Why Is Bankruptcy So Stigmatized?                         

For many in America today, bankruptcy is the elephant in the room. Everyone knows it's there. Storied companies like Chrysler and General Motors have experienced it. In Oregon, annual non-business bankruptcy filings more than doubled between 2007 and 2010. Still, few people want to talk about it. Why?

 

The stigma against bankruptcy isn't new. For centuries, people who have gone bankrupt have been characterized as irresponsible and selfish. In 1542, England passed the Statute of Bankrupts, criticizing bankrupt people for "craftily obtaining" money and not paying it back "against all reason...and good conscience."

 

On top of this, we live in a society where people believe that hard work will be rewarded. People don't like to say, "I'm struggling financially." If they do, they're often criticized for not having worked hard enough. Declaring bankruptcy, in this light, is seen as a personal failure-for making promises and not doing enough to keep them.

 

Of course, the reality is more complicated than that. People go bankrupt because they have a medical emergency that their insurance doesn't provide sufficient coverage for. They lose their jobs in a bad economy. An unexpected natural disaster strikes. Those who never thought it would be an option consider filing for bankruptcy just to begin to get their finances back in order.

 

Bankruptcy is not for everyone, which is why it's important to do your homework. But it's important to remember that filing for bankruptcy is a personal choice. What works for some-whether that means filing for bankruptcy or not-may not work for others.

 

By Landra Glover and Deanna Oothoudt

 Anyone considering bankruptcy needs to carefully consider the ramifications. Bankruptcy proceedings require debtors to appear in court: the resulting record is publicly accessible. A bankruptcy stays on a debtor's credit report for 10 years, negatively affecting one's ability to obtain credit, employment, and housing.

 

That said, under what circumstances should one consider bankruptcy? Consulting a bankruptcy attorney is advisable under the following circumstances:

• Failure of debt management or settlement options: when managing your debt has become too overwhelming and negotiation and communication with creditors has not proven to be successful.
• Foreclosure: a legal process in which the lending institution forces the sale of a collateralized asset to recover monies owed. Foreclosure is typically associated with homes.
• Insolvency: an inability to repay debts due to negative net assets (i.e., liabilities exceed assets).           
• Judgments and Lawsuits: a legal action initiated by a debtor to recover monies due. Bankruptcy proceedings may end a collection lawsuit.

The decision to file for bankruptcy demands due consideration. Factors to consider include the current economic climate, personal financial situation, personal goals, and the potential relief provided by bankruptcy.

 

By Elaine Lord

Building Credit After Bankruptcy                          

If you've had to declare bankruptcy, there are concrete steps that you can take to get your finances back on track:

 

Research New Credit

After bankruptcy, many report being bombarded with offers for new credit cards. The good news is that you'll have access to the credit you'll need to begin rebuilding your credit history. The bad news is that many of these offers come with high interest rates, fees, and other negative features. If you decide to take out new lines of credit be sure to ask about interest rates, fees, features, credit limits, and other items that are important to you. Making a chart can help you compare products, and don't be afraid to ask for help!

 

If you don't qualify for a credit card, consider using a secured credit card. It is very similar to an unsecured credit card, except you provide a deposit up front. The way you use your secured credit card is typically reported to all three credit bureaus, so your hard work can have a big impact on your credit history. Typically, after a year of responsible use, your deposit will be returned to you.

 

Another option is taking out Innovative Changes' Credit Builder Loan. This is a secured loan that gives you a jumpstart to rebuilding your credit at a low monthly cost. You are eligible to take out a Credit Builder Loan if you have taken all 4 of our Financial Household Resiliency workshops or are referred by a referring partner or a current/past IC$ borrower in good standing. Read more about our Credit Builder Loan here.

 

Once you have a new line of credit be sure to:

 

Pay On Time

Paying on time is the most important factor in your credit score. Keeping bill due dates on a calendar or using auto-payment can help you pay on time and stay on budget. If you prefer online tools, Mint and many others have great bill reminder tools.

 

Keep Balances Low

Thirty percent of your credit score is how much credit you use compared to your available credit. Although every creditor is different, they typically like to see no more than 30 percent of your available credit used. So if your new credit card has a limit of $300, you would want to spend no more than $90.

 

Check Your Credit Report

Knowing what is on your credit report is important for us all, but it is especially important for those trying to rebuild credit. Continue to get your free reports from annualcreditreport.com, and be sure to dispute any errors. You can always make an appointment to pull and review your free credit report at Innovative Changes by calling: 503-249-5205.

 

By Cassie Russell Rupar

Are You Receiving Your Payment Reminders?

If you chose to receive your payment reminders by email, make sure that they are coming to your inbox and not your junk mail. If you would like to change the way that you receive reminders (by mail, by email, or by phone call) let us know! Call Misha at 503-249-5205.

How to Make Your Loan Payment

 

Are you having trouble making your payment this month, or afraid that it might be a little late? Let us know! We understand that unexpected events and expenses can make it hard to keep your finances on track, and Innovative Changes wants to be there for you in such cases. Innovative Changes is flexible and willing to work with our borrowers to satisfy loan obligations, and in return we ask for honest and timely communication. Remember, if you know your payment is going to be late, let us know ahead of time and we might be able to avoid charging a late fee or sending out a late notice.