We ask the CRA’s to re-investigate each of the creditors’ reports that were listed in the bankruptcy, to be sure they are reporting accurately. If they were discharged in bankruptcy, the balance due should be listed as zero, and there should be a notation that the account was “discharged in bankruptcy.”  This is a derogatory item on your credit report, but at least it shows a zero balance. If you don’t do this “re-investigation” or dispute process, it’s possible that the creditors will continue to report a balance due (or just not report anything new), which makes it look like you charged up debt after the bankruptcy, and didn’t pay it. That is worse.

And once it shows discharged in bankruptcy, the item must be removed in 7 years. Not only that, the older that item becomes, the less it hurts your credit score. Not sure how to dispute items on your credit reports? You can go to the web address http://www.myfaircredit.com/s/correcting-your-credit, it tells you exactly how to do it.

Most of the time, it works quite well. If a bankruptcy client pays their bills on time after filing bankruptcy, and uses credit responsibly, their credit scores can recover into the mid 600′s after one year after bankruptcy, and possibly to 700 or so after two years.

We do the credit clean-up for clients, because even though we tell them how to do it, after bankruptcy many of them just either: (1) don’t get around to it; or (2) are just too overwhelmed by going through the bankruptcy, it is just not the most important thing to them at that time. Then when they decide they have to finance a new car, or buy a house, they decide to fix their credit, but unfortunately it can take a long time to work on your credit to get it right.

If you review your credit reports once a year, you can stay on top of the situation. By law, you can obtain free credit reports once per year from https://www.annualcreditreport.com. Review the reports, and follow the instructions to dispute any inaccurate information. Not sure how to raise your credit score? You can purchase your credit scores (they are not free, like your credit reports) at www.myfico.com, and also learn what you need to do to raise your score, and what it holding you back.

If you were turned down for credit, you should receive an “adverse action notice” or similar notice, which may also include your credit score, at no charge to you. Federal law was changed to require this starting in 2011. If you want more information about this, go to http://www.scoreinfo.org.

It takes time to get your credit back, once you have had problems with it, including bankruptcy. Whatever you do, to get your credit score headed in the right direction, make a budget and live on what you make. If you can help it, don’t default on medical bills, cell phones, or other items. But of course you must prioritize your bills, so never put those types of bills ahead of truly important things like housing, transportation, and other necessities of life for your family. There are more important things than a good credit score.

Remember the TV jingle, “Countrywide Is On Your Side” or the other slogans about how great Countrywide was? I liked the one, “NOBODY can do what COUNTRYWIDE CAN!”

Well, it turns out that it was about the truth, but not in a good way. Recently Countrywide (now part of Bank of America) has had to fork over $108 Million in refunds to consumers that it allegedly cheated through fraudulent practices. If you were a customer of Countrywide from 2005 through mid-2008, you may be entitled to a refund.

“It’s astonishing that a single company could be responsible for overcharging more than 450,000 homeowners,” FTC Chairman Jon Leibowitz said. “Countrywide’s unconscionable behavior harmed American consumers on a massive scale and we are proud to be getting every single dollar back to hundreds of thousands of struggling consumers who can least afford to lose the money.”

The FTC’s June 2010 settlement order required Countrywide, which is now owned by Bank of America, to pay $108 million to be used for refunds and barred the company from taking advantage of borrowers who have fallen behind on their payments. The refunds are being distributed to consumers whose loans were serviced by Countrywide between January 1, 2005, and July 1, 2008, and who were subject to the company’s allegedly unlawful practices.

According to the FTC, homeowners who were in default on their loans were charged excessive fees for services such as property inspections, lawn mowing, and other services meant to protect the lender’s interest in the property. Rather than simply hire third-party vendors to perform the services, Countrywide used subsidiaries to hire the vendors. The subsidiaries allegedly marked up the price of the services charged by the vendors – often by 100 percent or more – and Countrywide then charged the homeowners the marked-up fees. The FTC complaint alleges that the company’s strategy was to increase profits from default-related service fees in bad economic times.

Also, in servicing loans for borrowers trying to save their homes in Chapter 13 bankruptcy proceedings, the FTC alleged that Countrywide made false or unsupported claims to borrowers about amounts owed or the status of their loans, and added fees and escrow charges to their mortgage accounts without notice.

Some People Need to Consider Short Sale or Walkaway From Underwater House

Here at my law office in west Houston, we help a lot of people save their homes by filing Chapter 13 bankruptcy. We can stop a foreclosure from taking place, and then set up a plan whereby the client pays a chapter 13 trustee, who pays their regular payments to the mortgage company and also an extra amount to catch them up over a long period of time, usually 5 years. The plan payments are deducted from my clients’ paychecks. For the cases that I handled in 2005 (the last full year for which I have numbers), 66% of my clients that filed a Chapter 13, completed the case and received a discharge (or converted to chapter 7 and received a discharge).

But not all of my clients can afford their house. Particularly during the “real estate boom” if you want to call it that, mortgage lenders were lending money to people to buy more house than the people could afford. In some cases, people were buying houses, when they should not have been allowed to buy any house. Either they just didn’t have the income to do so, or they were just not responsible enough to be ready for home ownership.

Or in other cases, people bought a house that they could afford at the time, but something happened. Perhaps they were in the real estate business, or some other business that has become depressed, and they just cannot now afford to keep the house. Or they became ill, disable, or divorced, or their business failed, the reasons are infinite, but some people can just no longer afford a house, if they ever could.

Anyway, for some of our clients, we counsel them that in their particular case, it is not worth it, and to give it up. If you can’t sell your house in the usual way because it is “underwater,” i.e. you owe more than it is worth, it may be possible to do a “short sale” whereby you sell the house for the best price you can, and negotiate with the mortgage company to accept that amount in full satisfaction of the debt. You will probably need help doing that, many real estate professionals can help you with that.

For other people, just walking away from the house and letting it foreclose can be the best thing.  There is even a website devoted just to that, www.youwalkaway.com, that seems to have good information about it. There is a calculator on the site where you can see how much money you can save (or lose) by giving up the house. And I hate to counsel people to break their contract, their promise that they made when they signed the mortgage to buy their house.

But in some cases, there is just no way. I had an older lady that had just bought a house before she retired (does that make a lot of sense?). In her case, some family members were going to stay with her and help her pay the mortgage. Well they had a falling out, and the family members left. So here she is, with a total of only $2600 per month or so in retirement income, and the house payment alone is $2000 per month! But a house is not just a payment, there are taxes, insurance, maintenance, mowing the lawn, etc., etc. And as we get older, it is harder to keep a house up.

Anyway, we finally talked her into letting the house go, and moving into a subsidized rent apartment, that is set up for senior citizens. She is much happier, has friends and activities, and her stress level is way down. She has much more disposable income each month, and can actually afford to eat a good diet, buy clothes and have recreational activities.

So while I encourage clients to try to save their house if is practicable, income some cases it just doesn’t make sense. If it doesn’t in you case, make the decision and let the bank have the place. Of course talk to an experienced consumer lawyer or consumer bankruptcy lawyer first, to be sure you know what consequences that you face if you give it up. My clients are typically already in bankruptcy, so they will face little or no further consequences by walking away. If you live in the Houston Texas area or surrounding counties, contact my law office at 713-772-8037 or online at www.jthomasblack.com.

In fact, he said he had just refinanced his truck, the one that we reaffirmed in the bankruptcy, at a 4.3% interest rate. He said the banker offered to do it, and he told the banker that he must not have looked at his credit score. The banker looked at his credit score, and it was 680, not too shabby for someone less than a year after a bankruptcy case.

I’m sure it helps that we do a “credit clean-up” for clients at no additional charge after their bankruptcy. We write to the major credit bureaus and ask them to “reinvestigate” or update their records, to properly show that the discharged debts have a zero balance, and show that they were discharged in bankruptcy.

And so long as the client does their part, by paying any reaffirmed or new debts on time, it is not unusual for a client to have a credit score in the mid-600′s after one year, and 700+ after two years.

Now if you are one of those people who are always paying their debts late, or if you default on cell phone contracts or medical bills or something else AFTER the bankruptcy, then your credit will go right straight down again, and all bets or off.

But if you find yourself having to file bankruptcy, and you can keep your bills paid on time on a “going forward” basis, you can rebuild your credit rather quickly. And that’s good news, if you’re looking to buy something on credit, or try to refinance something, like my former client refinanced his truck.

2600 So. Gessner, Houston TX - Where Bankruptcy Law Office is Located

I had a phone call here at my Houston bankruptcy law office today, from a lady that had her car repossessed. She had financed it at one of those corner lots, where people can buy a vehicle and finance it without a credit check. But she had to put $3,000 down. After making 3-4 payments, she was late with one, and they immediately repossessed it.

Because she was delinquent on payments, the car lot “accelerated” the loan, or called it all due. They won’t let her just pay the back payments and the repo fee; they want the entire balance of the loan. So unless she does something quickly, they will be able to keep her big down payment, re-sell the car to someone else, get another big down payment, and if they get behind, repossess it again, etc.

Hopefully this particular lady will be able to find a friend or relative to just pay the balance and “redeem” the car, that is, pay off the car and get the title to it.

If not, one option that people have, particularly if they have other debt problems, is to file a Chapter 13 bankruptcy.  Once filed, a court order or automatic stay goes into effect, which, once the creditor is notified, prevents the creditor from selling the vehicle.

Then it is possible to demand the return of the vehicle, and in my experience, we are almost always able to obtain the return of the vehicle. If not, we bring an action or adversary proceeding in bankruptcy court, asking the bankruptcy judge to hold the car creditor in contempt of court, for violating the automatic stay. Then, we propose a Chapter 13 plan to pay for the vehicle over the term of the Chapter 13 plan, usually with greatly reduced interest, and at a level that the client can afford.

Obviously you want to avoid having your vehicle repossessed, but if you do, and there is no other reasonable option, filing chapter 13 bankruptcy can save your bacon. Some of my clients would lose their job if they didn’t have reliable transportation, so getting their car back is very important. For more detailed information about repossession, you can read my article on my main website, Repossession in Texas. Or visit my main website at www.jthomasblack.com.

Filing Chapter 13 bankruptcy brings into effect the “automatic stay” which is a federal court order that temporarily at least, stops all collection actions against the person that filed the case. So, repossessions, foreclosures, collection calls, lawsuits, garnishments, etc. are all stopped. In Chapter 13, the debtor (the person that filed the case) with the assistance of their attorney, files a plan that usually includes catching up any past due mortgage payments over as long as 5 years.

Many people who were out of work for a period of time, or ill, etc. are able to catch up their mortgages, while maintaining their regular mortgage payments through a Chapter 13 plan. Chapter 13 can also let you pay your vehicle loan out over time, and deal with your unsecured debt in a manner that you can afford.

If you are interested in seeing how Chapter 13 can help you reorganize your finances, and potentially save your house, vehicles or other property, and you live in the Houston, Texas area, give my office a call at 713-772-8037, or visit my main web site at www.jthomasblack.com. I offer a free first consultation to evaluate your situation and see if Chapter 13 or some other remedy would be best for you.

Like I tell my clients, unless you owe your employer money, they are not listed in the bankruptcy schedules that are filed with the Bankruptcy Court, and are not generally notified, just because you file bankruptcy. Employers can check your credit reports, but in my experience only do that in connection with the hiring process, and they must obtain your written consent to do so.

Now that being said, if you file Chapter 13, at least here in the Houston area, the Southern District of Texas, if you are a “W-2 employee” and have taxes withheld from your check, you must have your Chapter 13 plan payment deducted from your paycheck. So, your payroll office would have to know that you filed bankruptcy; they are the ones that are sent the “wage order” from the bankruptcy court.

Don’t be overly concerned about such payroll deduction or wage orders in the event that you have to file Chapter 13. If you work for a large company, many of your co-workers have all kinds of deductions coming out of their paychecks such as garnishments for child support, student loans, IRS wage levies, chapter 13 plan payments, etc.  It’s likely not as big a deal as you think.

If you are in a small office or you have a very responsible position, it is possible for us to ask the Bankruptcy Court to “waive” the requirement of having a wage order, but it must be unusual circumstances for the judge to consider doing it. A far higher number of Chapter 13 cases are successfully completed, if the debtor has a wage order, with the Chapter 13 plan payments being deducted from their paycheck.

Moreover, employers are not allowed to fire you, or discriminate in employment against you, solely because you filed bankruptcy, or didn’t pay a debt that is dischargeable (cancellable) under the U.S. Bankruptcy Code.

The only possible exception that I know to that one is, if you need a security clearance for your job. If you have such a job, of course you should inform your superiors of any change in your financial situation. I have had them investigate clients that have filed bankruptcy before, and cleared them and allowed them to continue with their classified work, so I know filing bankruptcy doesn’t necessarily mean that you will lose your job, even if you need a security clearance.

MMI provides financial guidance and counseling, and if you qualify can put you on a debt management plan (DMP) to repay your debts over time. DMP’s don’t generally reduce your debt; they are “consolidation” plans, where you make one payment a month to MMI, and MMI pays your creditors for you.

For the people that can afford these DMP plans, they are fine. It can help you avoid bankruptcy. Many of my clients have consulted with credit counselors before they come see me, and legitimate ones like MMI will just tell them whether or not they can help them, or if they should consult an attorney about their debt problems, and possibly consider filing bankruptcy.

Most if not all of the “shady” debt settlement companies, are not even legally operating in Texas. To operate legally, they have to be registered with the Texas Consumer Credit Commissioner, and comply with the Texas Debtor Assistance Law, which almost none of them do.

To see if your debt settlement company complies, go to http://www.occc.state.tx.us/pages/searches.htm and click on “List of Debt Management Service Providers. If your company is not on that list, they are not operating legally in the State of Texas.

I just had a couple come in to the office this morning, that had paid a debt settlement company $9000 in fees, and the company had only settled one debt for them. Then they were sued for $19,000 by a creditor, and the debt settlement company told them they needed to file bankruptcy.

So the debt settlement company basically did them no good at all. We will likely put them into a Chapter 13 bankruptcy, paying $450 per month for 5 years. That will repay 30% of their $75,000 in unsecured debt, with the rest being discharged or cancelled. And no one can sue them or call them at work trying to collect, once they file Chapter 13.

If you are interested in consulting with me about your options, including filing a bankruptcy case, and you live in the Houston Texas area or surrounding counties, give my office a call at 713-772-8037 and make an appointment to meet with me. Or you can make an appointment on my website at http://www.jthomasblack.com. There is no charge for your first visit.

Anyway, welcome to Sugar Land, MMI. I’m sure you will be a good neighbor!

In my experience, that is not real common here in Texas, but it wouldn’t surprise me if it begins to increase. Particularly where there are second mortgages, or so-called “80-20″ financing.

Like you don’t have enough to worry about, if you are losing your house, to have the lender or a collection agency coming after you trying to collect. They could file a lawsuit against you for the rest of the money, the money that they did not recover from the foreclosure process. If they got a judgment, they could seize your non-exempt assets such as bank accounts, investments or possibly other property.

But one cause of the lenders beginning to pursue people, is the “strategic” foreclosures, where people are letting their houses go back, even though they could afford them if they want to do so.

Not so much here in Houston, but in other areas of the country, home prices have fallen precipitously in the past few years. And if you owe $50,000 or $100,000 more on your house than it is worth, it is understandable that some people would choose to just “walk away” from the house, rather than struggle to continue to pay it.

Particularly so if they have an adjustable rate mortgage or ARM, and their payments are high. That would be another reason for some people to just give up and walk away.

If you are considering walking away from your home, and letting the bank or mortgage company have it, you should consult with an attorney experienced in these matter such as myself. It could be that your lender will try to pursue you for the debt.

If so, filing bankruptcy is one option to eliminate any chance that they can collect a foreclosure deficiency from you. There may be other options in your situation. To call my office for an appointment, call 713-772-8037. Free first visits are available for residents of the Houston Texas metropolitan area and surrounding counties.

The report by the GAO, the Government Accountability Office, was presented yesterday at a Senate Commerce Committee hearing, and it included recordings of salesmen describing their companies as “government approved” and linking settlements to the federal bailout of troubled banks.

Debt settlement companies charge a LOT of money, and they are heavily regulated in Texas.