Filing Bankruptcy Cost
The cost of filing bankruptcy has risen since the amendments to federal bankruptcy law were added in 2005. Filing bankruptcy costs can be complicated due to the different fees that may have to be paid. The costs of filing bankruptcy can be quite low for consumers who handle the filing and petition on their own or more expensive if an attorney is involved and the case is complicated with various assets and contracts.
There are many different options for consumers to deal with their debt and budget problems. Bankruptcy is certainly one such option and generally has the greatest impact on debts and credit. Filing bankruptcy costs is just one factor to consider in evaluating credit and debt solutions. The cost of bankruptcy will vary substantially, depending upon the complexity of your case and the type of bankruptcy you file
A recent study of bankruptcy filing costs published in the American Bankruptcy Institute Law Review concluded that the average costs of Chapter 13 bankruptcy cases was 4,077.00 in 2007 and 2008 while the costs of bankruptcy for a Chapter 7 filing costs averaged $1,399.00.
The American Bankruptcy Institute Law Review study considered the costs associated with the process of filing for bankruptcy, including the court filing fees, credit counseling fees, debtor education fees that may be required, attorney fees and expenses as well as trustee fees and expenses.
An estimate of the costs for filing bankruptcy includes:
Filing fee with the court of $299.00 for a Chapter 7 case or a filing fee of $274.00 for a Chapter 13 case.
Hiring a lawyer to prepare the bankruptcy case file and to represent the consumer in court. This cost can be anywhere from a few hundred dollars to a few thousand dollars.
Before you can declare bankruptcy, the court may require that you get credit counseling from an approved counseling organization. The cost of these credit counseling programs will vary from region to region.
When evaluating the cost of filing for bankruptcy, all of the costs should be considered, not just the direct expenses on fees. The other significant costs can be the time involved and the damage to an individual’s credit history and credit score.
Individuals that may find that they cannot obtain new credit after bankruptcy or that the new credit and credit cards after a bankruptcy will have a higher interest rates and fees. Employers are more frequently checking credit reports for new hires as will insurance companies and rent management firms. An individuals credit score will be impacted by a bankruptcy for up to ten years.
Bankruptcy may very well be the best solution for consumer debt trouble, but filing for bankruptcy is a plan of action to help resolve debt issues that should be considered very carefully.
Credit Scores and Your Hospital Stay
Hospitals have long struggled with handling delinquent medical bills of their patients. In recent years the business of identifying potentially risky customers in advance of rendering medical services has picked up steam. Credit scores have been used by lenders, landlords and insurers to evaluate consumer’s financial risk. Now the business of handling and managing medical bills has moved into the arena of credit scores and credit profiles.
The medical credit score is intended to be similar to the credit score that lenders review when determining the risk level of a consumer that apples for credit. The concept of the mortgage lender or credit card company that looks at a credit report to determine a loan or credit card approval is moving to a hospital or other healthcare provider who will review a medical credit score to determine how likely a patient is to repay their medical bill on time.
From the hospital or medial service provider’s point of view, this is a tool for more efficient hospital billing and collections. But most patients that hear of this practice are surprised to learn that they’re being subjected to any form of credit or financial analysis. Even more importantly, some groups and patients are questioning whether this will develop further and patients may be denied care if their credit score is too low.
Another clear concern is the amount of errors in existing credit reports. Credit scores can be complicated and sometimes hard to fix and the likelihood that these problems will happen with medical credit scores and create more problems in the health care sector is a grave concern.
Credit scoring models in the health care industry have the potential to be a very large business, with the large rate of unpaid bills. Medical credit scores or health care score were initially designed for use in post treatment billing. The medial providers use the information to determine how aggressively or which procedures to employ top collect on a medical bill. But, again the question of any data being used in unforeseen ways is a big concern for many consumers.
For those consumers that are concerned about whether a hospital should have access to their credit history or credit score or even their financial records, make sure to read all the admission papers carefully that are asked to be signed. Any organization, including a hospital, needs to have the consumer permission to obtain information about their specific credit history.
Even while credit scores and credit histories have become increasingly important in most consumers day to day lives, it is hard to imagine how the use of credit profile and credit scores use could be employed in such a manner.
In the end, whether the medical credit score concept is accepted or not, this is another reason why it has become so important that consumers check their credit reports and credit score. By knowing what is in your credit report, consumers are able to see any erroneous data that should be corrected and all claims of debts that have been reported in the credit history including medical claims that were made in a credit report.
The growing use of credit reports and credit scores makes it imperative that consumers track and dispute any items that were reported as unpaid and challenge any claims that can adversely affect their credit rating.
Importance of Credit Scores Underscored with FTC Congressional Subcommittee Testimony
Credit scores have become increasingly important in our lives, whether we like it or not and their importance and impact is almost certainly going to expand not diminish.
The Federal Trade Commission just recently presented a report to the U.S. House Subcommittee on Financial Institutions and Consumer Credit of the Committee on Financial Services regarding actions by the FTC that cover the accuracy of consumers’ credit reports, preventing identity theft, and giving consumers a better understanding of their credit scores and what they mean. A press release provided by the FTC stated that, “Because credit scores are important to understanding the rates consumers pay for credit cards, mortgages, auto loans, and insurance, Congress wrote into the FACT Act a consumer’s right to purchase a credit score, and a requirement that certain mortgage lenders provide a free score to home loan applicants.”
The prepared testimony covered actions taken by the FTC that included the agency’s completion of rule making to ensure that consumers have access to free annual credit reports and understand that right; a rule making to enhance consumers’ rights to dispute errors in their credit reports by the credit reporting agencies and the furnishers of the data; and a study on the use of credit scores regarding pricing of policies in the automobile insurance industry.
The foundation for the testimony is grounded in The FACT Act which amended the FCRA. The FACT Act and the FCRA is the federal law that governs the operation of the nation’s consumer reporting system. The FCRA was instituted to regulate the practices of consumer reporting agencies and the furnishers of the data to the consumer reporting agencies as well as the users of the credit reports prepared by the consumer reporting agencies for activities such as extending credit. The FTC is the primary government agency responsible for enforcing and monitor activity associated with The Fact Act and FCRA which means the FTC is the primary agency governing credit reports and credit scores.
An interesting note in the testimony covers the FTC’s understanding of the importance of credit utilization figures in calculating credit scores. For example, the guidelines state that when furnishers report an outstanding balance on a credit account, they should also report the consumer’s credit limit. This is because the failure to include a credit limit can cause credit evaluators to inaccurately estimate how much available credit a consumer is using, which is an important factor in assessing creditworthiness.
As part of the report The Commission noted that, “with sufficient knowledge about the score and what it means, consumers may use that information as a valuable shopping
tool.”
The conclusion from this report is that the FTC is watching the credit score market to ensure that the market remains fair and competitive and will continue to be a vital part of our lives.
Fed Announces Rule Changes for Marketing Free Credit Reports
The confusion over the marketing of free credit reports by companies that require a subscription to a credit monitoring service or other related products and services to receive the free credit report has resulted in intervention by the Federal Trade Commission.
Numerous consumers have seen advertisements touting free credit reports. Most of these advertisements have small disclaimer that explain that there is a requirement that the consumer sign up for a credit monitoring service or similar service that has a monthly charge in order to receive the free credit report(s).
The primary reason why there is a cost to the consumer over this confusion is that there has been no change regarding a consumer’s ability to receive a free credit report annually from each of the big three credit reporting agencies. Federal law mandated that the big three credit reporting agencies make available one credit report per year, with the no-strings-attached.
With the passage of the 2003 Fair and Accurate Credit Transaction Act (FACTA), all U.S consumers are entitled to one free credit report from each of the three major credit reporting agencies, Equifax, Experian and TransUnion upon request every 12 months. The credit reports are available by mail or at AnnualCreditReport.com or by calling 877-322-8228.
A new rule established by the FTC is designed to restrict procedures and actions that might confuse or mislead consumers as they try to get their federally mandated free annual credit reports and end up paying for an unnecessary service.
The FTC press release regarding the new rule changes states that, starting April 1, advertising for “free credit reports” will require new disclosures to help consumers avoid confusing “free” offers – which often require consumers to spend money on credit monitoring or other products or services.
The Federal Trade Commission’s Free Credit Reports Rule will require prominent disclosures in advertisements for “free credit reports.” The FTC example states that any Web site offering free credit reports must include a disclosure, across the top of each page that mentions free credit reports. The notice will read:
THIS NOTICE IS REQUIRED BY LAW. Read more at FTC.GOV.
You have the right to a free credit report from AnnualCreditReport.com
or 877-322-8228, the ONLY authorized source under federal law.
The Web site must also include a link to AnnualCreditReport.com and FTC.GOV.
The amended rule established by the FTC becomes effective April 1, 2010, except in the case of television and radio advertisements, in which the new rules will take effect on September 1, 2010.
The Big 3 Credit Reporting Agencies
A credit reporting agency is a repository of information that holds an individual’s credit or payment history. An individual’s credit report is created when a request for a report by a lender, credit card company or other authorized party requests it. Credit bureaus or credit reporting agencies hold the consumer’s credit data in their databases. The data is always there but the credit report does not really exist until it is asked for. It is then compiled by the credit reporting agency based on the information stored in the credit reporting agency’s file.
Information in a credit report is supplied by lenders, from court records, credit card companies, banks, mortgage companies and other creditors including the individual to create an in-depth credit report. A credit reporting agency or credit bureau collects and reports the credit information from these sources and retains the data until called for. An individual’s credit history is compiled and maintained by these credit reporting agencies as needed following their procedures and legal guidelines. The information held in the report is also used to calculate an individual’s credit score best a computer scoring model at the credit reporting agency.
There are three big national credit reporting agencies in the United States. Experian, TransUnion and Equifax are the three biggest credit reporting agencies. They are not the only credit reporting agencies in the United States but they are the biggest by a considerable degree. There are many smaller, regional and even industry specific credit reporting agencies that provide clients with credit reports. There are also many different international credit reporting agencies that operate in specific regions.
These big credit reporting agencies are the ones in which most of the attention about credit reports and credit scores is focused on because they maintain the largest national databases of consumer credit information. The big three credit reporting agencies perform two similar basic services: collecting and reporting credit information.
The three credit reporting agencies are independent of one another and though they conduct their business of data gathering to compile credit reports in a similar fashion they do not operate in the same way. This is the primary reason why consumers who obtain a credit report from the three largest credit reporting agencies get a report back with some different data. Therefore, a credit report from Experian will contain slightly different information than a credit report from TransUnion and Equifax. Not every creditor and lending institution such as credit card companies, banks or mortgage lenders report to all three credit bureaus, leading to additional difference between the three big credit reporting companies.
The majority of the credit data supplied to a credit reporting company is on a voluntary basis. A credit card company or lender can choose to supply the data or simply not choose to be burdened with the responsibility of supplying data files on their customers to the credit agencies. A common example of this is small and regional credit unions. It is likely that loans and credit accounts from these entities will not be found in a credit report. However, thousands of creditors, lenders and other businesses do send credit information and updates to each of the credit reporting agencies, frequently once a month.
The lending institutions and other creditors that do not supply information, send updated consumer credit information to one or more of the big three credit reporting agencies. The information often includes how much the consumer owes at that institution, the original amount of money extended, when the account was opened and the payment history. The same lending institutions and creditors that supply information to credit reporting agencies may also be the ones requesting credit reports when a consumer applies for credit.
The three credit reporting agencies also review public records for information, such as court records from bankruptcies, foreclosures and legal judgments. Information retained also includes recorded information about credit applications and credit inquiries.
TransUnion, Experian and Equifax now market their credit reports directly to consumers, in addition to its primary business of providing the reports to potential creditors. The big three credit reporting agencies can be contacted at the following numbers. Please note, in order to get your free credit report you want to go to annualcreditreport.com or call 877-322-8228. All of the services performed by the big three offered directly to the consumer are fee based.
Equifax, Inc. is a consumer credit reporting agency that is one of the big three credit reporting agencies. The company was founded in 1899 and is the oldest of the three agencies. Equifax is based in Atlanta, Georgia.
For general information and to order a credit report or score directly from Equifax you can contact the company at:
www.equifax.com
800-685-1111
P.O. Box 740241, Atlanta, GA 30374
Experian is a consumer credit reporting agency, also part of the big three credit reporting companies.
General information and credit report order information can be obtained at:
www.experian.com
888-EXPERIAN (888-397-3742)
P.O. Box 2002, Allen TX 75013
TransUnion is a consumer credit reporting agency, considered one of the big three agencies. TransUnion was created in 1968 and is based in Chicago, Illinois.
General information and to order credit report and score:
www.transunion.com
800-888-4213
P.O. Box 1000, Chester, PA 19022
Sample Credit Scores
Credit histories, credit reports and credit scores are key component of every individual’s financial health whether we like it or not. Unfortunately, too many consumers don’t know what the numbers of credit score mean for them. Have you ever obtained your credit report and credit score or been told about this number before and didn’t know what it means? The formula behind credit scores is a bit of a secret and credit reporting agencies can each assign you a different score. The good news is that credit scores have a range and if you understand what the ranges mean you can effectively evaluate your score.
Depending on who you read or which credit score you read, scores may go as high as 900 and as low as the 300s. A range of lenders use credit scores to facilitate lending decisions and every one of these lenders has their own guidelines for making loans and providing credit based on the borrower’s credit scores and other attributes used to make the credit decisions. There is no single credit score applied by all lenders that’s determined loan and credit approvals as well as the interest rates for the use of the credit.
With the recent tightening of credit, some report that what was rated as “good” may have changed a bit. What hasn’t changed is the higher your number the better. Here is what most sources that create the credit score models say about the ranges:
800-850 or more
This may be considered perfect credit. One caveat. If you have this number and no supporting credit history it is a meaningless score. People with a score in this range and a long history will get the best interest rates on everything. We all should strive for this.
720-799
Excellent credit. Most likely you get pretty much the same rates as those above this range. No worries here.
680-719
This is good but not perfect. Think of this as a being a “B” student. It makes sense to work a bit harder and get it into the ‘A” range. You will get approved for loans and credit cards but will you will pay slightly higher rates than those with excellent credit and you may be charged slightly higher premiums for auto insurance.
620-679
Good or okay credit. Scores in this range are fairly common so you should not despair. However, you may be getting charged more for credit and that is money you do not have to spend if you get your financial house in order. Even with good credit it always worth the effort to strive for perfect credit or a better credits score. The higher score, the more credit opportunities that will be available and the better the borrowing terms such as larger loan amounts.
580-619
No one likes to be “below average” and scores in this range are below average and may be teetering down a path to bad credit. People with these scores are considered “sub prime” and given the news of late, you know that is not good. In a tight credit market, if you have a score in this range you will have trouble securing financing and if you do the terms will not be good. Obtaining credit will not blocked but interest rates will be higher and credit conditions will be more restrictive. No question: get moving and improve your score.
500-579
Folks with a score in this range need to improve their credit and engage some form of credit repair. Most likely an account went to collection, became a charge-off, a mortgage went into foreclosure or bankruptcy was filed. Credit scores that fall this low will often have generally have a significant negative event such as a mortgage foreclosure or bankruptcy that involved numerous accounts or numerous accounts that have payment delinquencies. This is an indication of credit mistakes that can impact your financial life for years.
Below 500
There is no good news here. People with a score below 500 must make serious changes to pull themselves out of the financial situation they are in. In these situations, the credit score is usually impacted by both a significant negative event such as bankruptcy or foreclosure as well as having the vast majority of credit accounts paid past due.
The key to good credit begins with paying your bills on time and living within your means. It really is that simple.
Why You Should Check Your Credit Report
Credit reports are becoming an ever more critical document in our financial lives. Credit reports are used for credit cards, home loans, car loans, insurance quotes, rental contracts, employment and more. Therefore, it’ has become more important that individuals are aware of what it is in the credit report.
One of the most important reasons for an individual to check their credit report is to flag any inaccuracies in the report. Inaccuracies or errors in a credit report can result in higher interest rates on loans and credit cards, errors that result in the loss of opportunity to obtain a job or purchase a home. Inaccuracies or errors could also signal situations that involve identity theft or unauthorized credit activity. These errors or inaccuracies can lead to a derogatory credit history and poor credit score, two of the biggest factors that impact the ability to obtain credit.
Problems and errors on credit reports can be the result of anything from human error to a computer glitch to identity theft. Statistics are frequently produced that show credit report errors occur on anywhere from 25% to 60% of credit reports. Various reports have shown that numerous consumer credit reports contain errors that can affect individual’s ability to get a good interest rate on home or car loans, or even to get a job. Checking your credit history to make sure you don’t become a victim of credit report errors is essential. Given all these reasons, the Federal Trade Commission also recommends that individuals check their credit report at least every few months.
An individual should regularly obtain a copy of their credit report to make sure the information is accurate, complete, and up to date. Correcting errors is easier then many individuals believe. Correcting errors can also lead to better than expected results. An individual has the right to dispute an error on any particular item in their credit report regarding its accuracy. If the item inquestion is not verified properly by the creditor it may be removed entirely. One can see the how this can be very beneficial on a derogatory listing that has only a minimal inaccuracy in an individual’s credit report and subsequently gets removed entirely.
The act of checking your credit report has become as important as the information it contains and how it is now being used in our society. Other than making timely payments on credit accounts the next most important matter for making sure your credit report and your credit score are in good shape is to check your credit report on a regular basis.