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4 Texas Money Myths that Will Damage Your Credit Report

Texas is full of great tales and tall stories. While enjoying a good story is part of what makes us Houstonians tick, when it comes to money matters, blindly believing common myths about debt can be financial suicide. Here we’ll debunk 4 of the most dangerous and prevalent misconceptions regarding money and debt. If you have financial concerns in Houston, book a free financial consultation with Attorney Rod Kemsley.

MISCONCEPTION ONE

The smartest method of avoiding financial problems is to have no credit cards.

TRUE? Not necessarily correct. It’s true that having no credit cards helps to avoid spending too much, sensible use of credit cards is is a very good way of improving your credit score. Also, be aware that credit card debt is only one of many types of debt - mortgage debt, medical bill debt, tax debt and student loan debt to give but a few examples of dangerous debts. Therefore no credit cards shows good intentions, but may actually be limiting your future credit potential.

MISCONCEPTION TWO

Maintaining a balance on credit cards will improve the credit score.

TRUE? FALSE! Keeping a money owing on credit cards for a long period actually has the opposite effect on your credit score. When possible you should pay off the balance of your credit card at the end of each month to improve your credit score.

MISCONCEPTION THREE

When a creditor threatens to sue you or garnish wages there is nothing you can do to stop them.

TRUE? NOPE! If your lenders are getting in contact and they are making threats to take actions such as suing you, garnishing wages, taking assets ora house foreclose, you need to take advice, you DO have options.
Filing for bankruptcy at this point may be a good decision. ,This would call an immediate halt to your creditors activities. When you file for bankruptcy, an automatic stay takes immediate effect. An automatic stay is a court order that stops any actions you while you are going through the bankruptcy procedure and resolving your debt issues.

MISCONCEPTION FOUR

Because you’re about to declare bankruptcy, it’s smart to run up more debt on your credit cards (because all debt will be discharged).

TRUE? FALSE AGAIN! Running up big bills on credit cards shortly prior to declaring bankruptcy can constitute fraud. Credit card companies can propose that you had dishonest intentions in regard to the debt as you were assuming the debt would be discharged in bankruptcy.
Should a court decide that you did commit fraud, one of the following is probable:

That debt will be non-eligible for discharge.

Your entire bankruptcy case may be dismissed.

You face formal criminal fraud charges.

Shaklaw and Kemsley Law are now one and the same. We offer a free, no obligation consultation to review your situation and answer your individual questions about this or any aspect of bankruptcy law. Please contact us at 281-847-4345 or rkemsley@kemsleylaw.com so we can discuss your individual situation and see if Chapter 13 would work for you and how we can help you set up a plan to pay the required fees. The consultation is free. Take the first step by calling us today. We look forward to hearing from you soon.

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