Sunday, January 29, 2012

A Truly Free Credit Report

       All of us have likely seen those commercials offering us to view our credit score for free. But if you can read the fine print in the commercial, while its up for about one second, the offer is only valid if you enroll in one of their programs.

       However, don't be sucked into such commercials and potential fees. The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months. The companies promoting free credit reports to you are just using this law to get you your credit report in exchange for your membership. Please refrain from using these companies to trick you into their membership programs.

       To order, visit, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. You can print it from Do not contact the three nationwide consumer reporting companies individually. They are providing free annual credit reports only through, 1-877-322-8228, and Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
Visit the Federal Trade Commission's website on this for more information and some frequently asked questions:

Friday, January 27, 2012

Bankruptcy 2011 Statistics

       A statistical breakdown of the Country's Bankruptcy filings were recently released by the National Bankruptcy Research Center (NBKRC), and Tennessee unfortunately did not fare well. The county with the highest bankruptcy filings per capita was Shelby County, Tennessee with 18,764 per million inhabitants (12,814 filings total filings). And Tennessee, overall, ranked the 4th highest of bankruptcies filed per capita. Aside from Tennessee's clear struggle in this recession, overall the country's filings dropped 12%, the first drop in bankruptcy filings since 2006 (the year after the Bankruptcy Code was amended to make it harder for people to qualify for bankruptcy).

       However, according to the NBKRC, “bankruptcy filings in December were almost exactly the same as November (101,000), but December filings are typically quite low. So, on a seasonally adjusted basis filings were actually up 7% from November.”  Accordingly, it is predicted that 2012 filings will increase.  Another interesting note, putting aside from Shelby county's #1 ranking, the counties ranking 2-10 are all rural. This is likely due to the fact that (1) rural counties generally have lower incomes, and (2) more people per capita own their homes in rural counties while, per capita, more people rent in urban counties, making rural citizens more susceptible to debt and foreclosure, a strong catalyst forcing one into bankruptcy. 

       By looking at these results, it seems that Tennessee is in for another rough year of Bankruptcy filings as well as the rest of the country.   Though the economy is muddling through a recovery, the slow growth is insufficient to allow those indebted with credit cards, mortgages, medical bills, and car loans to cure those defaults. 

      For more information on the NBKRC and the research provided by Professor Ronald Mann of the Columbia Law School, please visit

Tuesday, January 17, 2012

Cars in Bankruptcy: The Cram Down “910 Car Claim”

       One of the luxuries of the Bankruptcy Code is the ability to Cram Down the amount you pay on your vehicle. The Bankruptcy Code allows you to (1) lower your interest rate to as low as 3.25% instead of keeping it at that 18% interest rate at which you bought your car; and (2) lower the overall payment of your car to its value instead of the balance on the loan. (This also includes Title Loans on your car) There is only 1 caveat. The loan on the car must have been acquired more than 910 days before the filing of the Bankruptcy case. If the loan on your car is less than 910 days, then you will have to pay the full balance on the loan but not the contractual interest rate. Here is an example to illustrate.

       Assume you bought your car 2 and a half years ago for $25,000 at an interest rate of 15%. Your remaining balance on the loan is $12,500, but the value of your car is now $6,000. Well, in the bankruptcy, you are allowed to “Cram Down” the loan to the value of the car and reduce the interest rate to as low as 3.25%. Therefore, you are now paying only $6,000 at 3.25%. Moreover, we can assume that you only had 2 years left to pay on balance of the loan according to its terms, but through bankruptcy you also get to extend the loan to another 3 or 5 years which would make your payments considerably lower. Under the original terms, the monthly payments would be $695.77. But under the Cram Down, the payments would be $108.48 if extended out by 5 years.

       It must also be noted that the 3.25% is a general rate that has been established for the Middle District of Tennessee, other districts and circuits may have different standards.