Bankruptcy, Credit, and Lessons for You and Your Children

If you’ve read this blog before or looked around our website, you won’t be surprised to hear me repeat what we’ve said about bankruptcy many times before. Bankruptcy is a legal tool to allows people to protect their future and keep financial issues from taking over their lives. While many people automatically associate negative thoughts with the word “bankruptcy,” it’s also worth looking at in a positive light as well. It does, after all, provide this important protection for so many people. Far worse would be a country with no bankruptcy law and no effective way to get out of lifetime indebtedness.

But in this post, let me suggest another “silver lining” regarding the bankruptcy process—the lessons you can learn and that you can teach your children about finances, borrowing, and debt. That’s right: Although going through financial hardship isn’t fun, it can lead to some important life lessons.

Have you ever heard it said about someone that, “he (or she) knows the value of a dollar?” It’s a common saying and usually refers to someone who has had to work hard for his or her money or someone who has a “rags to riches” story. The point of the saying is, whatever the case, they don’t take money for granted—they pay attention to their money.

There are many stories about people who have become wealthy only after they have first had a financial hardship. Financial hardships can transform the way people think about money and how carefully they pay attention to it. To be sure, financial difficulties can come from any number of situations and are not always relational to how vigilant one is with their finances; however, someone who has had to watch every penny might just value those extra pennies just a little more.

So whether you’re thinking about filing for bankruptcy, already have, or are just finding out more about the process, let me suggest that there can be a lot of value in going through a difficult financial time. Let’s take a quick look at some of the financial experiences that many have gone through and how they have used those experiences as an opportunity to learn and to pass on wisdom to their children.

Borrowing

For many of us, we were perhaps never given a formal introduction to the concept of borrowing money. Maybe the whole idea first came in the form of a low-limit credit card or a department store card. Or maybe we started borrowing money when we took out student loans and we simply resigned ourselves to the fact that borrowing money is a part of life. Then, as we got more and more comfortable with borrowing, we took out more cards, loans, and borrowed other places.

After going through a cycle of borrowing and trying to repay, many people become more aware of how the process works. If you have children, this is a very valuable lesson you can teach them. You can explain to them how the process works and what the implications are so that the first time they are presented with the idea, they have the facts. Your experience can be a great teacher for them.

Repaying

Up until recently, lenders like credit card companies didn’t have to clearly lay out the implications of making minimum payments on debts. For those who didn’t know better, they may have assumed that they could simply pay the minimum monthly payment and the debt would be retired in a relatively short matter of time. This is almost never the case with things like credit cards. Oftentimes, even small debts will take years and years to pay off if only the minimum payment is made each time. This is another pearl of wisdom you can pass along to your children. You can teach them that when they do borrow, they will need to pay attention to these number and figures and be prepared to know what to expect before they sign up for anything.

It’s Not “Real Money”

When you’re given a line of credit, it might not feel like real money. It’s really just a number. And then if you make your payments online, an amount is just debited out of your checking account. It might not be tangible to you. Think about creative ways to quantifying money when you talk to your children, or even quantifying the amount of money they will spend in interest. Try explaining that “this is enough money for a new video game…a new bike…or even a new car” (depending on how much money you are talking about). Putting it in real terms might help them think about what the numbers mean and make it more tangible.

Saving

Many young people open their first credit card so that they have a backup plan for “unexpected expenses.” Since life is unpredictable, these lines of credit almost always get utilized. By saving up an “emergency fund” instead of utilizing credit cards, you can still be prepared for those unexpected expenses. Encourage your children to start a “rainy day” fund for themselves very early—maybe when they are working just a part time job and still in school. By the time they start their adult lives, they will have a nice little bit saved up that they can rely on as a backup plan rather than opening a credit card for the same purpose.

Finally, it’s important to re-iterate that the reasons for financial hardships are as diverse as the people experiencing them. The above information is not at all to suggest that poor decisions were made by anyone, but just a way of explaining how sometime good lessons can come out of hard times. If you are facing financial problems and need to talk to one of our Milwaukee bankruptcy attorneys to find out what your options are, please don’t hesitate to give us a call today. We’re always here to help!

Rebuilding Your Milwaukee Credit After Bankruptcy

The bankruptcy process is both stressful and relieving at the same time. It’s a difficult journey, but the end goal is financial freedom, which is very rewarding. After your bankruptcy process is complete, the next stage is rebuilding your credit. Without the proper steps to rebuild credit, the hard work and dedication you gave towards removing your debt will be in jeopardy. Here are a few tips for rebuilding your Milwaukee credit.

Be aware of your card limits

When you begin re-establishing credit, it’s absolutely crucial to know the limits on your credit cards. By keeping your balances well below the limit, you’re showing control. Ideally, when you’re just getting back on your feet, you should use your credit cards sparingly – you likely won’t have very high limits, so you’ll want to keep credit purchases at a minimum.

Be attentive and timely with bills

Paying your bills in full and on time is the best way to get back on track. Being late on payments will counteract the rebuilding process and have a negative impact on credit. There are lots of tools you can use to keep reminders set. Many businesses offer auto-pay services where you can set up your payments electronically. If that’s not an option, use your calendar to set reminders.

Don’t run to a credit repair service

Just like debt settlement companies, credit repair services will likely contact you promising they can help repair your credit. These companies often charge astronomical fees and the work they do is something you can do on your own for free. If you decide to go with a credit repair company, be sure you do a thorough background check.

If you need assistance with your Milwaukee credit score or need advice about recovering from debt, contact Burr Law Office at 262.827.0375. With over 20 years of experience, attorney Michael Burr works personally on each case.

Charges That Shouldn’t Be Left to Your Credit Card

Milwaukee bankruptcy attorneyFor many individuals, obtaining and using a credit card is one of the easiest ways to build a strong credit rating—however, this is only true if you understand how to use your credit card properly. Continue reading to learn which types of charges should be avoided when it comes to your credit card.

College Tuition

It may seem like a better option to charge your college tuition, but in reality, you will end up paying more on compounding interest rates if you rely on your credit card rather than a loan for your tuition. Instead, consider a low-interest student loan, financial aid, scholarship, or grant to help fund your education.

Taxes

Understandably, many of us find it tempting to charge our state and federal taxes, especially when we find ourselves up against unexpected fees and penalties from the IRS. However, it is important to avoid using your credit card to pay your taxes, as processors will collect a fee of anywhere between 1.88 and 2.35 percent.

Medical Bills

Unexpected medical bills can often lead to financial strain, making it extremely tempting to charge treatment fees to your credit card. You may consider asking your provider if they offer any type of payment plan with little or no interest to help you pay off necessary medical expenses.

Big Events

It is important not to use your credit card to pay for big events, such as weddings, honeymoons, or other vacations. Instead, you will want to start saving your money ahead of time, or consider taking out a personal loan when planning these types of large events.

If you are facing a significant amount of credit card debt, it may be time to consult with a bankruptcy attorney. Give the Burr Law Office a call at (877) 891-1638 for more information on your debt relief and affordable bankruptcy Milwaukee options.

Legal Aid Milwaukee: Rebuilding Credit

After a bankruptcy filing, the question of rebuilding credit scores is often raised. Just as your bankruptcy filing and proceedings take time, so does rebuilding your credit. There are a lot of things to keep track of during the process, so legal aid Milwaukee from Burr Law Office can help. The number one rule for rebuilding your credit is to know your score and the things that will change it.

Acquire and review credit reports

As mentioned above, before you can do anything to fix your credit score you’ll need to know where you can go. Attorney Michael Burr will not only help with your bankruptcy filing, but will also help you review your credit report as well. By breaking down your score, you will have a better idea of what you can do to fix it.

Open credit/loans with caution

Many people do not keep a major credit card open during bankruptcy. If that’s the case for you, it’s a good idea to open one once your bankruptcy has been discharged and pay it off monthly in full. Also, a few years down the road, it may be worth considering getting a line of credit – maybe a car loan or something similar – that you can pay off successfully. Be sure to shop around for interest rates and know that the higher your credit score the better interest rate you’ll get.

Be timely with bill pay

Most people don’t understand the influence timely bill pay has on your credit score. To make it simple, paying your bills on time is a must. There are a number of services that allow for automatic bill pay nowadays. If you’d rather not do automatic bill pay, set reminders in your electronic calendar.

If you’re having troubles rebuilding credit after your bankruptcy, call Burr Law Offices to speak with attorney Michael Burr and get the legal aid Milwaukee you need. He’ll help you get your credit back on track.

Keep Yourself Out of Credit Card Debt: Tips & Tricks

Credit cards can be a blessing when it comes to large purchases. They prevent you from having to carry excessive amounts of cash and, depending on the card, can provide you with competitive financing options. There are a few things to keep in mind when deciding whether or not to use a credit card. Take a look at these easy steps to help keep you from getting yourself into trouble with debt.

Establish and stick to a budget

Keeping yourself on track is the most important and key component to staying out of debt. You may be tempted to charge that brand new gadget because it’s the latest and greatest thing, but you need to be able to justify it financially before doing so. If it’s not in your budget, don’t buy it.

Understand how reward cards work

Some people get caught up in reward offers on credit cards. Sometimes people that hold these cards end up spending way more than the reward is worth and get caught up in major fees and interest rates.

Choose cards with lower interest rates

Having a better credit score allows you to be approved for credit cards with lower interest rates. Try not to be fooled by fancy offers or catches associated with applying for a new credit card without looking at the full details first. Usually, cards with the best introductory offers bump up to sky-high interest rates after the first 6 months or so.

Don’t keep balances longer than 6 months

Compound interest adds up quickly. The longer you keep a balance, the larger the amount you pay. Don’t let you balance snowball for longer than six months, or it can become extremely expensive to pay off.

The Milwaukee bankruptcy specialists at Burr Law Offices are here to help keep you out of debt. If you find yourself in financial trouble, call Milwaukee bankruptcy Attorney Michael Burr to schedule a consultation.

Rebuilding Credit After You Declare Bankruptcy

Milwaukee bankruptcy rebuild creditThe process of filing is extremely stressful. After you declare bankruptcy in Milwaukee, there are several very important things you should do to continue on the path to financial freedom. It is crucial that you pay close attention to a number of details so as to protect yourself from problems down the road. Here are a few tips to help you rebuild credit.

Keep tabs on your credit report/score

After you’ve filed for bankruptcy, one of the first things you should do is obtain a credit report and check it to be sure everything is accurate. From then on, make an effort to continuously monitor your credit score. This way you’ll be aware of any changes that may occur and can address the issue immediately. If you need assistance reviewing or understanding your credit report, feel free to contact Waukesha bankruptcy attorney Michael Burr.

Hang on to your discharge and other documents

Although you won’t be pulling them out every so often like you would a photo album, it’s a good idea to keep all of the paperwork from you filing in a safe place. If something were to happen down the road regarding the discharge, having the paperwork will be a huge help.

Don’t throw in the towel on credit cards

Many people that have filed for bankruptcy say they will never again have a credit card. While living without credit cards has its benefits, it may not be practical in this day and age. It’s a good idea to keep at least one credit card for a multitude of reasons – online purchases, hotel reservations, unexpected expenses, etc. You never know when you might need a credit card, so it’s best to have one and be smart with it. Wait about 6 months after your bankruptcy to apply, and do so at your local bank or credit union.

Set a goal for savings

Setting up a new savings account and setting a goal as to how much you will keep in the account is a great way to give yourself a bit of security. You can start out small – maybe one or two weeks pay worth – and build it up over time. Just and with anything, you never know what will happen so it’s a great idea to give yourself a backup account in case of emergencies.

At Burr Law Office, we are committed to helping you declare bankruptcy and want to help you to get back on your feet. Our Waukesha bankruptcy attorney team is a great resource – give us a call with any questions!

Answering Common Questions About Milwaukee Credit

Credit and debt are among some of the most complicated financial topics to grasp, which is often why so many individuals find themselves facing massive debt and other major financial troubles. A good way to help protect your financial future is to educate yourself on common credit topics. Read over these answers to common questions about credit to boost your knowledge.

How Many Credit Cards Should You Have?

While there is no perfect number, most individuals benefit from having two credit cards —one that offers a low-rate when you must carry a balance, and one that offers a grace period. However, it is recommended that you carry at least four different lines of credit to help boost your overall rating, such as a major credit card, retail card, car loan, and home loan.

Does Checking Your Credit Rating Hurt Your Score?

Checking your credit rating does not affect your score if you utilize a “soft inquiry” rather than request it directly from your lender. By requesting your score from a service that provides reports directly to consumers for a fee, these inquiries will show up on your credit report, but will not deduct any points from your overall score.

How Can You Repair Your Credit Rating?

There are a number of ways to improve your credit rating. This includes reviewing your credit report for discrepancies or errors, obtaining a secured credit card, and paying all of your bills on time each month. It is also important that you pay the maximum balance on all of your credit cards on a monthly basis rather than just the minimum balance to avoid compounding interest.

With years of experience, the bankruptcy attorneys with the Burr Law Office are here to help you with your financial struggles. To learn more about our debt relief services or Milwaukee Chapter 13 bankruptcy, contact our bankruptcy law office at (877) 891-1638 today!