Credit Scores and Credit Reports Explained

Understanding Credit Scores and Credit Reports

A credit score is a number that tells institutions such as banks how creditworthy you are. For example, banks will look at your credit score when deciding whether or not they approve a loan and how much interest they will charge you.

The better your credit score, the more willing financial institutions will be to give you a loan and the lower the interest rates charged on your loan.

Credit scores aren’t used by banks only but also by lots of entities from insurance companies to landlords.

Credit scores are calculated based on information gathered from multiple sources but mainly based on your credit report, which is a record of your credit history.

A credit report contains information from lending institutions, debt collection agencies, and even the government. For example, if you’ve paid back previous loans on time, your credit report will reflect that.

The credit score is calculated through an algorithm that varies from country to country as well as from institution to institution. In the United States, your credit score is mostly calculated based on credit report information from the top three bureaus: Equifax, Experian and Trans Union.

These three agencies operate the website through which Americans can request up to three free credit reports per year, one from each bureau. The Fair and Accurate Credit Transactions Act gives citizens the right to receive that information free of charge.

Contact Mr. Mark Shayani of Pacific Attorney Group for credit and debt counseling. Mark is a professional and compassionate financial expert who will help you ease your financial stress and develop a plan for living a financially healthy life.


Fair Debt Collection Practices Act (FDCPA)

Ways the Fair Debt Collection Practices Act Protects You

If you’re behind on making bill payments or a credit bureau has made it appear that way, you may be contacted by a debt collector. Under the Fair Debt Collection Practices Act (FDCPA), you are protected from debt collectors using deceptive unfair and abusive methods to collect this debt.

When dealing with debt emergencies, you have the right to request that the creditor provide proper documentation of the debt. Since it can take several weeks for these documents to be provided, you can use this time to pull some funds together.

The FDCPA laws cover not only the actual collection agencies but also the people working as debt collectors. When speaking with debt collectors, make sure to get the name of the person calling, the company that they work for, an address and phone number.

Make sure to record all details of contact with each agency including time, date and a brief summary of the conversation.

Debt collectors cannot contact you outside the hours of 8 a.m. to 9:00 p.m. or at work if they receive documentation that the calls are not accepted. The act allows you to send a written letter to the debt collector, requesting that they stop all contact. Upon the receipt of the instructions, they are only allowed to contact you to either let you know that they received your request and will not be contacting you anymore, or that they have chosen to take a specific action.

The debt collector also must provide detailed information within five days of their first contact with you. The letter must contain the name of the creditor to whom you owe the money and what to do if you don’t think the account is yours.

The act covers personal, family and household debts, including money you owe on a personal credit card account and an auto loan, medical bill, or even mortgage.

The FDCPA, however, does not cover debts incurred when you run a business. Debt collectors are not allowed to harass you, make false statements. They also cannot claim that you will be arrested or that they will garnish or seize your property without already being granted permission to do so by law.

The debt collectors are also not allowed to share false information about you or use a false company name or engage in any unfair practices.

If you would like to discuss your financial situation with one of an experienced consultant, contact Pacific Attorney Group and talk to Mr. Mark Shayani.


Debt Relief Options

How to Choose the Best Debt Relief Options

When it comes to getting out of debt, make more money and spend less is always the common advice you will receive. When you’re past that point, you may have to consider debt intervention. There are a few legitimate options to intervene on a heavy debt load. These are credit counseling where your payments are reduced on a monthly basis over a four and five year period.

Another option is avoiding bankruptcy through negotiating your balance down. Typically it would be best if you came up with about half of what you owe over a prescribed period of time, which is usually going to be more condensed than a debt management plan.

A third option, of course, is bankruptcy. There are two chapters, chapter 7 and chapter 13. Each of these has different attributes and how long they’ll take. When you’re looking at your situation to determine which path is right for you, you need to consider your monthly income and expenses. You will then decide whether you can afford to pay 2% of your overall unsecured bills such as credit cards, store cards, gas cards, and medical bills.

Simply calculate the total amount of unsecured bills, and 2% of that would be your monthly payment in a debt management plan. Find out if you can afford that amount and commit to over a four and five year period.

Alternatively, you need to find out how long it would take you to accumulate about 50% of those balances (unsecured bills) and settle those accounts. If you cannot settle these debts in a couple of years, you should consider filing for bankruptcy.

Bankruptcy is often the last resort when dealing with debt. However, there are many factors that may influence your decision. Some of these include:

  1. What’s going to happen to your credit?
  2. How soon you may need credit?
  3. Do you need to refinance a mortgage?
  4. Are you trying to get a home or get student loans?
  5. Do you need dependable transportation?

Although the answers to these questions can actually affect the decision-making process, they are actually secondary factors.

Anyone who wants to find which path to take is advised to reach out to professionals at Pacific Attorney Group and do free consultations. Mr. Payam Shayani is an experienced bankruptcy attorney who will help you determine how a debt management plan might suit your specific needs. He will also advise you on how to find reputable professionals that offer debt settlement services.


24 Hour Fitness Files for Chapter 11 Bankruptcy, Closes 13 Bay Area Locations

24 Hour Fitness Files for Bankruptcy, Closes over 130 Gyms amid Pandemic

24 Hour Fitness announced Monday that the company was filing for Chapter 11 bankruptcy after having to close more than 130 gym locations around the US amid the coronavirus pandemic.

One of the company’s officials, in a statement, said that they would not have decided to file for Chapter 11, were it not for COVID-19 and its devastating effects.

Once approved by the court, the company was expecting to secure roughly $250 million in debtor-in-possession (DIP) financing, which along with its cash from operations, would allow 24 Hour Fitness to continue operations and reopen its remaining clubs.

24 Hour Fitness, an industry leader for over 30 years, confirmed Sunday that it was permanently closing down more than 130 clubs.

The remaining 300 locations were expected to reopen by the end of June by state and local public health agency guidelines. The company also altered its club experience to include a new workout reservation system, touch-free club check-in, and stringent cleaning and social distancing protocols.

24 Hour Fitness was aiming to restructure its balance sheet and operations to ensure a resilient future. With this, the company would gain financial strength and flexibility to accelerate its business transformation plan, including reinvestment in their existing clubs, opening new clubs, and introducing several new innovative products and services that would enhance the fitness experience for its club members and guests for many years to come.

Financial services company Moody’s had already downgraded 24 Hour Fitness’ status in December 2019 before the onset of the pandemic, citing a sizable decline in membership count and an acceleration in comparable club revenue declines in the third quarter.

A dramatic shift in the US fitness industry could be expected even after coronavirus restrictions are lifted, as many Americans were now accustomed to at-home, online workout options since gyms remained shuttered for months under stay-at-home orders.


How to Stop Harassing Phone Calls from Debt Collection Companies

How to Stop Collection Calls and Creditor Harassment

There are a few things one can do to stop the harassing phone calls from your debt collection agencies. One way of achieving this is by recording all conversations either you have with the agencies. This very important because this will provide evidence of the harassment.

You can buy a tape recorder to record the calls and remember to write the call logs in a notepad.  When you finally get that initial phone call, all you have to say is that you dispute the debt, and you want all communication in written form. This should be enough to stop all unnecessary phone calls.

However, if they call after that, make sure you record the conversation because now they broke the law, and according to the TCPA, you can get anywhere from $500 to $1500 per phone call.

Secondly, you can send a cease-and-desist letter to the debt collection agency. You can look up samples of cease and desist letters on the internet and use them to draft your own. A simple letter has the company name and your account number.

The advantage of requesting written communication is that the company would have to inform you of the debt and other important stuff before putting it on your credit report.

Another thing you need to know is that you’re not obligated to pay these debt collection companies. They are just a third party, and you’re not under contract, so you’re not obligated to pay them.

Therefore, you may consider talking to the original creditor of the account and come up with a payment plan or agreement.


How Much Will My Chapter 13 Plan Monthly Payment Be?

How Much Do You Pay In Chapter 13  Bankruptcy Plan?

People looking to file a chapter 13 bankruptcy and a plan of repayment on their debt often ask what their monthly payment is going to be.

The amount to be repaid is determined on a case-by-case basis because different things can come into play that can affect your monthly repayment.

The main factor is how much disposable income you have available for debts. This is how much money is left from your net monthly income after all monthly expenses have been paid. This analysis is called means-testing. Means-testing may require a certain minimum amount to be paid to creditors.

Second is how much money you must pay through the bankruptcy plan. Some debts must be paid in full for practical or legal reasons. These include things like mortgage, taxes, child support, alimony, or other domestic support obligations.

Finally, if the value of the assets you own exceeds their exemption, the trustee would sell that asset and pay that extra amount to creditors.


How to Qualify for a Chapter 7 Bankruptcy

Filing Chapter 7 Bankruptcy: Do I Qualify?

Anyone who wants to eliminate debt by filing for bankruptcy must first determine if they qualify. There are two types of personal bankruptcies that one can file: chapter 7 and chapter 13.

A chapter 13 bankruptcy is reserved for people who don’t qualify for chapter 7 because their income is too high so they must repay their debts over a period of three to five years.

Chapter 7 bankruptcy is the most sought after type of bankruptcy. People prefer a chapter 7 bankruptcy because they don’t have to repay debts. Chapter 7 bankruptcy eliminates dischargeable debts forever.

There are two important factors that will determine if one qualifies for a chapter 7 bankruptcy;

  1. You can only file a chapter 7 once every eight years
  2. Your household income must qualify under what is called the means test.

A means test calculates your average household monthly income over a six-month period based on your household size and the state where you reside.