Archive for December, 2017

Credit Card Balance Transfers

Wednesday, December 27th, 2017

So we are approaching a new year. This is a great time to work on reducing your credit card debt. One way to do that is to transfer your credit card balance with one of those zero interest promotional card deals. Balance transfer cards allow you to move high-interest credit card debt to a low-interest credit card from a different issuer. The right offer can save you money and inch you closer to a prosperous new year.

credit cards

What to know about balance transfer credit cards

You should look for a balance transfer credit card with a lengthy 0% introductory APR period, so that you’ll have a nice long window to pay down debt interest-free. Also, make sure the card doesn’t charge an annual fee.

Balance transfer fees are harder to avoid, unfortunately. You’ll generally be charged 3% to 5% of the amount transferred, although some cards don’t charge this fee as long as you initiate the transfer within a specific timeframe.

You can transfer only as much debt as your credit limit on the new card permits — and generally you won’t know what your limit is until after you’re approved. If you have debt on several credit cards, start by transferring the balance from the card with the highest interest rate.

Remember that the goal of a balance transfer is to save money as you pay off debt — not necessarily to secure a lower monthly payment. We really want to look at the interest rates and the cost of borrowing that money, not the payment itself.

Maximize your promotional period

Once you’re approved for a balance transfer credit card, make a plan to help yourself stay on the debt repayment track.

These tips can help:
•Make payments on time to keep the promotional offer active
•Plan your monthly payment by dividing the amount you’re transferring by the number of months in the promotional period
•Make more than the minimum payment if you can
•Set reminders for your expiration date
•Don’t use the card for purchases or additional transactions, as that can delay your progress

Carolyn Secor P.A. focuses its practice in the areas of Bankruptcy and Foreclosure Defense in Clearwater, Florida.  For more information, go to our web site
or call (727) 254-1704.

After Bankruptcy

Wednesday, December 20th, 2017

So you have bankruptcy behind you. That’s great. But you want to make sure that you don’t get back in that situation again.

credit score


To start rebuilding your credit, you must (1) get any nondischargeable debts back on track; (2) start building a history of regular on-time monthly payments and responsible use of credit accounts; and (3) avoid taking on unnecessary debt.

(1) Making arrangements to pay any nondischargeable debts. If you have non-dischargeable debts, such as student loans or certain taxes, you will need to contact the creditor to make arrangements to pay them. If you do not arrange to pay these debts, the creditors can begin collection action and can report delinquencies on your credit report.

Nondischargeable student loans. As to student loans, you should receive a forbearance for the time you were in Chapter 7 bankruptcy. In a Chapter 13 bankruptcy, the loans would have been paid the same as other unsecured creditors but would also continue to accumulate interest. In either case, you need to make arrangements to get these loans back on track after bankruptcy.

Fortunately, there are various programs to lessen the burden of federal student loan payments that are worth exploring to see whether you might qualify, including income-based repayment and occupation-related and public service loan forgiveness. Some private lenders have hardship programs of some kind. In any case, try to avoid deferments, as the accumulating interest may cause the debt to build to an unsustainable level.

Nondischargeable taxes. Regarding non-dischargeable income taxes, contact the IRS, state revenue department (e.g., the Pennsylvania Department of Revenue), or the local taxing authority to make payment arrangements. (The IRS will typically accept a monthly payment of around 2 percent of the total.) However, if you have a substantial tax debt, you may need the assistance of an attorney to work out a settlement. If you can pay off these tax debts in a lump sum at some point, you will likely save substantial interest and fees.

There are other nondischargeable debts, such as criminal fines and restitution, alimony, and child support. If you have any of these debts, be sure to consult your attorney.

(2) Using a secured credit card or small vehicle loan to help build a record of on-time payments.

(a) Secured credit cards. To begin rebuilding your credit, you may wish to obtain a secured credit card. A secured credit card uses money deposited in a bank account as collateral for the credit card. The creditor can take the money in the account only if you default. Some banks offering secured cards do not require a credit check, and it may be easier to obtain a card from them. However, be sure to shop around. Some secured card providers charge excessive fees and interest. Also, you should make sure the provider reports to all three credit reporting agencies (not all do).

It is important to use no more than twenty percent of your available credit on your secured card (or any credit card). Thus, if you have a limit of $500, avoid carrying a balance of more than $100 on the card at any one time. The purpose of this card is to rebuild your credit, so responsible use is essential. If you are a couple, it is a good idea to have a separate card for each of you.

Quick Note: A secured credit card is not the same thing as a prepaid credit card. Although very convenient, prepaid credit cards do nothing to improve your credit.

(b) Vehicle Loans. If you need a vehicle, a car loan is another way to rebuild credit. However, I do not suggest getting a car loan just to rebuild your credit. See below for information on obtaining a vehicle loan after bankruptcy.

(3) Avoid unnecessary post-bankruptcy debt. The main traps for post-discharge debtors are (1) the temptation to open too many credit accounts and (2) incurring too much debt.

Too many accounts: In some instances, post-bankruptcy loans and credit accounts may be available. However, I do not recommend obtaining multiple credit accounts after bankruptcy to try to improve your credit score. Some post-bankruptcy debtors believe that the more accounts they open, the faster they will rebuild their credit. That mindset is a recipe for disaster. With few exceptions, debt is not your friend. One or at the most two credit cards should be enough for anyone.

Keep in mind that each time you apply for credit, the inquiry reduces your score a bit. Moreover, if you have too many accounts, you may be tempted to over-utilize credit, which may severely damage your income-to-debt and debt-to-available-credit ratios (see below). The key to rebuilding your credit score is the responsible use of credit and living within your means.

How much is too much debt — Understanding the income-to-debt ratio and debt-to-available-credit ratio. One reason debtors often see their credit rating rise soon after bankruptcy is the reduced income-to-debt ratio. In other words, the amount of debt that they have compared to their income is now much lower. The income-to-debt ratio is a significant factor in credit scoring. Therefore, you want to keep this ratio low.

Just as important is the debt-to-available-credit ratio, which measures the percentage of debt you use compared to your available credit. Limiting your use of unsecured credit to less than twenty percent of each account’s available credit will show that you are a responsible user of credit. Maxing out credit is a sure way to damage your credit rating. Of course, I prefer to see clients pay off their credit cards each month and avoid revolving balances.

Carolyn Secor P.A. focuses its practice in the areas of Bankruptcy and Foreclosure Defense in Clearwater, Florida.  For more information, go to our web site
or call (727) 254-1704.

Christmas and Bankruptcy

Sunday, December 10th, 2017

If you are considering filing for bankruptcy, this Christmas may not be your best. But perhaps getting this all cleared up will make next Christmas a great one. One question you have have is whether to file before or after Christmas.

christmas cash

Bankruptcy law states that any debts incurred within 3 months before or after Christmas are considered non-dischargeable debt. This means all the money spent on gifts and other holiday items are the responsibility of the one purchasing them, and these bills must be paid off. There are 2 options in this matter. The first is reaffirming the debt, which means making monthly payments until it is completely paid for. The second is redeeming the debt, which is paying the full balance all at once. The exception to this is any item deemed a necessity. These debts could be discharged when bankruptcy is filed.

Holiday Bonuses and the Means Test

The means test refers to a set of steps one must go through in order to decide whether to file for Chapter 7 bankruptcy, which would mean writing of many, or all, of the debts incurred in only a few months, or file for Chapter 13 bankruptcy, which requires reasonable payments over a matter of 3 to 5 years. One of the areas covered in the means test is the income received in the 6 months before filing for bankruptcy.

This does not just mean the amount received on regular paychecks.  It includes money given for child support, lottery winnings, and even holiday bonuses. Because the income is decided based on the 6 calendar months before filing, it is a good idea to file before receiving the bonus. For instance, if the bonus comes on December 20 every year, filing in early December will not affect the bonus, because the 6 month calendar will run from June 1 to November 30.

Receiving Cash for Christmas

This falls under the same category as the holiday bonuses. If the money is received after bankruptcy is filed, it will not affect the means test, and will not factor in on the decision of whether to file for Chapter 7 or Chapter 13 bankruptcy. It is also better to file before these gifts are given because they may raise the amount of “income” earned in the 6 month period. If the income is too high, it may not be possible to apply for Chapter 7, so instead of writing off many of the debts, the debtor must file for Chapter 13, and be responsible for more repayments over a longer period of time.

Income Tax and Bankruptcy

There are 2 types of Chapter 7 bankruptcies. The first is “no asset”, which means that what is owned is either exempt, or worth too little to be sold to pay the debts. In this case, if bankruptcy is filed after January 1, even the IRS is not paid anything through the bankruptcy case. But this does not excuse the debt. Instead, arrangements will have to be made with the IRS to pay off the income tax owed. In an “asset” Chapter 7 bankruptcy, any item not exempt that is worth a fair price can be sold to pay off creditors. Because the IRS is considered a priority debt, they will receive payment before any other creditors. And though the debtor may lose property they valued and wished to keep, there will be one less debt to worry about once the bankruptcy case is complete.

In a Chapter 13 bankruptcy, there are 3 major benefits for filing after taxes have come due. The first is that you are protected from the IRS during the process of repayment. The second is that there is more flexibility for repayment, making it easier to pay off debts that are a higher priority. The third benefit is that there can be no interest or penalties added during the bankruptcy case.  In these instances, filing after Christmas in the New Year is a better option.


These are just a few things to consider when filing for bankruptcy. If cash gifts or bonuses are anticipated, and income tax debt is not expected, filing before Christmas is most likely the best option. But if those situations are reversed, filing after the New Year celebration has ended may be in your best interest. Either way, if filing is definitely in the future, a chat with a bankruptcy attorney may clear up any concerns, and help to decide which option is the best for each individual case.

Carolyn Secor P.A. focuses its practice in the areas of Bankruptcy and Foreclosure Defense in Clearwater, Florida.  For more information, go to our web site
or call (727) 254-1704.