Bankruptcy Advice

There are hundreds reasons you might need to take out a short term loan in your life. For example, you might wake up one morning to find it’s April 13th, and you only have two days until your taxes are due. You had a particularly prosperous year last year, and you owe the government some serious cash.

You face one big challenge: in spite of the fact that you put in reserve the necessary funds for the government’s bill, your tax account no longer has any money in it due to the fact that you and some associates took an unplanned vacation to Las Vegas. If only the government had sympathy toward your spontaneous lifestyle, you wouldn’t have any stress right now. Unfortunately, they don’t, and now you’re going to have to get someone to lend you enough money to pay your taxes - or you’ll be paying the penalty.

A lack of cash isn’t the only problem you have to resolve before you can pay off the Feds - you’re also facing your poor credit history. Remember when you purchased an almost new Ford truck because they were having a year-end blowout sale? You borrowed the money for the truck even when you knew you’d have no real ability to keep up with the large monthly payments, and not much time had gone by before the truck had to be repossessed.

So here you are, taxes due, no cash on hand, with a tax bill looming. There is hope, if you know where to look. There are signature loans for people with bad credit. You can qualify, but you have to know what you’re doing.

First you should understand what a signature loan is, although it’s fairly self explanatory. You walk in, fill out a couple forms, sign your name (hence, signature loan) and walk out with the cash you need. It’s that simple, but it may not be that easy unless you can fulfill a couple of the prerequisites.

A few complications may arise. One, you’ll have to prove to the bank that you actually have earnings to justify their loan. A lender may not mind your bad credit as much if they see that your current income exceeds your personal expenses including the new payment on your loan.

And what about collateral? Collateral is defined as some valuable article the lender could sell on the open market if the borrower decided not to fulfill the obligations of the loan. It’s a classic risk-minimizing tool for banks who want to be able to recover all or part of their lost money when they loan to flaky people. Be careful - if you use something you actually care about for collateral, you run the serious risk of losing your valued item.

If you can convince the bank you’re not a major loan risk, you’ll end up getting the loan and surviving the day. Next time you should probably be more prudent about the use of your emergency cash reserves and your tax planning. Don’t let your financial situation become a vicious cycle!

If you are currently repairing your credit report you understand how important your score is. How this number directly impacts your quality of life.

You will be judged by employers and lenders on this number. It can prevent you from being approved for credit and worse yet being hired for a job.

Many lenders will look at nothing else but your credit score when you apply for new credit. They rarely care as to the reason why a negative mark is on your credit.

There are two parts to credit repair that you should focus on.

1. Removing negative items from your credit report.

Negative marks will cause the most damage to your credit score. However these marks can be removed before waiting 7 years.

The Fair Credit Reporting Act gave consumers the power to dispute any mark on your credit report. When a dispute is filled you are saying to the bureaus that the negative mark is invalid or incorrect.

To file a dispute a dispute letter must be sent to each credit bureau. In this letter you must include why the listing is inaccurate. Common reasons are; not my account, item is out of date, account paid in full. Upon receipt of your letter the bureaus will investigate the disputed listing.

If the mark can not be verified then the credit bureau must remove it from your report. It has been found that once a listing is investigated it is often removed, regardless of its accuracy.

2. Build positive credit

This is a more difficult aspect. This is because when you have a low credit score it is hard to be approved for new credit lines.

However it is necessary to open a new line of credit. The best is an unsecured credit card even with the insanely high interest rate.

With your credit card you want to keep the balance at approximately 10% of your credit limit. This is because it will show the credit bureau that you are using your credit and it will improve you ratio of credit to debt.

By making your monthly payments on time it will also create a positive payment history on your report. If you can not create a positive payment history it will be almost impossible to add points to your credit score.

In sum your credit can be repaired. It may be in your interest to remove some negative marks before you open a new credit line, to ensure approval. However you should remove negative marks and build positive credit to get you to a 700 credit score.