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     | Tuesday, November 16, 1999 - 09:03 am  This is the situation... We have numerous charge off's a repossion, and a foreclosure. Credit ruined. Looking back we should have filed Ch7 3 years ago when husband was out of work and we lost everything, but felt we should do the"honorable" thing and try to pay them. We have made lots of mistakes. Now things are better, we both have good jobs, have a stable income. We have started making payment arrangements of the charge off's, car repossion, and bounced checks. My question are we wasting our time???, Our goal is to buy a house in 2 yrs. Even if we spend our money to pay off the collection they will still be on credit.(had no luck trying to negotiate removal)We have a current car loan, 2 low balance credit cards in good standing. The total amount owed is about 18,000. My thought is to file, and use the money we would be using to pay the collections to use towards the down payment. Keep the car loan, and the 2 credit cards to show payment history for the next 2 years. I really want opionions on how lenders will look at this. All of these collections began 3 yrs ago.
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| | Tuesday, November 16, 1999 - 09:32 am Doesn't it depend on how quickly you can pay off your debt? If you can afford it pay it off very quickly, then maybe that is best. But if it will take you 2 years or more then I feel that a Chapter 7 is best, assuming you qualify and lose no property. Why? Because I keep hearing from loan officers that debt/income ratios are very important with home purchases. And further that one can have an "A" credit rating within 2 years after bankruptcy discharge - with the correct post-bankruptcy credit counseling. SO ideally, 2 years after bankruptcy, you can have zero debt for the debt/income ratio and have 2 years of credit re-establishment and "A" or "B" credit, along with a hefty downpayment. The alternative is that after a 2 year period of late payments, those late pays will still show along with the old collections, etc. Plus you have not had time to re-establish credit after those 2 years of collections. I don't know if this is true, but I've heard that while the negative information still shows on credit report for 7 years after a bankruptcy, because it was "discharged in bankruptcy" it is either no longer considered or is no longer heavily weighed in credit decisions. Are discharged debts reported on a different part of the credit report (on the bottom??). I've heard this but have yet to see it. Frequently mortgage loan officers tell my clients to file bankruptcy or else they can't get a loan. I'm sure that it depends on the amount and nature of debt.
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| | Wednesday, November 17, 1999 - 08:36 am voigtkampff said, "And further that one can have an "A" credit rating within 2 years after bankruptcy discharge - with the correct post-bankruptcy credit counseling." Why does one need a credit rating?
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| | Wednesday, November 17, 1999 - 05:02 pm Greg, I'm NOT sure that I understand. Are you disagreeing with the loan officers who provided this information? I've heard it often enough that(for me) it is consensually validated. Or are you commenting on how ridiculous the credit rating system is?
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| | Wednesday, November 17, 1999 - 10:16 pm FHA Loan Guidelines: "Mortgage Credit Analysis for Mortgage Insurance on One- to Four- Directive Number: 4155.1 4155.1 REV-4 CHG-1 CHAPTER 2 MORTGAGE CREDIT ANALYSIS '... A bankruptcy (Chapter 7 liquidation) will not disqualify the borrower if at least two years have passed since the bankruptcy was discharged and the borrower has re-established good credit (or has chosen not to incur new credit obligations), and has demonstrated an ability to manage financial affairs...'" (http://www.hud.gov) Ignore the folklore. With this, you can have a little fun with the loan "officers" who gave you the wrong information.
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| | Thursday, November 18, 1999 - 05:13 am Thanks for the reference Greg. I see that it may take time to wade through it so I'll have to save it for the weekend. But doesn't what you say agree with what I have been told by the loan officers as far as the 2 year period and the credit re-establishment? I should clarify that I am an attorney who does nothing but bankruptcy. The problem is that we attorneys know the law, but credit is more a matter of lending practices and creditor perspective. In fact, as pathetic as it is, I seem to know more than other local bankruptcy attorneys that I've met when it comes to credit. I've had clients approved on mortgages DURING a bankruptcy!! Other times it seems to take 6 months to 2 years. But my information, while it is empirically derived, has a very small sample size from a statistical standpoint, because I don't stay in touch with enough clients to know how their credit is later on. I'm looking for hard, black-letter rules on credit rather than folklore. So I'm going to have to rely on you, the websites you provide, and the many loan officers I know for my credit information.
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| | Thursday, November 18, 1999 - 06:43 am Having reviewed your site, I was aware of your credentials. The ignorance problem is just that; I agree. "... or has chosen not to incur new credit obligations... " No re-establishment is necessary, however two secured credit cards from companies that report to the bureuaus may kill two birds with one stone: savings, and credit re-establishment (for things other than FHA loans). Consider offering a credit repair service one year after discharge-- and a review of the report 6 months later so you can see if what you did stuck. If it didn't, sue. Regarding getting a loan during bankruptcy, see the rules for Chapter 13 in the same section.
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| | Thursday, November 18, 1999 - 08:34 am Greg, I offer credit advice (what I know) for free since I've noted that the FTC has taken the formal opinion that people are better off doing it themselves. That's a Feb. 1998 FTC article from ftc.gov. I can't really charge for the service. I see what you're saying about "chosen not to incur new credit obligations." I find it hard to pass that info on because it is so counter-intuitive TO ME. Of course, I cannot ingore that it is fact. But I have a bad habit of always trying to make sense of things. I might get too creative. I try to imagine that I am a creditor (stand in a pentagram of pig's blood) and try to imagine what would improve my perception of a person requesting credit. The example that I came up with is as follows: 2 people apply for a job, both with some past INDICATOR of a potential problem, and I have 1 job opening. I pick a problem that is similar to what debt represents - a compulsive disorder or slight lack of self-control. Without being too insulting with the analogy, I imagine a drug problem. Both people have been clean for 2 years. I ask what they have been doing for the past 2 years. One worked at the pharmacy and the other was in a padded cell in a tight jacket. I would trust the person who had access to drugs (credit) and chose not to abuse them, rather than trust the person who never had the opportunity and has not proven him/herself. Isn't that a linear analogy? Or is it the type of second hand smoke that gives you the munchies? My THEORY is that a person who never touchs a credit card does qualify for an FHA loan after 2 years. But a person who has 3 or 4 credit cards that show controlled, responsible use might qualify for that same loan PLUS other benefits. Are all FHA the same or do interest rates vary? It's only a theory. If you crush it now, I won't use it anymore.
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| | Thursday, November 18, 1999 - 09:16 am Thanks for all the info. I'm really starting to think Chapt 7 might be what we need to start over. We don't have equity on anything, except a pension, and no large sum of cash in the bank, and yes it could takes us up to 2 years to pay off the bad debts. So I'm thinking if we hold onto the money that we has planned to pay to the debts, save it, we could than use it for down payment. It's just hard to know what the right thing to do is, but i have done some research, after all what harm can it do really when our credit is already shot. Our credit was great up until the job loss. Know any good Bk Atty's in the Sacramento area??????
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| | Thursday, November 18, 1999 - 10:15 am Now that you've made the decision on your own, I'll give you an opinion that I could not have given you before without arousing your distrust. Bankruptcy is definitely the way to go based on the information that you have provided SO FAR. Understand that if your credit is "already shot" then it is probably bad enough that you create the perception of someone who could file bankruptcy at any time. It would scare potential creditors off. WOuld you lend money to someone who shows all the signs of someone about to file Bankruptcy and default? It's a bomb about to go off! What would eliminate that fear that potential creditors feel? How about if the bomb already went off. They know that any money that is disposable can be paid to them because there are no other creditors to vie for it. Also they know that if you don't repay them, they can always sue you and you can't escape by filing bankruptcy. Not for 6 years. That being said, speak to several attorneys in your area. I don't know any. Make sure that your assets are clearly exempt. And don't assume that bankruptcy improves your credit without work on your part. Pull the major credit reports after bankruptcy and make sure that there is no inaccurate info and that the discharged debts are listed as such. And keep visiting this site to decide whether you should take affirmative steps to re-establish credit or whether you should avoid new credit.
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| | Thursday, November 18, 1999 - 11:32 am voigtkampff: Greg is right in that re-establishment, per se, is not necessary. The FHA program can underwrite a mortgage based on things like paid gas or electrical bills in a manual sort of way. I should also point out that Fannie Mae and Freddie Mac won't accept credit scores as valid unless their credit profile has three or more tradelines. Filing bankruptcy and obtaining two secured credit cards (like Greg suggested) can't hurt but a third credit line in there would also be a great help. The FHA-program is a "feel good" kind of program. They provide loans to people they feel are deserving regardless of whether that works out in the real world. Currently the FHA mortgage insurance program is undercapitalized to the tune of $4.5 billion dollars and they had a loss in fiscal year 1998. It doesn't matter -- taxpayers foot the bill. I have financial statements on the FHA program obtained through the Freedom of Information Act (FOIA) if anyone is interested.
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| | Thursday, November 18, 1999 - 06:07 pm Sean, that's really helpful. But what about my question on interest rates with these federal loans? And what if a consumer is not going FHA, Fannie or Freddie? Does my reasoning hold water that re-establishment is necessary in those situations, where they are not "feel-good" loans? Isn't re-establishment always better, even when it's not necessary?
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| | Thursday, November 18, 1999 - 08:19 pm I won't get into all of the facts you guys have gone into here, we could really be here a century trying to figure it out(smile). I can tell you this. If your credit was shot,charge offs,collection accounts,liens,lates etc. of course you would never get a loan or even be able to buy steam of a hotdog, but it you take that same credit, file for bankruptcy (and believe me I suggest that RARELY),follow up with making sure all accounts say "included in BK" (which will carry a neutral listing after a number of months) then open one secured credit card at your bank or Credit Union,take the money you get from that loan and go open another credit card (secured) using that money. Then take that money and open a third. You will make the payments every month on 3 new c/c/'s and the payments will be small (a credit limit of $500.00) will yield a 25.00 payment. Now, just pay and pay and even pay more, let your credit sit with no activity. No inquiries nothing! You will see the Fico going up and up. Inactivity is great for credit. Just pay your bills,save your money,let your BK get a little old and then apply for your loan. I do love it though when I hear people say a BK won't affect you. It does no matter how you slice it, it's baggage! but for people who can't negotiate reduced payoffs through restrictive endorsements,arbitration or mediation or don't know how to do it, then a BK is put in place to protect those people. Sorry so long but I had alot to say! Cheers! Kristi Feahers Carreon & Associates Credit Restoration & Debt Negotiations
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| | Friday, November 19, 1999 - 05:47 am Kristi: You mean... no, say it ain't so! Credit reports have errors after a bankruptcy? In what percentage of the cases?
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| | Friday, November 19, 1999 - 08:20 am Fannie Mae's and Freddie Mac's automated systems are now used to underwrite FHA loans. Did they teach them to have feelings?
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| | Friday, November 19, 1999 - 11:38 am Voigtkampff: Well, FHA doesn't issue loans, per se. They insure loans by offering federal mortgage insurance, usually through the 203(b) program. A loan issued by any private lender that conforms to FHA standards can receive FHA insurance. That means that in the event of foreclosure the FHA program will pay off the lender and take back the property in foreclosure. These homes are eventually liquidated through HUD using a closed-bid auction system. The FHA program is supposedly covered by charging the loan applicants an OTMIP (one time mortgage insurance premium) which covers the defaults, but in reality this amount charged isn't enough to cover the losses. This is not due to underpricing but rather to FHA inefficiencies because many private mortgage insurance providers beat FHA prices and are profitable too. Fannie Mae and Freddie Mac buy a good portion of FHA insured. Why shouldn't they? If the loan goes bad the government picks up the tab and if the loan is good, then they profit from it. Personally I recommend that a person should re-establish credit after a bankruptcy. Last I heard FHA insured loans required 6 tradelines. So that's water&power, gas and phone ... then what? Rent ... cable ... we're up to 5, where's the 6th paid bill? Sometimes it's tough to come up with. Personally I think bankruptcy is an underutilized option. People think about the danger too late. The time to think about bankruptcy is before you incur the debt, not after you figure out you can't pay your bills.
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| | Saturday, November 20, 1999 - 08:22 am Greg: I am not sure if that was meant to be sarcastic or an actual question. Nonetheless, if your in the lending,credit, or scoring business, you already know that answer. Creditors will accept the bankruptcy because by law they have to, but they sure wont go out of their way to update your credit file to say "ic in BK" they don't want to bother w/you. You cost them money. So for everyone who filed a BK, look at your report and write to bureaus to list it correctly. Otherwise you'll be left with all the charge off's and collection accounts hanging around until you make it right. It is easy. One letter for each account listing incorrectly after BK. Kristi Feathers
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| | Saturday, November 20, 1999 - 08:48 am Kristi: If the creditors are informed of the bankruptcy, and neglect to update their records so that the records are accurate when they report to the credit reporting agencies, are the creditors in violation of the Fair Credit Reporting Act? In your estimation, in what percentage of the cases do you see an account not shown as included in bankruptcy when it should be?
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| | Saturday, November 20, 1999 - 03:31 pm Unprecedented as it may seem, I completely agree with Greg on this one. Creditors who have been included in bankruptcy have an obligation to update your credit profile accordingly. It is the law and regardless of whether you cost them money they have an obligation to report the truth of the matter, which is negative enough anyways.
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| | Saturday, November 20, 1999 - 08:42 pm Since I only deal in bankruptcies I have some idea of how often they are incorrectly reported on the credit reports. No statistics. But without being dramatic I have to say that nearly every post-bankruptcy credit report has had some false info with respect to the bnk. By false info, I not only count the failure to state "included in bnk", but also the failure to state the correct chapter of bankruptcy, the NUMBER of bankruptcies (doesn't that stink!!), or when the bankruptcy was filed. Even though I'm upset about the inaccurate info on credit reports, the inaccurate bnk info is not one of my gripes. Because it seems so much easier to fix than other inaccuracies. I always tell debtors to send a copy of the discharge order and the list of creditors directly to each credit reporting bureau, and then pull another report later. I do agree that creditors are obligated to report the bankruptcy, but accept that they will not.
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| | Saturday, November 20, 1999 - 08:49 pm Greg: It is not considered a violation until the consumer has asked for the verification process. The creditors can not be penalized unless they show certain neglect. The law states that if they fail to correct the problem once they are aware of it,then that is purpose neglect. However they can claim it was a reporting error,tapes uploaded before updated etc. It is not in any violation until the consumer discovers it and complains, otherwise no one knows. As for percentage I can tell you this. I have been handeling advanced BK issues for about 13 years and I have NEVER seen a credit report that has all the collection accounts and charge off's listed as "incl in BK" until the consumer questiuoned it. You would be surprised how many of my clients have BK's from 4-6 years ago & the accounts still say "collection Acct" Disgusting huh?. That is why I said earlier, it is so simple to fix. Just take a look at your credit about 90 days after a filing and you will see who left you looking like you still owe. This is really bad for lenders because then it appears that you filed BK and still have additional bad debts. Although a BK is negative also, it is a heck of alot better to at least have a tidy report reading inc in BK" all the way down instead of a BK & a mess. Cheers! Kristi Feathers Carreonandassociates.com
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| | Sunday, November 21, 1999 - 08:32 am Kristi: Have any of yor clients sued the bureaus or creditors for a violation of the FCRA with regard to neglect? Something other than neglect? A current lament is that bankrupcty has been at high rates recently. Would that, coupled with using the incorrect data from that increased number of credit histories skew credit scoring?
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| | Sunday, November 21, 1999 - 02:05 pm Greg: Yes it would,matter of fact the credit scoring system would be much more accurate if consumers had the accounts properly reflected after a bk. When you have a bk and charge offs, collection accounts etc, then the score is not accurately reflected. take that same credit, list all the accounts appropriately and you would have a much more accurate score. In regards to the FCRA and if my clients have sued any CRA, none have sued, but many have filed numerous complaints with the FTC which in turn got on the CRA to be more efficient,beleive it or not, if your disputes are posed right to the CRA, they are pretty good at fixing the mistakes. It's the creditors that need more convincing. The CRA use to lobby more about convincing consumers that nothing could be done to repair accurate negative credit but with more savy consumers these days, the myths that the CRA lobby arn't holding much water. On another note: (not talking about innacurate credit but accurate negative credit) I remember a CNN episode where they interviewed the president of TRW, and he said" Absolutely bad credit, if accurate can not be repaired. The Anchor showed him numerous credit reports where TRW removed accurate negative info and he still would not beleive it. He said it was impossible even though the proof was before him. Now, I tell you this not to advocate consumers ruin their credit and then try to be deceptive but I do not agree that the CRA and creditors who make money off each other, imprison a debtor's credit for 7-10 years. How is society suppose to recover from lay off's, illness's etc when the sentence is so stiff. I heard recently that Congress is trying to lobby a shorter term such as 2-4 years to report negative credit.
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| | Sunday, November 21, 1999 - 02:36 pm Kristi: I actually meant the overall system itself with regard to skewing. If inaccuracy due to bankruptcy is so prevalent, and the scoring formula is based on such inaccurate data, isn't the formula itself off-- if not for everybody, but certainly with regard to those who have been bankrupt? If most people who have been declared bankrupt have credit reports with charged-off accounts (when those accounts should have been reported as Included in Bankruptcy), that would develop the false inference in the scoring system that those having a bankruptcy are also statistically likely to have charged-off accounts. So, whether your charged-off accounts show as included in bankrupcty or not, wouldn't it stand to reason that the score for the bankrupt person would be lower than it should be-- a double-whammy? And, how do you change accurate negative credit?
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| | Sunday, November 21, 1999 - 03:07 pm I'll give you an example. I had a client who had 11 charge off's, 4 collection accounts and a Bankruptcy. His score was 484 (yuk). We attacked every single negative account based on the accuracy issue and that they needed to be changed to "inlc in Bk". In about 40 days everything was changed to "Inc in Bk" and the accounts that were previously listed as past due (the ones he did a court reafirmation on) were questioned as well and changed to "reafirmmed thru Bk". We also questioned a few different addresses and alias that had been reported by lenders inputting incorect ss,address etc. Sixty days after we did all of this (we did it in August) he now showed a score of almost 600!. I understand that a BK is also hell on your credit but if you are forced into it why should you know suffer the double whammy of it and negative accounts. The scoring system is crazy. I also have a client with perfect credit, never had any bad credit(we helped him with a tax problem) so he did not come to us for bad credit. His score was 636. this is only 36 points higher for a guy with perfect credit. Why? because he had a few too many inquiries and showed several possible addresses. That is where the scoring system is flawed. I myself only rank a measly 737 and I have zero balances, own a home and have no alias's,additional address or anything. By standards I should be at 900, which btw I have yet to see. Desktop underwriting has it's advantages but rarely does the score show the person's overall ability. As for changing accurate negative info. I don't think it is appropriate that I go into that here, I only mentioned it to reference the years a person has to suffer the dreaded debtor-prison and that I don't agree that they are penalized for sooooo long.
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| | Monday, November 22, 1999 - 07:24 am Greg, I have read that the credit bureaus (either 1 or all 3 together -I forget) receive 10,000 disputes per day. I am certain that most of them are NOT sincere disputes of inaccurate information. These credit repair clinics know that the bureaus only have 30 days (or 45 days if the consumer late provides additional info) to correct inaccurate or UNVERIFIED information. So I assume that people who really accurately do have debts, keep challenging the verifiability of the accurate info until it is removed. This consumer misconduct is probably what makes it so difficult for people with real issues to get them remedied. Since the FCRA does give the bureaus some discretion to ignore disputes that seem frivolous, and the bureaus only have so much manpower to deal with the 10,000 hits, a lot of good people are hurt. I notice that the FTC formally states that it is prohibited for consumers to dispute accurate information. But the FCT also says that file segregation is illegal and that seems to be continuing as well.
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| | Monday, November 22, 1999 - 10:01 am That is true. You have to be able to argue real issues. The CRA are on to frivilous claims. This is where cOnsumers get confused that they can just do a letter blitz and remove accurate negative info. If you do not have a real argument then you are lying when you dispute it, however there are a ton of reasons you can effectively dispute info that is negative that has some hidden inconsistency that places it legally as inaccurate. People who do file segregation or letter blitzing are just taking consumers money and taking advantage of consumers who do not understand the laws. A good negotiator acts responsibly and is legal and has the consumers best interest at heart, otherwise you are paying a cheezy credit repair fly-by-night company good money for nothing. Let it be said. Check out who you are dealing with. Just as you would check out ay professional.
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| | Monday, November 22, 1999 - 10:19 am In the FTC website they state (or imply maybe? I don't recall) that it is illegal to dispute accurate info. But what happens when these credit docs it do anyway? Is this another case where the FTC has no teeth? I realize on reflection that you are probably right - there is usually some minor thing that I can find to honestly say that negative information is inaccurate. But there are still plenty of people doing the letter blitz without having even a stupid basis for the dispute. What happens to them? Seems like nothing. I feel obligated to tell people not only the legal way but also the practical way to repair credit. I do the latter only grudgingly. I have avoided recommending the credit clinics because of what the FTC website says. I have the FTC's February 1998 article "Credit Repair: Self Help May Be Best" on my wall for clients to see. I'm very torn on this. I sort of tell people what the credit clinics do and admit that it may work, but then point to the FTC article. I want some concrete reason to tell people why they must not go there. A fluffy statement like "it's wrong" does not work.
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| | Monday, November 22, 1999 - 10:54 am I do the same thing. When a client wants to retain us I send a copy of "their rights" under the FCRA and the copy of the FTC "Self Help first" article. I tell them this. Credit restoration or debt negotiations should only be done by someone other then themselves if they A) Cannot do it themselfs and have legitimate beefs. B) Do not understand the laws and cannot conceide them. c) Are afraid they will make it worse. As long as the consumer is aware that they "Have the right to do it themselves" then they are not being taken advanatage of, rather ,like any other business they wish to designate someone more knowledgable to do it for them. My biggest client base is consumers who have tried it before and got so frustrated and impatient that they wanted someone else to deal with the headache of it all. Listed on the form that accompanies a consumers credit report from the CRA has a section that says "Many states have laws the regulate the practices of a CRO" (credit repair org.) it is not prohibited just be sure you check with the Attorney general etc to make sure they are legit. Even the FTC says "if you are going to hire a CRO make sure they are legit. The FTC is not against debt negotiators and credit resolution staff, they are against scams,file segregation and consumers being taken advantage of. What you want the client to be aware of is that they are not paying for a magic bullet but rather their fee's are covering well formated lengthy arguments,follow up,research,postage etc. If a credit repair orginization gives you a 100% guarantee---Run Run Run!,that would be like your attorney guaranteeing the outcome of a case! I don't know if it is too long to post this but it is quite interesting and is written by an Attorney: I apologize if some readers think it is too long, next time I will know better :) Is it Ethical to Try and Remove Legitimate Bad Credit? As stated by an Attorney Yes! One of the best explanations of that is the following article written by Jayson Orvis, Attorney At Law: "Credit Repair" has not been kind to the American consumer. In fact, the phrase is synonymous with fraud. This is the stigma we face as we offer a membership wherein the client is offered an alternative to "credit prison." Because the nasty reputation of credit repair sometimes washes over into our space, we are often called upon to defend the ethics of our service.Despite the disrepute, which taints credit improvement, our service is clearly analogous to the service provided by a defense attorney. The credit report is no more than an allegation. Unfortunately, most citizens never challenge that allegation. By enlisting the Law Offices through N.A.C.A. to their defense, our clients employ us to enter a plea of "not guilty." We take an affirmative defense; we offer a reasonable alibi and leave it to the bureaus to substantiate their allegation. If the bureau claims to have investigated and affirmed the allegation, we appeal the decision. Eventually, we find that most credit report allegations are at some point untenable and are removed.Removing record of a negative credit account, which did actually exist, is undoubtedly ethically sound. We belong to a fundamentally capitalistic civilization and the credit bureaus capitalize on consumer information. Unlike our legal system, the bureaus take no oath to truth, equity and the common good. No American has the moral obligation to support any business venture or corporation, much less a corporation which may well destroy their financial life. The information tended by the credit bureaus is ethically "up for grabs."The credit bureaus would maintain every piece of credit information forever if it weren't for federal law which has directed them to remove most items after seven years. In essence, the credit bureaus themselves practice credit repair, basically at the seven year mark. If it is right to remove accurate credit accounts after seven years, why would it be wrong to do so in less time?In relationship to the consumer, the credit bureaus do not concern themselves with the impact of the information. This information often misrepresents the credit worthiness of the consumer. By tagging good citizens as "deadbeats" the bureaus damage the creditors, the economy and, most importantly, the individual. Several policies and techniques employed by the credit bureaus appear most abusive to the American consumer; these we cite as justification of our opposition to the present credit reporting system.Seven years (10 years for bankruptcy and some court accounts) credit bondage punishes the debtor unjustly. At no point have the credit bureaus ever conducted a study determining seven years to be the point of deadbeat rejuvenation. The seven year mark is entirely arbitrarily. In fact, Dr. Bonnie Gution, adviser to President Bush on consumer affairs, remarked, "...it is our understanding that computer models that predict credit worthiness find most information that is more than two years old nonessential." Based on experience with our clientele, seven years is truly too long. Within a year or two, most consumers completely recover from an economic crisis. For the remaining five or six years, they are left hobbled---forced to rent homes, pay outrageous interest on high risk auto loans, forgo the convenience of credit cards and pay cash for every expenditure. By expelling the consumer from the credit loop, the economy suffers. Our clients come to us on the financial upswing. If they can afford our membership, they are most likely on the way back to financial abundance. These are consumers fully recovered from crisis, re-engaged to financial responsibility and anxious to reenter the credit economy. For them, we offer a deserved parole from the credit prison which they entered as their financial world fell apart.The credit bureaus have not been able to maintain reasonable accuracy in their credit profiles. The bureaus claim an error ratio under 1 percent. In reality, studies conducted by neutral third parties have determined the credit report error ratio to be closer to 40 percent. Unfortunately for the consumer, the credit bureaus choose to err on the side of negative information. As our clients' files have passed through our offices, we have noticed a high incidence of file mergers---the worst kind of file error. In a file merger, the credit of another person with a similar name is spread onto the file of the innocent bystander. Oddly, the credit bureaus fiercely resist correction of these obvious errors. We have found the only way to prompt them to revision is through a lawsuit.Credit reporting makes up only a small portion of the revenue which the bureaus claim each year. The databases really pay off in the sales of information. From generic target marketing lists to invasive personal investigative inquires, the bureaus cull a pool of information larger than any in the civilized world. The end loser is the consumer who values his privacy. The horror stories keep coming about individuals whose jobs have been lost, insurance cancelled, reputation ruined by sloppy collection and dissemination of personal information. This does not include the mass irritation experienced by consumers forced to wade through the reams of junk mail. Privacy is a thing of the past---and the blame can be firmly placed on the credit bureaus.America is not the only country in the world whose economy utilizes consumer credit. Other countries, such as Great Britain, extend credit based on the individual's present credit standing. A grand-scale revision of the credit reporting system in the United States would not throw our economy into chaos and distress. Until that day, we should feel comfortable that the removal of negative credit accounts before the seven-year mark isn't unpatriotic, it's not unfair and it's not unethical. end quotes""" Kristi Feathers carreonandassociates.com
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| | Monday, November 22, 1999 - 02:06 pm Kristi: On at least one point I do agree with your quote: No credit reporting agency that I know of has done research that indicates that 7-years is the magical point of credit rejuvination. Why is 7 the magic number? Why not 6 or 8? Note also that New York State has a special stipulation that says that paid collections are removed from your credit report after five (5) years instead of 7. Who is to say that is wrong or right?
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| | Monday, November 22, 1999 - 08:54 pm Kristi: When did Mr. Orvis write that? Does he have a web site, or does his firm have one? What is N.A.C.A.?
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| | Tuesday, November 23, 1999 - 11:58 am I am not sure when he wrote that, I beleive 1997. I got the material from a CCO Conference. FYI: NACA= National Association for Consumer Awareness. cheers! Kristi Feathers www.carreonandassociates.com
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| | Thursday, January 13, 2000 - 12:15 pm Bankruptcy vs. Charge off--My husband and I filed chapter 7 in 1998. It was discharged 7/98. However, we have found on our credit reports from all 3 agencies incorrect information. The accounts that were included in bankruptcy are being reported as charged off/written off/delinquent and as collection accounts. Equifax fixed all the accounts immediately to say only "included in Bankruptcy." We have yet to receive an updated report from Trans Union, and Experian, updated some accounts to read "included in bankruptcy," but also left all the other negative information on the report. For example, one account says incl in bankruptcy/charged off. delinquent 30 days, 60 days, and 120 days etc... Also, we were told by Experian that the creditors could report all negative information as long as it was accurate even though the account in question was included in the bankruptcy. What is most interesting is that most of the charge offs are reported approximately 30 days before the case was filed but certainly after they were notified by us or our attorney of our intentions to file chapter 7. In addition, some accounts are reported as charged off with no history of delinquent payments. Does this mean the creditors can arbitrarily decide that one day past due means the account is charged only because of their knowledge of a pending bankruptcy. Also, Trans Union and Equifax indicated that all negative information regarding an account is wiped out with bankruptcy. Yet, Experian adamently disagrees. Why file bankruptcy to have a 10 years negative credit when charge offs and delinquencies would have be removed in only seven. I have strong feelings these types of actions are a form of retalliation against cosumers who file bankruptcy. The creditor's figure they aren't going to be able to collect due to the bankruptcy, so they will make life miserable some other way. I would like to know if we have any recourse in attempting to have all three credit reports accurately report the accounts included in bankruptcy instead of included in bankruptcy with all the other negative appearing as well. Also, we kept our home even though we included in the bankruptcy, however, we did not sign a reaffirmation agreement. We have recently fallen behind in the payments and have decided we are unable to keep up with the high mortage payments. We have been contacted by the mortgage company of their intention to foreclose. When we contacted them, we were informed that since the bankruptcy had been discharged and we remained in the home subsequent to the discharge, the debt originally owed to them was restablished and nulliefied their inclusion in the original chapter 7. If this is so, what recourse do we have? Could someone please offer some insight and adivce. Thank you.
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| | Thursday, January 13, 2000 - 01:29 pm The answer on your mortgage is that you are absolved of any personal liability for the mortgage. In other words if your house goes into foreclosure, they sell it for $70,000 and you owe $80,000 they won't be able to sue you for the $10,000 shortfall because it was discharged through bankruptcy. All accounts should say included in bankruptcy. The best advice I have regarding the matter is to obtain a copy of your discharge papers and send that to all three credit bureaus and they should update their records to show accurate information. If you are in foreclosure and you cannot bring the payments current you should either sell the house and salvage what you can or file bankruptcy to halt the foreclosure. I believe under chapter 13 you prepare a plan to bring your mortgage debt current and you have up to 60 months to accomplish that.
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| | Thursday, January 13, 2000 - 03:34 pm Sean is correct. If you want to sound authoritative when the attorneys threaten you, the code provision which imposes a permanent injunction against the mortgage company pursuing you personally is 11 USC 524(a)(2). In my state, they would still be able to foreclose, but only to get title. If the same is true where you are, and since that is all they can get, I would offer them a deed in lieu of foreclosure. It would save them money and might possibly help you on the credit report. Even though they cannot pursue you for a debt, since they can sue and get a judgment, that might appear on the public records section of a credit report and frighten future mortgage companies. Consult with a real estate attorney because they will want you to sign a warranty deed, wherein you would warranty that there are no liens or ecumbrances on the property. Since this is a post-bnk document, if you are wrong, they might be able to come after you if they are damaged by the misrepresentation. Don't know. Offer a quit-claim deed only, I think. See a real estate attorney AND a bnk attorney who knows the laws where you reside.
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| | Thursday, January 13, 2000 - 04:11 pm Thank you both for your responses. I reside in California. My main concern was being responsible for any deficiency as a result of the sale of the home. Now with that out of the way, I am concerned about how these post-bankruptcy actions will play on the credit reports. As it currently stands, because we have remained in the home and continued payments until recently, the reports are now showing as delinquencies in conjunction with the included in bankruptcy information. Can information be posted such as this be posed subsequent to the posting of the included in bankruptcy. Also, how will other creditors, not just mortgage companies, view the possible judgment information that may appear on the reports as a result of foreclosure? If a judgement is reported in the public records section, is it also subject to the 10 rule as far as length of reporting time. We do not plan to ever buy another home here in California. We have decedied to look into that possiblity after my husband's retirement in no less than 15 years and depending on where we re-locate to. Also, I wonder if either of you know whether the information Experian has given to us regarding the creditors included bankruptcy being able to simultaneously report charge offs, delinquencies and balances due in conjuction with the indluced in bankruptcy information. Your input is greatly appreciated!
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| | Friday, January 14, 2000 - 08:37 am California foreclosures are handled non-judicially. That means there will be no deficiency judgement. It is not in the lender's interest to take the extra time and money to pursue the matter in court when they can just post the required notices, wait the required time and perform a trustee sale. A trustee sale will show on the public records and will have a negative effect on your credit report. You should do everything you can to sell before the Notice of Delinquency is recorded.
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| | Friday, January 14, 2000 - 10:45 am I believe the criteria for the lender HAVING to go the non judicial route is PURCHASE money loan. It's been a long time, but I remember the debates over refi's being subject to judicial foreclosure. The laws might have changed. I've seen judicial foreclosures only when fraud was involved on investment/construction loans. A homeowner *shouldn't* have to worry, and the bankruptcy attorney should definitely know.
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| | Friday, January 14, 2000 - 03:07 pm Gosh Christine, I sure hope that you are talking about someone else, because when you put it that way it just makes it more embarrassing when I'm forced to say that I don't have a clue. I might have the terminology reversed, but I recall that Florida is a title-theory state. Other states, like California, are lien-theory states. The "theory" refers to the nature of the purchaser's interest in the real estate. Here the title immediately vests in the purchaser's name, and the bank only has a lien, evidenced in the public records by a mortgage deed. This provides notice to 3rd parties and perfects the bank's lien (security interest). I am under the uneducated impression that in California, the bank retains title, and the purchaser only gets a deed of trust. If I am correct then title stays with the bank, until the note is completely satisfied. So in Florida a bank has to go the judicial route because there is no other way to transfer title, and eliminate subordinate liens. If in California the bank never transfered title, then I suppose that it is possible that it can be taken care of non-judicially. After all the only interest that the purchaser has, that needs to be removed, is a beneficial trust interest. It is so much more fun to chat on Dating. At least then, when I don't know, I don't have to sound especially ignorant. I'm a man. I'm expected to be ignorant on that topic.
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| | Saturday, January 15, 2000 - 10:30 am In California title to the property is first granted to the Buyer by a Grant Deed, then the Buyer grants the title to a third party IN TRUST using a Deed of Trust document, vesting in the third party the power of sale. The trustee has the power to sell the property to anyone they want at any time, but if they act improperly they will certainly be sued and may be criminally liable. If you've never been to a foreclosure auction on the steps of the county courthouse you're missing out on some amusement. I especially like to see various highly educated attorneys standing on the steps of the courthouse exhorting a non-existent audience to give him a bid on the property. This can go on for 20 minutes while he reads all types of information about the property, showing it to the imaginary people and pleading with them to make a bid. If you didn't know better you'd swear the guy was loony. But that's the law -- even if no one is there to listen a certain procedure MUST be followed.
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| | Saturday, January 15, 2000 - 12:30 pm Most laws were passed to further a significant public interest of health, safety or welfare. In this case, the significant public interest was in humiliating attorneys. It was assumed that if society did not learn to vent some of its dislike for attorneys, then a valve would inevitably blow and people would start gunning them down on the streets. Leading to civil unrest and bad smells. Still, it is better than making us wear powdered white rastah wigs.
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| | Saturday, January 15, 2000 - 02:52 pm hmmm, I never knew it was attorneys holding the sale. Thought it was just title company employees, the "criers." It certainly isn't a requirement that an attorney do the job. The requirement is to publish the sale in newspapers and to hold the sale in the published public location during normal business hours. There *used* to be sales held at the pier at 2 am. That is no longer legal, to protect the interest of the home owners.
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| | Sunday, January 16, 2000 - 07:01 am Sales are held by the trustee. A trustee can be anyone and normally the title company selects themselves or some other company they know to be the trustee. The trustees are never even told that they've become trustee. It's an established procedure now, and becoming more and more common that in the event of foreclosure the beneficiary files a "Notice of Default and Substitution of Trustee" form. These used to be two separate forms, but now they're just one form. A foreclosure specialist is put in charge of the matter almost immediately. Another cute trick is for the beneficiary to substitute themselves as trustee right before reconveyance and charge a reconveyance fee, which they pocket. The trustee can be anyone except the trustor -- even the beneficiary.
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| | Wednesday, March 15, 2000 - 05:44 am For the person thinking of filing Chapter 7. In 1996 my husband and I filed for chapter 7. We worked very hard at getting new credit making sure we did not fall behind. In 1998, extacly 2 years after the discharge we were signing papers for a brand new home. So filing bankruptcy worked for us. Please note that we filed bankruptcy as we both got divorced and then remarried in a short time after and even though we both worked our divorces left us deep in debt. We have continued to keep our bills paid, no lates (ever!!!) and according to eloan my score is 627 and my husbands is 682. So it is slowly getting better.
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| | Tuesday, July 11, 2000 - 01:21 pm I am $8,000 in debt. My current income is only $600 per month for a military disability. I have two children to support and I also am a full time student. I am trying to plan a future for myself and my children which includes cleaning up my credit. I was wondering if it is possible to file bankruptcy on such a small debt or is it better to let the debts be charged off?
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