My Way Credit

The idea of the 2005 bankruptcy "reform" law was that it would stop abusive filings and as a result everyone would be better off, except the shameless few who were abusing the system. We were sold this bill of goods so effectively that many of us who are usually quite compassionate felt the reforms probably made sense. After all, shouldn't it be difficult to file for bankruptcy?

The resulting mess was legislation that bankruptcy judges are calling a colossal failure.

• "Unquestionably, this is the most poorly written piece of legislation that I or anyone else has ever seen," U.S. Bankruptcy Judge Keith M. Lundin of Tennessee (31 years of experience) is quoted as saying in an article on bankruptcy reform published by In These Times.

• "It's such a poorly thought out piece of legislation," says Henry E. Hildebrand, a U.S. bankruptcy trustee in Nashville, Tennessee in the same piece.

• U.S Bankrupcty Judge Frank R. Monroe published an opinion that essentially accused the credit industry and Congress of colluding "to make more money off the backs of consumers in this country."

Bankruptcy attorneys everywhere are expressing tremendous frustration in their ability to help consumers suffering from the perfect storm of bad mortgages, credit card card debt, stagnant wages or unemployment, and rising food and fuel prices.

For the credit industry, a word to the wise: Sometimes you don't get what you paid for. They wanted fewer bankruptcies  (more money) but filings are still rising, even with the new law. All predictions are they will reach the one million mark this year – a number not seen since the bankruptcy law was changed in 2005. As for making money as a result of these changes, apparently that's also a fantasy according to bankruptcy researchers. (I wonder if the credit industry has recouped the millions spent lobbying for it yet?)

Clearly the bankruptcy law is broken, and needs to be fixed. An overhaul is not likely at the moment, but there is an immediate issue that can and should be addressed: helping consumers save their homes by allowing loans to be modified in bankruptcy.

The Center For Responsible Lending says that by lifting the ban on court-supervised loan modifications for qualified homeowners in bankruptcy, Congress can help communities retain an estimated $89 million in tax revenues and save at least 600,000 homes from foreclosures.

HR 3609, the "Emergency Home Ownership and Mortgage Equity Protection Act"  would enable bankruptcy judges to allow these modifications in cases where it makes sense. Essentially, a bankruptcy judge would be able to order a lender to modify a loan if he or she determined the homeowner could afford keep his or her home. (Additional guidelines would have to be met.) This solution will cost taxpayers nothing, and in the end will likely save lenders a tremendous amount of money they would otherwise lose through foreclosures, short sales, and a continuing decline in home values. (What many people don't realize is that some loan servicers can't modify loans even if they want to help homeowners avoid foreclosure!)

Unfortunately that legislation has been "put on hold" but my sources say it's not a dead issue by any means. So let's do something about it.

While bankruptcy reform may not save every home, it's the single best commonsense way to help the greatest number of homeowners at one time, without costing taxpayers anything, Kathleen Day at the Center for Responsible Lending explained to me. I agree.

So speak up! Are you worried about keeping your home? Did you lose your home to foreclosure, or do you know someone who has or will? Is your neighborhood, county or state at risk of being hurt by foreclosures, and the corresponding loss in home values and tax revenues? Write to your Congressional Representative and Senators, the Presidential candidates, and even your local newspaper.

Gerri Detweiler – Personal finance author, radio host and credit expert. Gerri contributes budgeting, debt recovery and savings information online. She is also the co-author (with Mary Reed and attorney John Ventura) of the forthcoming Credit.com book, Stop Debt Collectors: How to Protect Your Rights and Resolve Your Debts.

Bring Your Goals to Life!

Effective credit repair involves a systematic effort to clean up and reconfigure the content of your credit report. There is some work involved, and you want the results to last. Here are some tips on developing a personal budget that will carry your credit repair effort to the next level and bring all of your goals to life.

Taking Stock

Money comes and money goes. How do you spend your money? Organizing a budget does not have to be painful. Getting started can be challenging, but once underway you are likely to feel exhilarated. There is nothing like the feeling that comes from regaining control of your life. If you are starting a credit repair program, now is the time to implement a budget. It’s easier than you think. Just take one step at a time and you will reach your goal before you know it.

Your Philosophy

What do you really want? What is important to you? You want your credit repair effort to be successful, and you want financial security. What else is on the list? Think about your life. Think big. You can achieve anything you desire if you understand the relationship between the choices you make today and the future you picture for yourself tomorrow. Every decision you make counts. And in the world of money the right decision can have a geometrically positive effect.

The Joy of Security

One of the benefits of a budget is peace of mind. There is nothing worse than sitting down to pay bills and discovering a shortage in your checkbook. Living within your means insures that ends will meet. Of course there are always unexpected situations that can strain even a well-planned life. A properly structured budget will provide a cushion for those events as well. You will find that a budget is the perfect compliment to your credit repair program. It’s time to get ahead of your bills. The joy of financial security is within your reach.

Getting Organized

Are you ready to get started? Get some paper and a pen. It will be helpful to have your checkbook and your credit card statements handy too. Make a list of your obligations. Include everything you spend money on. Organize expenditures by category. Don’t ignore discretionary items like entertainment or dining out. If you spend it, create a category and write it down. Now add it up and compare the total to your monthly income. Many people are surprised that they spend more than they earn. Where do you stand?

Less Today, Much More Tomorrow

The time you invest in your credit repair effort will produce significant and lasting results, and the effort you make to live within your means will produce long-term gains far in excess of any short-term sacrifice. As you look at the list of items you spend money on it is time to think about your goals. What do you want? Do you want to purchase a home? Do you want to travel? Weigh the value of your goals against your current expenses. Consider that every dollar you save today will be worth many times more in the future. What can you do without? Are you ready to start building your future?

Pay Yourself First

It’s time to add a new category to your budget. This is the most important category of all, the one that most people never think to include. What is this category? It’s you! Make a category in your budget for yourself equal to ten percent of your income and put it at the top of the list. This ten percent will change everything. Your credit repair effort will pay off, your future will come to life, and all of your goals will become possible.

Better Scores Lower Costs

The creation of savings will impact your life in more ways than you might imagine. Savings brings confidence and the end of financial stress. And savings is the perfect credit repair insurance policy. Unexpected events will no longer threaten your ability to make your payments. Pay your bills on time and watch your credit scores approach perfection. Perfect credit delivers the gift of low-cost financing on every dollar you borrow. This can translate into many thousands of dollars in savings each year.

Savings Options

Over time, your savings account will grow. There are many ways to invest your money. It is wise to remember that higher returns are an indication of higher risk. Not all investment options will be appropriate for you. When the time comes you should interview several financial professionals to find one that you feel comfortable with. I also suggest that you take a trip to the library and pick up a selection of books about personal financial management. Educate yourself. Professional advice is valuable, but there is no substitute for knowledge. Good luck!

Copyright © 2007 Sky Blue Credit Repair. All Content. All Rights Reserved.

Come this fall, you'll be able to breathe a little easier when you use your Visa debit card at the gas pump. In October, excessive holds that freeze consumer's available funds for a day or two (or three) will become a thing of the past.

Currently, using your debit card to pump gas can be risky if you are living paycheck to paycheck as many people are. That's because when you use your debit card at the pump to pay for gas, a preauthorization request is made to your bank to make sure the card is valid and that there are sufficient funds in the account.  The problem is this preauthorization request also places a hold on an additional amount on your funds.  But that hold isn't lifted until the hold and the purchase amount are matched up by your bank, which can take about three days.

This means you may have bought $30 in gas, but also have a hold for $75 on funds. So the $45 difference is essentially "frozen" until your gas purchase clears the bank.

A new real-time authorization system that goes into effect this fall will cut that hold time to anywhere from about 15 minutes to 2 hours when a Visa debit card is used. MasterCard hasn't announced similar plans yet, but it's a good guess that they are working on something.

This is welcome news for consumers, but of course, we are presuming that gas stations will still welcome payment with plastic at the pump by then. In an effort to cut costs, some gas stations are banning credit cards, while others are offering discounts for those who pay with cash. And still others limit the amount you can spend at the pump if you use a credit card.