan resident and are considering filing for bankruptcy, please contact me at (866) 674-2317 or john@hillalaw.com to schedule a free, initial consultation.