How to Restore Damaged Credit

Better Credit Will Save You Money Over the Long Term

Repair your damaged credit through a bankruptcy. Your credit score directly affects most of your financial transactions such as purchasing a home, buying a car, applying for credit cards and potentially even applying for a job. If you have experienced past financial troubles, your credit score most likely declined. Our firm specializes in debt resolution and credit improvement.

There are concrete steps you can take improve your credit. Our firm offers a free consultation where we will:

Review your outstanding debts and current monthly budget.
Discuss your long term financial goals.
Provide qualified legal advice on your options to improve your finances and your credit score.

Call us today at 866-261-8282 with your questions or to set up a free consultation at one of our seven office locations in: Detroit, Southfield, Warren, Dearborn, Ann Arbor, Flint, Lansing, Michigan.

What Does Your Credit Score Mean?

Your credit score tells a lender how likely you are to default on a loan. The lower your credit score, the higher the rate of interest you can expect to pay based on the increased risk to your lender based on your past credit history. Therefore, the higher your score, the better your interest rate and lending terms will be. Improving your credit is one of the easiest ways to save money each month. What seems like a small difference in monthly payments can add up over time. Money saved on financing terms can be saved for more important things such as retirement, children’s education, etc.

Your credit score is determined based on the following factors:

Payment history
Outstanding debt
Length of your credit history
Recent inquiries on your credit report
The types of credit in use

How Can I Improve My Credit Score?

In order to improve your credit, here are some action steps to take (and ways our programs can assist):

Understand and monitor your credit and score. If it is negative, what are the impacting factors? Examples of such factors are high debt levels and derogatory reports such as late pays, collections, judgments or charge-offs.

Works to correct negative factorsby:
- Reducing or eliminating debt
- Lowering interest rates
- Creating a budget that is manageable so that you are able to resume a regular payment history to all your creditors.

No credit is not necessarily good credit. Choose your credit wisely by establishing open lines of credit with reasonable terms. Only use credit cards to charge what you can afford to pay off each month.

Work toward paying down your debts.The lower your ratio of current debt to available credit limits, the better you will look to a potential lender. Pay off high interest rate debts first such as store charge cards and credit cards with an ongoing balance.

Maintain current payments on debts.Forgetting to make payments or ignoring debts can negatively affect your credit and create more issues such as late fees, higher interest rates, etc. Store charge cards usually carry the highest fees and interest. An easy way to make sure bills are paid on time is by setting up an automatic checking account deduction before they become due.

Learn from your past mistakes and take corrective measures to ensure a higher credit score in the future. The goal is to prove you as a reliable consumer who has manageable debt and pays on time.

If you are unhappy with your overall debt load, having trouble finding a balanced budget and/or have past credit problems that continue to plague your credit report, we have solutions to help. By filing Chapter 7 or a Chapter 13 bankruptcy we can:

Resolve your debts,
Reduce your debt-to-income ratio to;
Restore a balanced budget and;
Work towards improved credit.

The common perception is that a bankruptcy will hurt or destroy your credit for 7 to 10 years – this is simply not true. While it can be reported for that time period, it does not impact your credit for that time full time. In fact, as you will read below, in different ways the programs we offer will improve your credit standing and offer positive changes to improve and restore your credit.

Debt Consolidation for Improved Credit

The Chapter 13 debt consolidation program is specifically designed to help you to improve your credit. This improvement occurs in several ways. According to FICO, the two factors that most influence your credit score is your payment history (with more emphasis on recent history) and your total debt-to-income ratio. The Chapter 13 program is designed to automatically address and improve both of these factors:

Debt Reduction:The program focuses on paying down debt, not just servicing it.
- With 0% interest paid on unsecured debts (Credit cards, medical bills, second mortgage, older tax debts, loan deficiency debt, etc) and mortgage arrearages, you are making headway each month on the principal balance of your debt.
- Through the plan you have the unique opportunity to reduce mortgage debt by:
  - Removing a second mortgage or home equity loan
  - Reducing your principal mortgage balance on a rental property(s).
- Each month you are improving your debt-to-income ratio.
- The goal is that at the end of the 36 – 60 month time period, you will be free of unsecured debts such as credit card bills, medical bills, etc and caught up on your secured debt obligations such as a home or vehicle.
The benefit of the Chapter 13 plan is that it reorganizes your debts based on your unique circumstances – your income, debts and monthly living expenses, and long term goals. By creating a customized repayment plan, you will not have to struggle each month to determine which creditors to pay.

Re-establish a positive payment history: In addition to reducing your debts each month, you will also re-establish a positive payment record through the program. Most often we can set up an automatic deduction for plan payments to make the process easier. The plan prioritizes your debts, provides optimal repayment terms and communicates the plan with your creditors so that you do not receive any further negative marks on your credit.Getting back on track with regular payments to your creditors will bolster your credit score and help you negotiate better financing terms for future purchases. If the Chapter 13 Debt Consolidation plan is used effectively, your credit score will improve throughout the course of the program.

Creditor Protection:The Chapter 13 provides automatic protection from your creditors and creditor actions, such as:
- Home Foreclosure
- Vehicle Repossession
- Judgments
- Garnishments
- Collection calls and letters
Ward off future creditor actions that could damage your credit by filing for Chapter 13 protection.

Debt Elimination for a Clean Credit Slate

Sometimes circumstances change and you are just not in the position to pay your debts back in full or at all. At the time of the initial free consultation our attorney will evaluate if you are able to pay back your debts, perhaps at a reduced rate or if you qualify to eliminate your unsecured debts and make a fresh start.

A fresh start will wipe your credit clean and you simply need to make wise credit choices to re-build your credit. Sometimes based on the size of your debt, your income and high interest charges, there is no other way to make positive steps forward towards a better financial future. Typically within two years of filing a Chapter 7 fresh start, you will qualify for FHA or a conventional home loan and be back on track.

Trust our Credit Restoration Experience

Both programs emphasize reducing debts and moving toward a debt-free existence. To see which program best fits your circumstances, we invite you to meet with one of our qualified attorneys for a free consultation. Call us today at 866-261-8282.

If you need help pulling your credit report and evaluating it, we can assist you. We are able to pull a “Merged” credit report right at our office that will pull your information from all three of the credit reporting agencies and combine the information into one report. Ask about this service when you meet with the lawyer for the initial consultation.

We offer free in-office or phone consultations to review your personal circumstances, analyze your situation and advise you on the best course of action. We specialize in bankruptcy law, debt resolution, foreclosure prevention and credit repair. We have offices in Detroit, Southfield, Dearborn, Flint, Ann Arbor, Lansing and Warren, Michigan. Please call us toll free at 866-261-8282 or click here to schedule a consultation right now.