Archive for July 2020

Free Weekly Credit Reports Until April 2021

Did you know that due to Covid-19 you can now request free credit reports every week from now through April 2021? Now is a great time to pull and review your report.

https://www.annualcreditreport.com/index.action

Once you pull a report (you can pull one from each of the 3 credit bureaus) you need to review and dispute any discrepancies.

What do I do if I fell behind on my mortgage because I took a COVID-19 Forbearance in Hackensack, NJ?

Many homeowners were relieved and in some cases eager to take advantage of their mortgage servicers willingness to grant them a COVID-19 forbearance.  However, homeowners may not have fully understood the effects of accepting that forbearance.  The Covid-19 forbearance on average are for 3 to 6 months but could be extend longer.  Only time will tell.

A forbearance is when your mortgage servicer or lender allows you to pause or reduce your payments for a limited period of time.  A forbearance does not erase what you owe. You’ll have to repay any missed or reduced payments in the future.

Typically at the end of the forbearance the home owner must come up with all the missed payments.  However, often mortgage servicers will agree to put your missed payments on the back end of the mortgage while you resume payments.  Putting the mortgage payments on the back end of the mortgage means that you will ultimately being paying interest on interest.

Another problem with simply putting those missed mortgage payments on the back end of the mortgage is that it most likely will create an escrow shortage.  If your taxes are paid through your mortgage then your account has a special escrow account.  The mortgage servicer is permitted by law to keep the equivalent of 2 months of monthly tax payments.  When you do not pay your mortgage the mortgage servicer uses your escrow funds to help pay your property taxes which in turn will leave your escrow account short.

So what do you do?  Only take a forbearance if you absolutely and only take it for as long as you absolutely need it.  If you feel like you are falling further and further behind you could speak to your mortgage servicer about applying for a loan modification.  If they are unable to help then give us a call.

A Chapter 13 bankruptcy may be able to greatly assist  you by reorganizing your debt, including your mortgage, giving you a some time (as much as 60 months to catch up on missed mortgage payments while beginning to make regular payments.  We can tell you how we may be able to help you.

Will I be able to get credit after I file for bankruptcy if I live in Bergen County?

The short answer is, “Yes! (Of course or I would be out of a job!)”  Often people do not file for bankruptcy because they believe they cannot get credit for 10 years.  This is a big misunderstanding.  A bankruptcy can appear on your credit report for 10 years but as you get further away from the filing date the better your credit score and credit offers.

I usually tell people that their credit scores will increase within the first year after filing for bankruptcy.  However, recently my clients have reported back their credit scores have increased more than 150 points a month or two after filing for bankruptcy.

Years ago someone credit score would increase 100-150 points within a year.  Why the change?  I am not sure why but I suspect the credit card companies are loosening up credit standards.  That is good news for you because filing a bankruptcy now will zero out the balances on  your credit report and your score will go up almost immediately.  I cannot guarantee results but my clients are proof that this is occurring.  So if you have been thinking about filing it is a perfect time!

 

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