Some fears regarding the general welfare of the economy and consumer confidence were somewhat eased by the relatively high shopper turnout on Black Friday. Crowds were so large at a Long Island Wal-Mart that an employee was trampled to death when the thousands of shoppers thronged outside broke the doors and rushed in. While shoppers did not spend as much as they have in past years, retailers were reportedly pleased with what was a solid shopping day, and relieved that the gloomiest forecasts did not come to pass. Strong consumer spending, on the surface, bodes well for the economy as a whole. One question that ought to be asked, however, is what impact this allocation of scarce funds toward holiday shopping will have in the following months.

 

The preceding months have brought us story after story of middle class Americans struggling to remain economically viable and avoid financial ruin. Money is scarce for families all around the nation and the percentage of households struggling just to make ends meet has skyrocketed. The recent decrease in both gasoline and home heating oil prices has created a very positive economic boost for many. Money that even a month ago had to go straight in to commuters’ gas tanks can now go into cash registers around the country. However, the rapid fluctuations in the price of crude oil that have occurred recently must, if we are to be responsible members of this economic community, give rise to doubts that the price relief will last. If crude oil were again to rise past the $150 dollar mark, the retail spending increase would instantly be null.

Even with gas prices at a level that is more comfortable for consumers, families are still making sacrifices. A recent news story described the efforts of some parent’s groups to petition toymakers to cut back on advertising, as many parents cannot afford to keep up with their children’s demands. The parent’s group’s complaints to the toymakers stem from the self described inability of parents to sacrifice their children’s holiday wishes. One parent even went so far as to say that she would commit crimes to give her child a toy that he wanted. With so many parents unwilling or unable to cut back on spending for their children, money must be reallocated within the family budget. Money set aside for mortgage payments will likely find its way into toy store coffers this month, and the result will likely be a spike in home foreclosures in January and February.

 

The economic stimulus of the Holiday season will, at least in the short term, give a much-needed boost to the economy at large. Retailers will hopefully be able to earn enough to get them through the winter without too many store closures. Where the funds that make this possible come from, however, could make for an even more challenging economic climate in the coming months. Concerns about the source of newfound spending money are valid, and should not be ignored. If these assumptions about where the stampeding Wal-Mart crowd got its money pan out, Nassau County foreclosure attorneys are going to have a busy winter.

 

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In a country that can often be overly zealous in preventing what it perceives to be threats to its security, Americans still sometimes make serious mistakes by simply acting in good (but perhaps oblivious) faith.  We scrutinize every detail of our children’s daycare centers.  We search aggressively for trustworthy mechanics to work on our vehicles.  We read food labels and make decisions based on research we might have conducted.  We wear our seatbelts and have front, side, and curtain airbags.  We buy things like credit protection insurance.  We investigate potential employees, employers, and even our landscapers and maintenance workers.  With the level of security-mindedness of most Americans, one would think that it would be difficult to fool us.  However, despite all of our precautions, we are now facing what is perhaps the largest swindle ever committed in the world.  Apparently, when it came to Bernard Madoff, all of our natural and learned safety senses went out the window of a high-rise in Manhattan. 

 

Even before these frauds- both alleged and admitted- were revealed to the public, we were already facing serious economic difficulties, as evidenced by the sharp increase search engines experienced for terms such as “qualified bankruptcy attorney in Long Island” and “chapter 7 bankruptcy in Suffolk County.”  While most of the filings that probably resulted from those searches were personal, the Madoff fiasco is shaking the country in its financial core.  Especially in New York, there are a number of great and prestigious companies and organizations that are now considering those same lawful financial protection options afforded to every day consumers.   

 

So, is it really fair that the American public is being made to suffer even more?  This “ponzi scheme” is robbing countless aid and charity programs and organizations of critically needed funds.  As a result, many of them are closing down operations.  In addition, investors and other large financial firms are in danger.  All of this means that the American people are yet again bearing the brunt of these poor decisions.  The most tasteless aspect of this is that we simply must accept at least partial blame.  Dozens of reports are surfacing that Madoff’s operations were rarely investigated or scrutinized.  Very intelligent people trusted enormous amounts of money with Madoff while knowing full well that what he promised was virtually impossible by all accounts.  But sometimes, greed warps our better judgment, and we may choose to ignore that little voice that says: “If it sounds too good to be true, then it probably is.”

 

We can therefore add this to our New Year’s resolutions: to be as diligent and safe with our financial matters as we are with the safety of our family, our bodies, and our neighbors.  Because after all, the act of each of us making smart decisions about our money will help everybody- all over the world.  That is, as long as we recognize this as the wake-up call that it really is.    

 

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                  It’s no secret that the American economy runs almost entirely on the credit system.  It used to be that very savvy or wealthy people could simply shun the system, and pay cash for anything they needed- or simply make do with what they had.  But this is no longer the case.  Credit has come to control extremely important areas of our lives that are beyond the boundaries of money.  This has created a wide variety of problems that did not exist previously, but ones that nevertheless must be understood in order to rebuild credit after a time of crisis.  This is especially true after a bankruptcy.  And with the increasing numbers of Chapter 7 Bankruptcy filings in Nassau County each month, this means that a large number of people need to pay extra attention to their credit right now. 

 

                  Most Americans have heard the news that banks are tightening their lending practices.  While the end result of this will only mean struggles for every section of the economical food-chain, what it really means to you is that your credit is more important now than it ever has been.  If you have recently filed bankruptcy, your first financial task after your case is approved should be to begin repairing the damage to your credit.  Obtaining a secured loan or a secured credit card is one of the fastest ways to begin doing so.  Other methods might involve piggy-backing on a relative or loved one’s credit.  The faster you begin to rebuild, the better, because if you are like many New Yorkers, you may have lost your job in conjunction with your bankruptcy.  Thousands of jobs, especially in metropolitan areas, are now requiring extensive credit checks prior to employment.  If your credit is not up to par, then you are not considered up to par for the job. 

 

                  Perhaps the year has been exceptionally tumultuous for you, and you are now in the process of relocating.  Did you know that many apartment communities, suburban developments, or other types of housing (both public and private) can use your credit as determination of residency?  If you have collection accounts or any other items considered seriously delinquent appearing on your credit report, you will not be able to rent from these places.  What is worse is if you paid an application fee, they are usually non-refundable, even if you are not approved.  This is just another reason why rebuilding your credit after a bankruptcy is a vital part of your immediate future. 

 

                  In addition to all of the above scenarios, there is also the fact that you might need credit to actually buy things.  Perhaps your car has seen better days, and you need another.  Chances are that you probably will not be in a position to pay cash for a safe vehicle.  This means that your credit needs to be in the best condition possible, because although you can get a loan even with terrible credit, you’ll likely pay 18% interest or more.  If this is the case, you could end up paying double what the vehicle is worth over a three or four year loan. 

 

                  Be aware of these situations.  Remember that bankruptcy is a way to start clean again, which means that your credit rating will need immediate work if you expect it to improve.  And don’t forget- credit is not just about money anymore.  It’s simply too important to ignore.   

 

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We are going to have a very frank discussion about bankruptcy.  There won’t be any fluff, and no B.S.-  just facts given with “no holds barred,” nothing held back, and no niceties.  The current financial crisis has affected all classes of people in the United States, so that even the most carefully laid plans can lead to eventual bankruptcy.  If you’re reading this blog, then you have probably already given it a lot of thought.  Now you need to take action.    Bankruptcy laws are complex and written in such a way as to be full of interpretive inconsistencies.  Regulated by the federal government, bankruptcy laws also change frequently, and specific laws can vary from state to state.   For these reasons, an expert must be consulted when you are faced with the possibility of a bankruptcy.  Seeking the advice of a qualified and experienced bankruptcy attorney is imperative in order to ensure that the whole process is handled legally and effectively.  At no time should you ever attempt to file your own bankruptcy: you could end up in serious financial and legal trouble if you do.     This means that research must be conducted in order to correctly choose the attorney whose skills best match your needs.  Seeking a bankruptcy attorney who is local to you will aid in ensuring that your counsel is available and understands local laws- if you live on Long Island, for instance, seek a qualified bankruptcy attorney in Long Island.  Check Better Business Bureau reports and other consumer reports to verify that your chosen lawyer is legitimate and committed to providing superior services.     When you have selected a suitable local bankruptcy attorney, the first step is to make their job easier by gathering information that they will need.  This means that you will need to collect all of your financial related documents: tax returns for the last several years, all your bills, bank statements, past due or foreclosure notices, government program rejection letters, collection letters, an asset inventory, a budgetary analysis, and anything else that will be helpful.  When gathering these documents, keep in mind that it will be used to establish that your financial situation is such that you have no other recourse but bankruptcy. Be prepared to show anything that will substantiate this.    Consult with your chosen attorney.  They will analyze the data you provide and determine if you have a solid case.  They may ask for additional pieces of information, and you should procure this as soon as possible.  If the bankruptcy attorney takes your case, you should immediately begin contacting your creditors.  To each of them, issue a cease and desist request.  This means that they will no longer be able to contact you to collect on debts you may have with them.  You will need to provide your bankruptcy attorney’s name and contact information.     If bankruptcy is what you have to do to protect your family, yourself, and your assets, then you should not feel ashamed to do so.  Remember, bankruptcy is a form of financial protection, designed to assist consumers who are overburdened with debt.  It is a way to start over again, and in some cases, may be the best thing that you can do for yourself.  Bookmark this blog, because soon we will discuss the realities of a bankruptcy’s effect on your very valuable credit.          –

 

 

Recently, record numbers of individuals have filed for bankruptcy, or had homes that entered into foreclosure.  This problem is worsening exponentially, and has become a pandemic that has spread to virtually all parts of the country.  As an example, Long Island, New York experienced 2,154 bankruptcies in the first quarter of 2008 alone, according to the May 23, 2008 issue of Long Island Business News.    Foreclosures in Long Island were up 11% during the same quarter.  Being that these same trends are being seen all over the country, it stands to reason that there are now thousands of people out there with the damaged credit of a recent bankruptcy or foreclosure status.  While this can be disheartening to anyone, most credit situations are not nearly as terrible as they seem.  Credit is easy to repair if you take decisive steps and have patience.    The first step in repairing your credit after a bankruptcy or foreclosure is to get a copy of your credit report.  The report needs to be obtained from all three major credit bureaus.  www.freecreditreport.com is a website that was set up with the assistance of the federal government as a means for citizens to view and manage their credit files.  Legislation passed at the time allows for one free copy from each reporting agency, once a year.  When you have these reports in front of you, check them for errors of any type.  If you find mistakes, you will need to formally dispute the information with the credit agency reporting it, and have it removed from your file.  If you dispute a reporting that is deemed to be valid, you can still legally have a consumer addendum added to your report, which will allow you to leave a permanent statement in your file that can explain or clarify delinquencies or inaccuracies.      After your credit report has been checked for errors, you can begin the true repair process.  The most effective means of quickly improving your credit score is to “piggy-back.”  This is where you are added as an authorized user to the account of someone who already has well-established credit.  While you will have no real financial obligation for the account, you will gain the good payment history of the person whose account you are piggy-backing.  This can improve credit scores dramatically, and in a very short period of time.     Even with poor credit, there are many high-risk lenders out there that will approve you for a credit card at an 18% interest rate or higher.  Take it, and use it to your advantage. Use the credit card to pay for everything:  rent, groceries, utility bills, pet food, gas, and so on.  However, being that you would normally pay cash or write a check for those items, you can simply mail one large check to the credit card account, before it cycles into the next month.  If you do this, you will avoid paying any interest fees, have a large amount of purchasing power, and will be quickly building your credit as a desirable “pay-in-full” customer.  Furthermore, if you can get a credit card with purchasing benefits, like airline miles, you can get free perks just for spending money that you were going to spend anyway.   Many banks and credit unions will make secured or collateralized loans.  Take advantage of these, even if it means you have to “buy” one.  In many cases, you can hand your bank cash, and ask them to make you a loan based on using the cash as collateral.  Or you can put an automobile up as collateral.  In any case, these loans will report favorably to the credit bureaus, helping to improve your score.  Doing this at multiple banks will help immensely.     Once you have established some credit, even if it is of the secured kind, ensure that you pay for the credit according to terms.  Never miss a payment or pay late, and always pay more than the minimum amount due.  Bankruptcy or foreclosure is not the end of your credit situation.  In fact, in many cases, it is only the beginning.         –

 

 

 

In America, our entire economy is based upon the credit system.  Without it, we would not be able to operate as we always have.   That is exactly what is happening right now: the credit freeze has effectively stopped the economy from moving, and everyone is suffering.  Because of the monumental losses that many businesses and individuals have sustained in the credit and housing markets, a wave of foreclosures and bankruptcies are occurring all over the country.  Even individuals who invested wisely and planned carefully are seeking the protection of a Chapter 7 or Chapter 13 bankruptcy, or simply handing the house keys back to the bank and walking away.  If you are considering either option, knowing how a bankruptcy or foreclosure will affect your credit is a strong move toward making a rational financial decision.     Let’s face it- if you are considering filing bankruptcy, or are in danger of a foreclosure, you have probably already examined and tried a number of reconciliatory actions.  How much of a concern should the impact of a bankruptcy or foreclosure on your credit be?  Well, in most cases, the only other viable option is to continue struggling and falling farther behind- damaging your credit all the more.  So what makes more sense- to file bankruptcy or foreclose now, or continue letting serious delinquencies and collections activities farther damage your credit for some time to come?  The fact of the matter is that, after a foreclosure or bankruptcy, the only direction your credit can go in is up.  It certainly cannot get worse after filing a bankruptcy- unless you are blatantly irresponsible with your finances.  Which, if you’re reading this blog, then you’re probably not.     In plain terms, a bankruptcy has a substantial impact on your credit.  While the effects will change and lessen over time, a bankruptcy will appear on your credit file for not more than ten years.  It tells future lenders that at one time your debts were insurmountable, and that some companies probably lost money as a result.  However, a bankruptcy is hard, and it is a lot of work.  Therefore, it also tells a future lender that you took drastic steps to liquidate and discharge your debts legally and fairly in a federal bankruptcy court.  Under certain circumstances, this can be viewed favorably, and that coupled with the fact that you cannot file bankruptcy again for eight years can get you a loan immediately after a bankruptcy.   According to Sperling’s BestPlaces, an online population and demographics data provider, homes in Suffolk County, New York depreciated in value by more than one half percent over the last year.  With trends like that, it’s no wonder that so many homes in Suffolk & Nassau County and elsewhere are going into foreclosure.  And just how badly will the credit of those that face foreclosure suffer?  Unlike a bankruptcy or a settlement, a foreclosure’s effect on credit is subjective.   Often, banks will lend a mortgage to someone who has experienced a recent foreclosure.  Generally speaking, a reduction in credit score of up to one hundred points can be expected.  However, a foreclosure is deemed to be outdated information after it has reported to the credit bureaus for seven years.  After this time, the foreclosure will be removed from your credit files, although it will still appear in public records.     One consideration that is easily missed is that, if you are on the brink of bankruptcy or foreclosure, you are probably not going to be rushing out and attempting to procure new credit anyway. So, why let that be a major concern?  While maintaining good credit is an important issue, you should remember that, even if damaged, credit can be easily repaired with good financial decisions and patience.  Bookmark this blog to learn how!       –