Genesis of a Crisis

The real estate is sparked by many creative lending practices. Many Americans that would not have been able to own a home got into the market due to these practices. It was a great time for homeownership in the U.S. However, some could not cope with huge payments that were coming due and interest rate hikes on adjustable rate mortgages. This was the genesis of a crisis.

Mounting Foreclosures

The numbers of U.S. homeowners that were facing foreclosure began to mount in the later part of the last decade. Many just could not handle the payments and these homeowners were looking at the loss of their homes to banks.

Foreclosure Crisis Perfect Storm

Adding to this the growth in the subprime lending markets in the past and its demise, and the market was facing something like a perfect storm. Storm fronts coming together;

• ARMs (Adjustable Rate Mortgages)
• Subprime Lending
• Rising interest rates
• Foreclosures
• Hyper inflated real estate prices

Predictable Foreclosure Crisis

Plenty of these mortgages were doomed to failure before the ink was dry on the contracts as unscrupulous and little regulated mortgage brokers, made large commissions for selling inflated and unsuitable homes and properties. The affect of these short-term gains are still being felt on long-term markets.

Ripple Effect of The Foreclosure Crisis

The effects are also being felt in all aspects of the economy what was once a market to be envied becomes one that is used as an example of what not to do. The impact of the foreclosure crisis in America has not peaked yet. So many financial watchers are waiting to see the results of the foreclosure crisis and who will come out as the ultimate winners and losers.

It’s clear that financial problems doesn’t discriminate among people no matter what the income bracket or line of work is and can affect any of us at any time in our lives. Stay tuned because the future will bring more tales of once rich and famous celebrities filing for bankruptcy.

Stan “the man” Lee

Did you see Spider-man 1,2,3,4, The Fantastic Four, The Incredible Hulk or any of the X-men movies? If you did you probably put money in the pocket of this man then he promptly mishandled it to the tune of millions. So in 2001 good Stan the creator of all our beloved superheroes filed for bankruptcy.

Donald Trump

Your Fired! The Donald is near the top of this list for being a two time filer of bankruptcy in the same decade no less. Now that’s business savvy. The 1st time Donald T went B-rupt was in 2004 when he had to give up control of Trump’s Atlantic City Hotel and Casino. He resurfaced sometimes later with the new name Trump Entertainment Resorts which tanked out in 2009. Now he is going for the hat trick as he has recently climbed back into the leadership chair of the corporation. Good Luck on the trifecta, I am putting my money on D Trump.

Stephen Baldwin

The Baldwin clan’s baby brother tried to make a comeback into the fame on game shows and reality television programs but, budgeting as a television star and budgeting as an average Joe still has the same formula; add debt and spending then subtract income. If income is not enough you end up in bankruptcy court, which is where Stephen and his wife ended up after losing their home in 2009.

Kim Bassinger

From walking down red carpets to strolling into courtrooms, Kim at one time owned an entire town but that was before her run in with a judge after being suited by a movie producer that she left holding the bag. The judge demanded that she pay the producer over $7.5 million dollars which she could not come up with. This led her to stroll into another courtroom to talk with another judge in bankruptcy court.

Burt Reynolds

An American icon the Bandit is responsible for hundreds of millions in box office receipts. But, if we go back to the formula above having over $9 million in debt and your ratio of income does not match your payback schedule and you are going to need more than a 1977 Pontiac Firebird Trans Am to out run the bankruptcy judge.

Larry King

Another radio and television icon that ran into serious cash flow problems in the late 1970s is filing for bankruptcy. Now his famous show on CNN has him back in the black.

Don Johnson

Crockett, Tubbs and that white 1984 Ferrari Testarossa you remember them or maybe you don’t that was a generation ago and maybe that is why Don had to sell that car to get cash to cover his debts after going bankrupt. He had to have hated that, because that was one sweet car.

Willie Nelson

Between tokes all the money went up in smoke and the tax man got Willie for over $15 million in back taxes. Good thing he does not change his clothes much or his hairdo.

How long does a Bankruptcy remain on my Credit?

A Chapter 7 bankruptcy will remain on your credit report for 10 long painful years from the date of filing. A Chapter 13 may stay on your credit for 7-10 years. This can be very devastating especially in the society we live in today where so many of us buy on credit or have to have credit to just get by.

Two Types of Bankruptcy

1. Chapter 13 Bankruptcy

Chapter 13 Bankruptcy will not discharge your obligations, but allows you to work out a payoff plan that you can handle. Chapter 13 is there to assist those who have a temporary financial situation such as a catastrophic illness or loss of employment.

A Chapter 13 will still have a negative effect on your credit report but it also shows that you are taking responsibility and living up to your obligations by continuing to pay your debt rather than having them discharged. This is recommended especially for those who still have a regular income and don’t want to have a discharge on their credit. With a Chapter 13 bankruptcy, you are able to obtain new credit within a year or so.

2. Chapter 7 Bankruptcy

Having a Chapter 7 bankruptcy is the worst thing you could have on your credit report. Chapter 7 makes life extremely difficult especially when credit is involved. It makes obtaining new loans and credit cards difficult to get for at least a few years or sometimes even longer.

The after-effects of Filing for Bankruptcy

The effects of bankruptcy on your credit will depend on the type of bankruptcy you file.

• After two years of being discharged, you may be able to obtain a home loan with a Chapter 7 on your record
• It will take about one year after filing a Chapter 13 bankruptcy to obtain a home loan.
• Revolving charge accounts or credit cards will be extremely difficult to get because they are based on each lender’s credit standards.

Did you or do you know someone who filed for bankruptcy? Tell us about your experience.

There are some steps that individuals can take to avoid bankruptcy. This advice is not a legal binding, as individuals will face their own scenario and this will give the basic idea on how to handle situation when in bankruptcy. However to avoid bankruptcy, individuals can:

1. Good Financial management: The best way of avoiding bankruptcy is through good financial management. Always put away something for a rainy day. This money must only be touched only in cases dire emergencies.
2. Increase income: The first step in avoiding bankruptcy is to increase your monthly income. This can be achieved by getting a second job. It does not matter how small the salary is per week, it all adds up at the end of the month and can go a far way in reducing your debt.
3. Stop using credit cards: Credit cards encourage you to spend and are one of your main sources of financial demise. Do what you have to do, freeze them, hide them whatever, but remove them as a source of finance for your daily expenditure. You can keep one only for emergencies.
4. Debt consolidation: Refinancing is another good way of avoiding bankruptcy. Under refinancing, the refinancer will pay off all your existing debt and give you a new loan with a more reasonable repayment schedule over a longer period. This may also in the short-term increase your liquidity as more cash becomes available from the reduced monthly payments.
5. Taking a second mortgage: If you own a house and its value can cover the extent of your debt, a second mortgage loan is a good option. However, if its value does not cover your debt, this is not a good option.
6. Selling valuables: Being on the brink of bankruptcy is a dangerous time. As a result, serious decisions must be made. Assess what valuables you possess that if sold can bring in some much need money that can contribute to relieving your debt.
7. Selling your car: Unlike a house, the value of cars will depreciate. Selling your car now, will give you more money than delaying it until next year, or whenever the crisis becomes critical.
8. Budgeting: When bankruptcy comes knocking at your door, budgeting can be a life savior. Implement strict budgeting conditions. Every month write down what you need and not you want before going shopping.
9. Life style changes: One must adjust their lifestyles to suit their financial conditions. Do not go clubbing if you know your rent or credit card is not yet paid. Reduce your power consumption and other non-essential utilities.
10. Negotiate with creditors: If you have exhausted all your options in trying to streamline your finances, then try renegotiating with your creditors to give you more time or the ability to make smaller monthly re-payments.

If a person fails to pay his creditors and is legally declared unable to repay his creditors, then the term used is bankruptcy. Either the creditors can file bankruptcy against the individual or the individual can declare himself bankrupt. To declare bankruptcy, an individual needs to find legal and financial advice to make sure that this would be the best option. To deal with the immediate consequences of bankruptcy, the person needs time and it is recommended to try refinancing or a second mortgage after looking at all the other available options.

A second mortgage refinancing loan is possible to get after two years of bankruptcy. To opt for the second mortgage loan after declaring bankruptcy a person needs to ensure the following:

• improve your credit score
• clear your bad credit history
• find a good lender
• get good quotes for refinance rates

Options for You

If you have been declared bankrupt but you have cleared all your debts and have ended your period of bankruptcy there are a few options for you to get the second mortgage loan. You need to make sound financial plans to clear your debts and increase your credit score. Also you can put some restrictions on yourself so that you do not fall into a debt pattern they may have contributed to the situation.

Good Credit History

A good credit history will enable you to apply for a second mortgage loan after declaring bankruptcy. Your credit record is the key indicator for your lender. There are certain types of bankruptcy that are filed by or against you. The credit report will reflect a Chapter 13 bankruptcy for seven years and a Chapter 7 bankruptcy for ten years. Accumulating assets and paying bills on time will improve your credit history and you can become eligible to receive second mortgage refinancing.

Refinancing Rates

Searching for low refinancing rates can be a daunting task for you as there is so much information available. There are subprime brokers available on the websites for you to compare rates and fees. After comparing financial costs, you can get an estimated cost of the loan you are going to apply for. You may consider the top three lenders that you find trustworthy and reasonable, then go ahead and investigate them further.

Real Quotes Comparison

Mortgage loans are determined by various factors like property location, employment history, and credit score. A subprime broker needs all of this information to give you a realistic quote. After comparing these quotes including rates, fees, and terms of refinancing offer, you can proceed to the loan process. If you require any additional information, you may contact the subprime broker over the phone or through their website. You can then complete your application for the loan.

Advice

Once you have declared bankruptcy, you can seek the assistance of a good lawyer or financial expert to assist you locating a second mortgage loan. Your attorney or financial adviser can help keep you out of future bankruptcy and offer sound advice to ensure that you find a good mortgage loan with lower interest and closing fees. ]]> http://blog.badcreditwhiz.com/refinancing-second-mortgage-after-bankruptcy/feed/ 1 http://blog.badcreditwhiz.com/personal-loans-bankruptcy/ http://blog.badcreditwhiz.com/personal-loans-bankruptcy/#comments Thu, 24 Dec 2009 10:22:39 +0000 William M. Davis http://blog.badcreditwhiz.com/?p=1190

Bankruptcy is one of the worst things you can have on your credit report. However, almost anyone can get credit after filing for bankruptcy. It’s just a matter of knowing how to do it.

Two Things to keep in mind after you Filed for Bankruptcy:

• Use credit to get credit – Buying everything with cash will not help you to rebuild your credit score, but it is definitely a smart choice. However, if you want to rebuild your credit, you have to get credit and use credit to rebuild your credit score. If you make your minimum monthly payments on time and put an effort into rebuilding your credit over time, you can qualify for credit card with no annual fees and normal rates, personal loans, even mortgages, all in just a year or two.
• Bad credit is not forever – A bankruptcy can remain on your credit report 7 to 10 years but the negative effects will start from the day your bankruptcy case is closed. If you adopt credit habits that are responsible, such as paying your bills on time, decreasing the usage of credit cards, not applying for too many credit cards or personal loans at once or going over your credit limit your credit will improve dramatically.

Get a Copy of your Credit Report!

Get a copy of your credit report from any of the major credit bureaus: Equifax, Experian and Trans Union. Go over your credit report very carefully making sure that it is free of mistakes. Credit reports frequently have mistakes, such as accounts still open or overdue, when they are closed and erased as part of the bankruptcy agreement. If you find any mistakes, you need to contact the credit bureau immediately and get the corrections made. Any errors on your credit report can decrease your credit score.

How can I rebuild my Credit after Filing for Bankruptcy?

• To quickly rebuild you credit score you need two types of credit: credit where you can make installments (such as car payments) or revolving credit (such as credit cards).
• If you recently filed for bankruptcy you will not get a regular unsecured credit card or an uninsured loan. The next best thing is a secured line of credit. A secured line of credit means you will have to put up collateral or, for credit cards, you will have to make cash deposits and use that as your credit.
• For an unsecured line of credit, you will want to pay the balance off in full each month, reduce usage and not max out your card or go over the credit limit. If you do these things, you will eventually rebuild your credit score over time and you will notice a rise in your credit score.
• Auto loans can help you rebuild your credit, just be ready to pay higher rates. In the long this run will improve your credit score, as long as you make your payments on time.
• If you decide to refinance a loan, try to make a big down payment so that your monthly payment will be smaller.
• Maxing out your credit cards will hurt your credit score, so try to stay within the credit limit.

Stock Market Investment

When the market condition is tight, you will find that prices of stocks will come down. This is the time when you should buy shares of top companies that are expected to come out of the financial crisis with a flying color thanks to their reputation in the market. Economy will not remain in recession mode for a long time and that is where by buying cheap stocks of good companies, you can give your financial portfolio a tremendous boost. After five or six years, you will realize that your investment value is doubled.

Becoming A Producer

Population is growing in every continent. And if the experts are to be believed, it will increase even more in the coming years. Therefore opening a business that produces staple items which individuals require for daily operations is an excellent idea. Irrespective of economic situation, your business is going to increase as demand for products that are important in conducting daily routines does not decrease.

Real Estate Investment

Investing in real estate can turn out to be quite useful as because of current housing slump, there are lots of real estate properties available in the market at rates which are affordable to say the least. By buying these properties in a low rate, you can sell them later at big prices once the economic condition improves. Before buying any real estate property, it is advisable that you take a closer look at the legal paper of property because you do not want to buy a property which is already being sold to another party.

Investing In Municipal Bonds

With current financial situation, it is advisable that you invest in City Govt. Bonds. In some cities, such as Los Angeles and New York, you can get more than 8 percent in your investment. If you are one of those who do not like taking risk but are interested in getting decent return then investing in municipal bonds is the way to go.

Investing In Emerging Economies

No doubt, financial crisis is global but there are still few economies where effect of recession is not that much. Asian markets such as India and China are still buzzing with a double digit growth. Although investing in other country is a risky proposition but if you have the necessary knowledge, you can get significant return in your investment.

Investing In Staple Commodities

Demand for staple items is not going to decrease in the coming years. Invest in staple commodities as soon as there is some dip in their prices. Investing in gold and copper is also a very good option.

]]> http://blog.badcreditwhiz.com/be-rich-financial-crisis/feed/ 3 http://blog.badcreditwhiz.com/bankruptcy/ http://blog.badcreditwhiz.com/bankruptcy/#comments Fri, 15 May 2009 10:07:40 +0000 William M. Davis http://blog.badcreditwhiz.com/?p=732

Before filing for bankruptcy, keep in mind that it can have very dire consequences. In some cases, you may not get credit for the next five years. To file for bankruptcy, you need to go into a credit counseling program. You will not be able to file for a bankruptcy until you manage to finish the credit counseling program.

Job

When you file bankruptcy, there is going to be a record of it in your credit report for a period of ten years. Employers all around the world do not give job to people that have filed for a bankruptcy.

High Interest Rates

You need to pay high interest rates if you are interested in getting credit after bankruptcy. This is because of the fact that lenders treat you as a risk due to poor credit rating.

How to File Bankruptcy

According to Bankruptcy Abuse Prevention and Consumer Protection Act, before filing for bankruptcy you need to get some consumer credit counseling from an entity that is recognized by the U.S. Trustee within six months of the date of the filing of a bankruptcy case. The main objective behind such counseling is to offer you with other alternatives.

There are two kinds of bankruptcy, namely, chapter 7 bankruptcy and chapter 13 bankruptcy. Chapter 7 is a straight bankruptcy while chapter 13 is a repayment schedule for individuals. Number of individuals chooses to file without the help of a bankruptcy lawyer. However, it is advisable that you take the services of a bankruptcy lawyer. Often, people who go for big firms to represent them will work with a paralegal. If possible, select a firm where you can contact your lawyer directly.

Loans After Bankruptcy

As already mentioned, you need to pay high interest rates in order to get loans after bankruptcy. To get rid of this situation, make sure that you improve your credit rating first before applying for any loan package. Improving your credit rating takes time. Try to pay all your dues on time. In addition, keep a keen eye on your monthly expenses. Lenders love giving loans to individuals that save some money on a monthly basis. Before opting for any loan package, it is recommended that you read terms and conditions carefully.

Mortgage refinancing

If you are looking for mortgage refinancing after bankruptcy, you need to work extra hard as lenders are not going to give you an approval very easily. To increase your chances of getting an approval, try to improve your credit score. Instead of applying to just one or two lenders, apply to at least ten lenders. You can also take the services of online lenders that do not implement any credit check on their customers.


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