Living Life As a Credit Risk After Bankruptcy

People filing Bankruptcy are finding it easier to pay their bills, but harder to live a better life.

Once someone files Bankruptcy, they become a bigger Credit Risk.  So if you know anyone hopelessly considering Bankruptcy, they should consider the years of negative credit consequences.

Today, I was reading a story about Danielle Lancaster.  You may not know her and in fact, I just read about  her heart-breaking story in the Washington Post.   Danielle, filed Bankruptcy when her debt became twice that of  her monthly income.

Although Danielle was able to Bankruptcy,  she still owes money to her Creditors.

Danielle was not granted a ‘Clean Sweep’ of her debts.   She is on a repayment plan.

After the Bankruptcy, Danielle is also finding it hard to get a better paying job.  Not because of the Bankruptcy, but because she can’t move her family to where the better jobs are.  Danielle can’t get a Landlord to rent to her without a lot of money upfront.

In theory, Danielle would be able to rent an apartment for her family after Bankruptcy. But in real-life, Bankruptcy makes her a Credit Risk.

Fantasy Land of Bankruptcy

People talk themselves into Bankruptcy out of fear.  Bankruptcy does make the Creditors back off.  And Creditors backing off eases some of the tension bad Credit and Debt cause.  But what do people learn after they file Bankruptcy?

• They are trapped in Debt for up to 20 years (just less of it).
• Their Credit-Worthiness is worthless (people are scared to do business with them).
• They find it harder to get life back on track financially.

Why not consider the alternative to Bankruptcy?

I’ve asked this before.  Why don’t people consider their other options to filing Bankruptcy?  I think the answer is because they do the math.  They figure they can pay about $2,500, file Bankruptcy and be done with it.  I have to face the facts, Bankruptcy is a quick-fix.  Bankruptcy works when filed properly.

So, if you know someone who really has their heart on filing Bankruptcy, ask them if they’ve researched the negative consequences of filing.  Ask them are they ever going to want Credit again (maybe to start a Business)? Ask them if they are prepared to live on the wrong side of the tracks for about 10 years?  Ask them if they are prepared to live life as a Credit Risk?

The 6 C’s Of Credit: Borrowers Enemies Or Allies?

WWII ALLIES, U.S. U.K. U.S.S.R.

In War,  no Victory can be attained without the support of Allies. In World War II, United States, Brittan and Russia were the Allies who aided one another in Battle against the tyranny of Hitlers’ Germany (and it’s Allies).

Your War On Debt is no different. Just like World War II, there are Enemies of Great Power on opposing sides. These conflicting sides battle to defeat the other.

In your War On Debt, nothing is more important than having solid  intelligence on potential Enemy Forces, Allies and knowing what forces remain neutral. This leads us to “The 6 C’s Of Credit”.

What Are The 6 C’s Of Credit?

The Six C’s of Credit are “Protocols” used to asses the risk of a Borrower to repay a loan or Extended Credit. The 6 C’s of Credit  are essentially neutral. But the 6 C’s  should not be overlooked, because they can provide you a Road-Map to Peace and Financial Liberty.

Above are the "6 C's Of Credit

Character: You know if you’re a good person who’s been caught in a Bad situation, or a Dead-Beat Bum, who had every intention to file Bankruptcy, to get out of paying their Debt. I don’t judge, but your Creditors,  Lenders and some Employers do.

Your Credit Report exposes YOUR Character. Your Credit Profile exposes much more.  But what does your Credit Report say about you? Is it  telling the [whole] truth? Is there false negative information being reported about you? Your Character as listed on your Credit Report is always a FORCE to be reckoned with.

Capacity to Pay: What is your Capacity to re-pay the loan? When any Loan is granted, there’s an automatic expectation of that loan being repaid, according to the terms of the agreement.

Capital: Capital is considered to be; Assets, equity, or  money. As a Borrower  and Debtor, some good questions to assess your Capital are:

• “Do I  have the money to repay this loan at the current terms”?
• “What will I do if they RAISE  my the Interest Rates above a certain percentage”?
• “What is my ‘Exit Strategy’ if the Lender changes the terms, or I loose my income”?

Collateral: Collateral is any item that used as leverage to secure a Loan. Collateral is where the “Battle-Lines” are drawn for the transaction(s). If the Borrower doesn’t repay the loan, the Lender can demand seizure [“Repossession”] of the collateral used by the Borrower – to secure the Loan, or Credit.

[TERMS] & Conditions: Conditions can be Debt Land-Mines waiting to be stepped on and activated. For example many Credit Card Agreements have Arbitrary but binding “Terms and Conditions”.  So It’s important to know the legally binding Terms and and it’s just as important to consider your Conditions.  It’s best to keep in mind all External Conditions as well (e.g. The Credit Freeze of 2008″).

Confidence: Coming full-circle, Confidence is reflected in your Character, Capacity to pay, amount of Capital and or Collateral. The Conditions are based on the Terms of the Loan Agreement as well as your own Financial Conditions.

I’m sure that you see that all Six C’s Of Credit are inter-connected. Each individual “C” provides a framework for Creditors and Borrowers. They are generally NEUTRAL FORCES that can work for or against you.

On the other hand DEBT WARRIORS seek to be YOUR  “Allies in your War On Debt”.

Protecting Your Credit During A Divorce

I’m going through a divorce right now.

That’s right, 20 years of marriage is coming to a bitter-sweet end. My soon to be ex-wife decided that she is ready to move on. I honestly wish her the best.

I’m speaking about this not to defame her but to share that unexpected events happen to us all.

50% of marriages today end in divorce. Divorce is hard to avoid these days. So what can you do to proctect your credit during a divorce? I’ll tell you in just a second. But first let me get my side out.

I pulled my ex-wife and her then four children off of welfare. I helped put her through school and was a full-time Dad. She recieved her Bachelors Degree and started working in the Insurance Industry for one of the nations biggest companies.

Everything was going well in our lives until the hurricane season of 2004.

Charile, Jean and the gang were beating Florida like it sole the election. The storms scared my ex-wife out of Florida. Sshe moved back to Michigan to look for work, leaving me with all of the bills. Hey, I was trying to keep my marriage intact.

So, I’m paying the car loan, the house payment, the utilities, the food, everything. She was flying back and forth from Florida to Michigan having a fall fling with an old crush. I was heart-broken. I tried to get counseling and it was working, until her Mother died suddenly. My marriage was in ruins and we were morning the loss of one of our families Matriarchs. After her Mother passed that was it. She was moving back to Michigan with or with out me.

She insisted on moving our family from Florida to Michigan, with no job, no home, no income – nothing.

I said “that’s a crazy idea”. I told her that the manufacturing sector is Michigans bread and butter and that the state economy was about to plummet. I forwared her emails about the economy there to show her objective sources. She still insisted. So I agreed and put in my 3 month notice to my boss to let him know. I told my wife that I’d move back to Michigan to keep my family together.

She Said “never-mind. I don’t want you to move back.” I was puzzeled. I did what she demanded and then she changed her mind – about me going back to Michigan with her. So she proposes a ‘Separation’. I say OK. We decide to tell the kids. That’s when she said “I want a divorce”.

I was blown away

The kids were shocked. They expected a separation. I had told them that things were looking bad months before. But they did not expect to hear divorce. The kids and I realized that she meant business. So today, after a 3 year break-up, my ex-wife decided she’s ready to move on.

She was drowing in debt

Her credit was horrible. She had credit cards all with default interest rates. She was without a job and her car loan was in repossession status. She had considered Bankruptcy, but I decided against it about one year prior.

We decided to separate our money shortly after we got married. My credit score was 730 my beacon was good enough to co-sign a no money down loan on a new car (but they got me on the interest rate). So I was doing well and my credit was very healthy. What I didn’t know what how far in debt she was and how that would make my life extreamly stressful.

The first thing you can do is take your husband or wife serious when they say “I want a divorce”. Always take it seriously and protect your credit. Over the next few post, to help you, I’ll tell you what you can do before, during, and after a divorce.

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Don’t Let Debt Defeat you!

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