Gazprom to Counter Negative Global Market Trends

The Gazprom Board of Directors took note of the information on the Companys financial strategy under the conditions of negative trends in the global financial market for the Russian business entities.

It was pointed out that the geopolitical events involving Ukraine as well as American amp; EU sanctions imposed on Russia affected many Russian companies.

In this context Gazprom thinks it is necessary to adhere to the current financial strategy, which provides for the Companys good standing and enables it to swiftly react to the possible aggravation of the situation.

Gazproms financial strategy envisages several basic lines of the Companys business.

One of them is forming Gazproms conservative budget allowing for the risks of reducing the volumes of gas withdrawal by contractors or not receiving their payments for the provided supplies. Based on such a scenario Gazprom shapes the kind of a cash budget, which demands the most efficient use of funds intended for the Companys top-priority projects, as well as enables the Company to fulfill all its obligations for repaying loans and fully finance the operational costs.

When shaping up the investment program, Gazprom defines the top-priority projects and rates them by their significance and feasibility. In this context the Company adheres to project financing mostly through its own funds. Such an approach restricts the unfounded growth in capital expenditures stipulated in the investment program, giving an opportunity to deliver Gazproms principal projects.

Gazprom proceeds with improving centralized liquidity management system of Group and managing financial risks.

Gazprom stays conservative while dealing with debt management issues within its financial strategy. Its implementation had already provided for an optimum debt structure and the Companys good standing by the moment the environment in the global financial markets turned to be unfavorable for the Russian companies.

Thus, following the results of H1 2014, the net debt/EBITDA ratio totaled 0.5, reaching the level of the global energy companies and allowing the Company to fully pay off its debt using the funds earned just over six months. A share of long-term debts has considerably increased currently the debts payable in or above five years make up about one third of the Companys debt structure. In addition, a share of fixed-rate debts exceeds 95 per cent of the Gazprom Group total debt, considerably reducing under the current market conditions the risks related to rate fluctuation.

Presently Gazprom considers the opportunity of diversifying the sources of financing through the Asian capital markets. The Company cooperates with Asian financial institutions on a number of issues, including the possible denomination of Eurobonds in Asian currencies.

The measures to sustain the capitalization and enhance the liquidity of Gazproms shares are in progress. Last June Gazproms global depositary receipts were listed in the Singapore Exchange quotations. Listing at the Hong Kong Exchange and getting a higher level at the Singapore Exchange are currently being considered. Listing at Asian exchanges gives access to new investors, including pension funds, insurance companies, Asian corporations, family foundations and managing companies of Asian banks.

Kansas City-based payday lenders’ practices leave borrowers scrambling

Jeannie Morris thought she’d snag a loan on the Internet to pay for her daughter’s wedding photographer.

So she punched personal information into websites that offered to match her with payday lenders. Soon, without asking her approval, two unrelated online lenders based in Kansas City had plopped $300 each into her bank account. Together, they began withdrawing $360 a month in interest payments.

After the loan companies cleaned out her account, sharp calls from collection companies started.

“(They) called me at work and threatened to garnish my paycheck or serve me with legal papers,” Morris, who lives in Panama City, Fla., explained recently in a federal court filing.

Her complaint and thousands of others filed in recent years prompted federal consumer watchdogs to seek court action against two Kansas City-based online payday loan networks. In response, a federal judge closed the businesses, at least temporarily, to allow investigators and court-appointed receivers to scrutinize the companies’ business practices.

Like Morris, many consumers reported that loans they’d never authorized had been dropped into their bank accounts. Then those accounts often evaporated as the lenders snatched out money for interest payments while never applying any of the money to the loan principal.

“It has been frustrating to read all the complaints of these people who’ve lost so much money,” said Aaron Reese, a manager at the Better Business Bureau of Greater Kansas City, which handled hundreds of such reports.

The Federal Trade Commission filed suit against two Johnson County men, Timothy A. Coppinger and Frampton T. Rowland III, and the 14 companies they controlled, including CWB Services, Orion Services, Vandelier Group and St. Armands Group.

The Consumer Financial Protection Bureau sued Richard F. Moseley Sr., Richard F. Moseley Jr. and Christopher J. Randazzo, and 20 companies that they ran, including SSM Group, CMG Group, Hydra Financial and Piggycash Online Holdings.

Defense attorneys say they plan to contest the government’s allegations.

The companies specialized in making payday loans over the Internet. Such loans are short-term, high-interest financial instruments that generally are paid back quickly, usually at the borrower’s next pay day.

The two lawsuits included sworn statements from about 40 people describing themselves as victims. Affidavits from them brim with lessons learned, such as the need to keep close track of your checking account and to immediately contest any unknown charges.

One borrower, Bobbi Kennedy of Farmer City, Ill., never recalled applying for an Internet payday loan, though she did ask for a car loan online about 10 years ago. Still, she noted, that decision haunted her when she argued with a manager about taking back a $200 payday loan that somehow had appeared in her account.

“(He) said I should be more careful about what information I put on the Internet,” Kennedy wrote.

Most of the borrowers recalled searching for payday loans online and punching their financial information — including Social Security numbers and bank account and routing information — into websites that promised to match them with lenders.

The websites were operated by “lead generators,” as federal officials described them. After collecting the financial information, the lead generators auctioned it to the highest bidder, either payday lenders or brokers who resold it.

“We are seeing more and more of these types of lead brokers online, collecting sensitive information and then selling it to whoever,” said Jessica Rich, director of the FTC’s consumer protection bureau.

Brenda Light of Delavan, Wis., learned just how loosely that information could be treated when two payday loans, from different companies, dropped into her bank account on the same day in May 2013.

When she called the Kansas City lender to complain, a representative blamed her for any problems, she wrote.

“They … accused me of not reading the fine print that by applying on a general payday loan website, my information could be shared with other lenders,” wrote Light, who did not recall seeing any such fine print.

Most borrowers said resolving their issues with the lenders was difficult.

Ginger O’Neal of Villas, NJ, immediately spotted an unauthorized $250 deposit into her account in May 2013, almost a year after she had secured, and paid off, a payday loan through a different firm.

After a month of telephone calls and emails, she finally persuaded the lender to take back the money.

“Never have I had to fight so hard to give money back,” she wrote in one of the emails.

For those who didn’t watch their accounts as closely, the experience could be a lot more expensive.

Anitra Watts of Frederick, Md., was late paying a bill in February 2012 and took out a $250 loan. She assumed that the Kansas City-based lender would stop withdrawing money from her account after the loan was paid off in a couple of months.

“Unfortunately, I did not keep a close eye on my bank account,” she wrote.

A year later she found that the lender had taken out $1,950 in interest payments on the $250 loan. Watts complained to her bank, which investigated. The lender produced paperwork purporting to show that Watts had electronically signed documents agreeing to the loan at an annual rate of 1,368.75 percent.

“I did not agree to these terms,” Watts wrote.

The networks’ collection efforts could be particularly unpleasant, dozens of victims reported.

Jarret C. Edmunds, an Orlando, Fla., marketing executive, wrote that he never applied for a payday loan, and he hotly contested the deposit of $300 in his bank account by one of the Kansas City lenders.

The lender responded by showering him with 50 telephone calls a day, likely coming from a call center in India, Edmunds said.

“They threatened to sue me and send me to jail,” Edmunds wrote. “Some of the callers used obscenities.”

Such business practices appalled the leader of an industry trade group that represents Internet loan providers.

“Their treatment of consumers is deplorable,” said Lisa McGreevy, president of the Online Lenders Alliance.

The income from such a business model is enormous — and illegal, federal consumer watchdogs said in their lawsuits.

Companies controlled by Coppinger and Rowland made about $28 million in payday loans over one 11-month period, while “extracting” more than $46.5 million in return, FTC lawyers alleged.

The Moseleys and Randazzo worked with thinner margins, but the volume was greater, according to federal court records. Their companies allegedly made $97.3 million in payday loans over a 15-month period, while collecting $115.4 million from consumers.

Investigators alleged that some of the owners used the companies for lavish spending.

Coppinger spent more than $19,000 at the Indian Hills Country Club from November 2012 to September 2013 and made substantial payments to Aristocrat Motors and for an Infiniti auto loan, FTC investigator Michael B. Goldstein said in a court filing.

Coppinger also took multiple trips to Las Vegas resorts, where he spent $14,000 at casinos between January 2012 and February 2013, court records allege.

And over two weeks in March 2013, a corporate debit card for one lending company made $3,100 in purchases in Gulf Shores, Ala., including $2,300 at a beach resort. And a company card paid for more than $4,100 in bills “at various food and alcohol establishments,” Goldstein alleged.

Lawyers said they are preparing answers to the government’s allegations.

“Mr. Coppinger and his companies deny the allegations and we are working very hard to defend against every claim,” said Pat McInerney.

Rowland’s lawyer also said he’s planning a “vigorous” defense against the allegations.

Attorneys representing the Moseleys and Randazzo could not be reached for comment.

With dozens of bank accounts frozen, some of the defendants are scrambling to sell property and vehicles to meet day-to-day living expenses, court records show.

But the payday loan cash flow probably won’t resume any time soon.

Brian Holland, a lawyer representing one of the court-appointed receivers, recently filed a notice in federal court saying the receiver had looked closely at whether he could reopen the businesses.

“(T)he receiver has made a good faith determination that the … businesses cannot be operated both legally and profitably,” Holland said.

Posted in Payday Loans | Tagged | Comments Off on Kansas City-based payday lenders’ practices leave borrowers scrambling

Targa buying Atlas Pipeline Partners

BCRS Business Loans supports hundreds of jobs in Staffordshire


MORE than 400 jobs have been created and 1,000 others safeguarded for the future through a loans scheme.

BCRS Business Loans runs initiatives in Stoke-on-Trent and Staffordshire, providing access to finance to enable businesses to grow.

The projects it has been able to support have in turn contributed more than £60 million to the West Midlands economy over the last year.

The lender provides loans ranging from £10,000 to £100,000.

Why SBA Loans Are a Lot Harder to Obtain After the Great Recession

One of the reasons that (expensive) alternative loans like merchant cash advances became so popular was because banks dramatically reduced their small business lending after the great recession. I spoke to a former CEO of a community bank. He told me when he first started at the bank back in 2006, they would issue loans based on stated income. Originally from Europe, he asked his colleague: What is stated income? It turned out stated income is whatever the income the business owner told the bank. It could be $50K, $100K, $150K or anything seemingly believable. The bank would just take it.

He was shocked, but during the go-go years of real estate, nobody questioned the insanity seriously enough. Then in 2007, the subprime mortgage crisis hit, followed by the prime mortgage crisis in early 2008, the credit default swap crisis in late 2008, etc. The government had to bail out big banks while a bunch of small banks failed. Many business owners had a very tough time maintaining their revenue while the banks tightened their credit policy. The bar became a lot higher for getting any loan, and business loans become extremely hard to obtain.

The following graph shows the number of SBA 7(a) loans by year. As you can see, the number of 7(a) loans peaked in 2007 and dropped dramatically in 2008 and 2009. The number of loans issued in 2009 is only 41.5% of the number in 2007, and has been hovering around 50% of the peak in the past couple of years. The total loan amount did come back and exceeded the pre-recession level . What this means is that banks are issuing a larger number of SBA loans in the past couple of years.


In our Democracy 2014: Candidate Profiles, were informing you on the important races in both Kansas and Missouri.

The job of attorney general includes representing the state in court cases. The office also approves concealed carry licenses, investigates crime victim complaints and updates the sex offender registry.

Kansas Attorney General Derek Schmidt is seeking a second term. Schmidt was previously a member of the Kansas Senate, representing the 15th District. He was also the Senate Majority Leader.
Here are his answers to three questions from voters:
Attorney Kate Zigtema asked, “Payday loan companies are notorious for exploiting the most vulnerable in the state of Kansas.  What would you do to protect these consumers if youre elected attorney general?”

Schmidt said, “In Kansas the law that governs payday lenders generally is part of the broader credit regulation law, so weve tended to work with the banking commissioner’s office, for example, on really consumer education because its on the front end, you can help consumers avoid falling victim. You can really make a difference in large numbers of people. 

“Generally speaking if we advise people if they can possibly avoid, and I understand life circumstances are difficult for many folks and they dont really have a choice, but if you can possibly avoid taking on a high-risk credit product that has a high rate of interest or a high payment cost, even if its not measured in interest, youre wise to do so, so that you dont wind up in that system in the first place. On the other hand, if you believe you have to take on that product, we would really encourage folks to take a look at the banking commissioner’s information or at our consumer protection website, upfront.  Read what the rules are in Kansas and what tips are available to avoid getting yourself into a financial circumstance thats difficult to get out of.”

Aaron Reece with the Better Business Bureau asked, “Because Kansans file more complaints about debt collection than anything else, what proactive steps will you take to prevent consumers in Kansas from being taken advantage of by bad or unscrupulous debt collectors?”

Schmidt said, “Well complaints from Kansans about debt collection practices are at the top of the list in terms of the consumer complaints that our office receives. Weve taken a two-pronged approach to that. No. 1, we want to make sure that once again Kansas consumers know what their statutory rights are in dealing with debt collectors. Obviously the basic rule – if youve taken on a debt thats legitimate, you generally do owe that and need to pay it back. But there are rules that govern how the creditors can go about trying to collect that in the consumer context. 

“There are both state rules and federal rules, both of which apply to protect Kansans and both of which we have some role in enforcing.  Youll find a lot of information in our consumer protection website. Thats one of our general approaches weve taken to try to get information out to folks while theyre making decisions, and I would really encourage anybody in a debt collection situation to check out our website at – lots of information on debt collections rights and what debt collectors can and cant do. So thats prong one. 

“Prong  No. 2 is those folks notwithstanding the effort to inform themselves and watch out for themselves still wind up dealing with an unscrupulous debt collector who is violating the law and seems to flaunt what the rules are, we really would encourage those folks to file a complaint with our consumer protection division.  We do investigate and bring enforcement action against quite a number of cases regarding unlawful debt collection practices and we always have to look at those case by case.”

Marilyn Ricci with Call For Action asked, “In over half the Call for Action offices across the nation, problems with used car purchases are the No. 1 consumer complaint. … What protections and assistance does your office currently offer and what further steps can your office take to protect consumers from unscrupulous sellers? And is there one piece of advice that you would suggest we give to potential car buyers?”

Schmidt said, “We do receive a large number of complaints from consumers whove been involved in purchasing used vehicles and believe that somehow their consumer rights have been violated and theres always a variety of alleged misconduct.  Its an area we deal a lot with in the Attorney Generals Office and Consumer Protection Division.  A couple of things on that, again not to sound like a broken record, but I do encourage folks before they enter that transaction to do some homework and figure out what protection might apply in their circumstance.  They can find information about that on our consumer protection website for the AGs office.  Having said that, we do a lot of enforcement actions related to used car purchases.   

“Theres all kinds of different alleged

The Financialization of Life (4/6)

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Costas Lapavitsas is a professor in economics at the University of London School of Oriental and African Studies. He teaches the political economy of finance, and hes a regular columnist for The Guardian.

TranscriptAUDIENCE MEMBER: We actually had that system in the 1980s when I moved here of the one-dollar house, where people paid a dollar for a house and they agreed to fix it up and then live in it, and then youre paying a property tax, so the citys actually making money. But thats not my question.

Two quick things. You talked about growth, so Im wondering what your thoughts are, if youre talking about growth for growths sake. And are we still in a capitalist system in your democratized economy? And you also talked about debt. Im wondering, are you talking about credit, like a mutual credit type of system? Or are you still talking about a debt-based system?


Now, some growth, I believe, there must be. But that growth, in a logical and well-organized society, has to be agreed socially, targeted, and organized on a social basis. We see what happens when there is no growth. There are problems, because peoples needs expand. They need to meet them. Theres a new generation coming in at any time. Societies need growth to bring the poor out of where they are and to improve general social conditions. But growth for growths sake, no. Thats a capitalist logic that is you grow to accumulate and become bigger. Thats mindless. We need growth that is socially targeted and socially organized and socially valued, basically, which areas and how. And thats exactly what a non-capitalist, anticapitalist, socialist society would be about. Thats the content of it. Okay? So thats what I would say about this. And, obviously, there would be ecological and other dimensions that we need to bring to bear when it comes to deciding what kind of growth we want.

Debt, though, is the other thing that you brought up. Debt is a very powerful and very peculiar social relationship, and we need to start with that. There are many kinds of debt. Now, we call everything debt, and we are right to a certain extent, because its an obligation of one person to another or one person to an institution. But actually there is a variety of forms of debt.

Theres the debt of business-to-business. This debt is actually, in contemporary capitalist societies, treated as an instrument of policy. Businesses go bankrupt, the lender gets what they can out of the assets of the business, and everybody goes about their affairs after that. And thats accepted as a normal run of things.

There is also debt between states. Thats also a kind of debt. But there, bankruptcy is not possible, or if it is possible, its deeply problematic. Right? If one state goes bankrupt or threatens to go bankrupt, it looks as if the world would collapse, even if it cant pay its debts.

So already we see that debt differs from debt.

Debt for households is still different. Individuals dont borrow to accumulate, to produce, to run a business; they borrow typically because they want to buy a house, they want to send their children to school, or they want to go to school themselves, or they want to meet other needs. This is a different kind of debt. Again, its debt to meet everyday needs.

How that debt works in modern society is a very different interesting question, because it can free up activity, it can make life easier for you, it can smooth out your spending, and so on. And it is there that we need to think of public intervention. If were going to think of debt as a public utility and banking as a public utility, then we can approach debt that way. And there we can put in communal and associational ways and mutual ways of dealing with debt. Thats where you begin to get other approaches to debt which are actually anticapitalistic in many ways, although it still is debt, right, because it would be publicly based, because it would be communally based, because it would be based on trust that would be created by society and by people themselves rather than a big private institution lending to individuals and expecting them to pay back and actually exploiting them and making profits out of their income. It is these changes that we need to think about and that we need to propose, because thats what modern society needs and demands, I think.

I dont know if Im answering your question.

AUDIENCE MEMBER: [incompr.] youre moving in a positive direction, so yeah.


AUDIENCE MEMBER: Yeah. First of all, thank you for your brilliant analysis. I learned a lot from it tonight.

I just wanted to explain a little further the relationship between the crisis of 2007-2008, basically the crisis of the paper economy and its relationship to the real economy. In other words, how has that dynamic played out, right, on the one hand? Thats one question.

You also talked about the class nature of the crisis. You talked about that it is clear. If you could, expand upon that just a little bit for us.

And for those of us activists who are political activists who were brought up in the old-school political economy analysis of sort of classical Marxism, where we were taught that a crisis of capital was basically a crisis of overproduction, in this case this was not a crisis of overproduction, in 2007-2008. Am I right or am I wrong? So, I mean, thats not industrial overproduction. This is not–

LAPAVITSAS: Some people think it is.

AUDIENCE MEMBER: –what led to the crisis in 2007, but rather speculation of finance capital. So if you could, just kind of clarify some of that for me.

LAPAVITSAS: Obviously, this is a very big issue, and we could spend hours discussing it. In fact, there are many people who do spent hours discussing it. Ive got a few things to say which might be helpful.

Now, the idea of crises coming out of production, the real economies, was a very powerful idea. And what I told you doesnt really go against it, in the sense that I said that the nonfinancial enterprises are actually financializing it, financializing. So finance here isnt simply seen as a separate sector. Actually, productive enterprises, commercial enterprises, have become involved in finance themselves. Its not as if this is some kind of imposition from the outside on them, right? So the idea that crises come from the real world, as it were, the economy, is a very powerful idea, and we need to maintain it and rescue it and use it. But, obviously, we need to apply it in a way that makes sense and fits and matches what we observe.

And the thought, the notion that what happened in the United States in the 2000s was overproduction, over accumulation, and a fall in the rate of profits, which then led to a crisis, it just doesnt persuade me at all. I dont see it. I see continued problems of production. I see continued problems of profitability. Profitability of US business collapsed in the 1970s, then rose in the 80s, and remained fairly high in the 90s, never went back to the heights of the 60s and early 70s. But when we look at the 2000s, we dont see a collapse of profitability which led to the crisis of 2007-2009. If we see a decline, its not really a decline thats commensurate with the gigantic disaster that happened in 2007-2009. So profitability is very important cause it remains problematic. But we need more complex and more sophisticated explanations of what happened, because the crisis of 2007 and 2008s extraordinary. Finance played a key role in it, and we need financialization arguments in order to understand it. Thats what I would say.

The class aspect of it, to my mind theres no doubt at all about this, first in terms of how it was dealt with, which Ive discussed briefly. Everything that was done in this country–I mean, when the crisis broke out, there was a brief discussion and a brief mention of a Minsky moment. I dont know if you remember that. It was a moment, because it lasted five minutes, this discussion, the idea that theres something structurally wrong about finance in the system, and therefore we need to intervene in it. Even the US elite discussed this. And then they forgot about it.

JAY: Yeah, there was a cover of Time magazine [crosstalk]

LAPAVITSAS: Thats right.

JAY: –were all socialists now,–

LAPAVITSAS: That kind of thing.

JAY: –which lasted about two weeks.

LAPAVITSAS: Well, yeah, and then we went back to business as normal, which meant what? Everything that was done aimed at protecting and restoring the profitability of the financial sector. I actually got a graph in this book of mine, cause I calculated financial profit as a proportion of total profit in the United States. Its the only country for which you can do it with good accuracy because of the figures. So what you see is an incredible increase in financial profit as proportion of total profit in the 1980s and the 1990s and in the 2000s. Actually, in 2003, financial profit as proportion of total profit is more than 40 percent. Its unbelievable, right?

JAY: Does everybody get that stat?

LAPAVITSAS: Forty percent of total profits in the United States in the year 2003 came out of finance, came out of banks, basically, cause thats the profit that you can add. Actually, there is financial profit which you cannot add to this because you cannot measure it. It doesnt appear, for instance the profit that big financiers pay themselves as bonuses and so on, which appear as salaries and wages. But that aside, total financial profit in the US economy as proportion of total profit in 2003 was 40 percent, about 40 percent. Extraordinary.

Then that collapses, begins to fall, and it collapses in the crisis, it goes right down, because bank after bank failed. What happens after 2009 and 2010? It bounces right back. It doesnt reach the level of 40 percent, but bounces right back. Why? Because of the state. All the measures taken by the state aimed at doing precisely this, to restore and protect bank profitability, financial–. And they did, they did it, in the ways that Ive outlined–zero interest rates and so on.

Whats the other thing they did? They took extraordinary care not to change the structure of financial regulation in the financial system–extraordinary care. All that discussion about regulating the banks, thats hot air, basically. Effectively, nothing has changed. Nothing has changed. Why? The social layers, the class layers that make profits out of this system have dictated the way in which the crisis was dealt with, and they have protected their interests first and foremost. Thats what they did. And they [shifted] their losses and the costs onto working people. Its very, very clear, crystal clear–class nature, the class character and the class nature of modern societies–crystal-clear.

And you might ask, whats going to happen, and is this sustainable? In the short term it might be sustainable. In the short term. In the longer-term, there is no society in which class interests can express itself so brazenly that can survive for long. Theres no such–these societies that do that are basically doomed.

AUDIENCE MEMBER: Even with the protection of the state?

LAPAVITSAS: Even with the production of the states. You cannot keep real wages flat as they have been in this country for so long, you cannot create poverty on a mass scale, you cannot exploit people in 1,000 different ways, including finance, and you cannot shift all the benefits and the profits to the top small layer of the population associated with finance, and do it time and time and time again, even in the midst of a gigantic crisis, and hope to maintain that system for long. Yeah, you can do it for a period, you can, as they have.

JAY: But not maintaining the system doesnt necessarily mean the alternative is going to be a positive one. I mean, you can have a Hitlerite response to the crisis, too.

LAPAVITSAS: I did not–I mean–.

JAY: I know youre not saying that. In Greece, you could go either way in Greece.

LAPAVITSAS: Yeah, all Im saying is that this financialized capitalism has become so shameless in extracting profits and maintaining exploitation and naked class privilege that, historically speaking, we know that its very difficult to maintain that without serious ructions, serious unrest. Which way that will go I dont know. I cannot tell. But to me this looks very unstable.


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HSBC and First Trust found ‘bundling’ small business loans

HSBC and First Trust found bundling small business loans

Banks wrongly told some small and medium sized businesses they needed to open
current accounts in order to secure a loan

How to Rebuild Your Credit After Bankruptcy — Fast

Its about as popular as a root canal or a blown tire on the freeway. Yet like both of those dreaded occurrences, filing for bankruptcy is commonplace in modern America. In 2013 1,107,699 individuals and businesses in the US had to file for bankruptcy according to government data. While its pretty safe to say that not many of the folks who filed for Chapter 7 or Chapter 13 bankruptcy were eager to do it, its worth remembering that bankruptcy is by no means a financial death sentence.

After all, bankruptcy protection is designed to provide people and companies with a way to discharge at least some of their debts and start over. And one of the very first steps to reboot your financial life involves rebuilding your credit score.

How Bankruptcy Affects Your Credit Score

Theres no sugarcoating the fact that any individual who has to file for bankruptcy is going to see a negative impact on their credit score. This matters because lenders rely on credit scores – which typically range from 300 on the low end to a maximum of 850 – to determine whether or not to offer you a mortgage or car loan and, if they do, at what interest rate. Put another way, a credit score is a quick way for lenders to decide how risky it is to loan you money.

Not surprisingly, a bankruptcy — which, by definition, allows someone to not repay all of their debts — hammers your credit score. How much it hurts depends on where you started. According to the Fair Isaac Corporation, which is better known as FICO and the best-known company that calculates credit scores, someone with a stellar score of 780 would see their rating plummet to between 540 and 560 after declaring bankruptcy. A person with a starting score of around 680 can expect to drop between 150 and 180 points, to between 500 and 530, after a bankruptcy. You can take a look at the credit profiles of the two people used in the FICO example here.

What does this all mean? In short, bankruptcy is a major red flag to lenders, a fact that is reflected in your credit score. In April of 2014 FICO reported that its median score was 711. Scores of 550 or lower are considered deep subprime by lenders and carry with them high interest rates – if you can get a loan at all.

Rebuilding Your Credit to Improve your Financial Health

Fortunately, a bankruptcy is by no means game over for your financial life. There are steps you can take to begin rebuilding your credit and, eventually, your overall financial health. Bankruptcy is a very difficult and emotional time since there are severe consequences, but it also represents a chance to start over from a financial sense, says Bill Harddekopf, CEO at

According to Hardekopf, the road back to financial well being starts with rebuilding your credit score. One of the first things to do is to get a free copy of your credit report, which you are able to do once a year from each of the three major credit reporting agencies. Check this for errors. Make sure you also determine your FICO credit score and work diligently to build up this score each month.

Raising your score, says Hardekopf, is all about getting back to basics. Pay your bills on time. Dont spend more than you can afford. Get a credit card that reports to the credit reporting agencies and pay off the entire balance each month so you dont incur any interest charges–this will help slowly build your credit score.

Gerri Detweiler, author of Debt Collection Answers: How to Use Debt Collection Laws to Protect Your Rights, counsels that its important to avoid the urge to steer clear from credit after a bankruptcy. Unfortunately, many people avoid credit afterward, which is understandable, but doesnt help the situation, she says. Instead, Detweiler says to focus on responsibly repaying any loans — such as a car or student loan — that may have survived bankruptcy. Continue to pay them on time. You may also want to get a secured credit card. Use it for one purchase a month (your cell phone bill for example) and pay it off right away, and it will provide a valuable credit reference, she says. Ive seen consumers boost their credit scores by 50-75 points or more in one or two years using this approach.

Ways to Improve Your Credit After a Bankruptcy: A Checklist

As both Detweiler and Hardekopf make clear, being proactive about rebuilding your credit score after a bankruptcy is a must. Here are some other ways to take an active role in reinvigorating your financial health post-bankruptcy:

? Know your credit score — Many people put this one off, because it can be painful. You know your credit score is low so does it really matter how low? Yes, it does. Get a copy of your credit report and know your score. Review it for any inaccuracies and make note of your debts. Only then can you come up with a plan to pay off your debts and improve your credit. is a great resource to get your score truly for free (without having to enter your credit card number).

? Open a new bank account — Opening a new checking and savings account will demonstrate financial stability. It can also give you a fresh slate to practice good financial habits. When you open your account, talk to the banker about signing up for automatic online bill pay. This will ensure that your bills are paid on time, which is a major factor in good credit.

?Apply for a secured credit card — If big credit card bills led to your bankruptcy, you may feel like this is a terrible idea. Why go down that path again? The best answer is that secured credit cards are one of the easiest ways to build credit and improve credit scores. Compare interest rates of different cards, so you can select a card with the best rate and a low annual fee. A rate around 15% is good and an annual fee less than $30 is desirable.

? Get a gas card or a retail card — Gas and retail credit cards will also improve your credit. If you drive a car, you will have to purchase gas. You should make those purchases work for you. Gas and retail cards typically dont require applicants to have good credit and, in fact, cater to folks with blemished credit.

? Pay off your balance in full every month — While you are reestablishing your credit, its critical to pay off your full balance every month. This demonstrates to creditors that you are not a risk. Timely payments also have a significant impact on your credit score.

? Continue to monitor your credit score — Check your credit score regularly (monthly is ideal) while you are actively improving your credit. Watching that number go up can make you feel like your hard work is really paying off.

Finally, its also important to remember to be patient throughout this process. A bankruptcy can impact your credit for as long as 10 years. But the more active a role you take and the sooner you get started, the quicker you can bounce back from bankruptcy. The bottom line is avoid a bankruptcy if at all possible, but if you have to file, then know there is hope. Good luck and please share any tips or feedback you might have below!

Curtis Arnold, a nationally recognized consumer advocate, is the founder of, which provides ratings of prepaid cards and secured credit cards. He also founded almost 20 years ago.

ESPIRITO SANTO entities filing for bankruptcy

Subsequent to the rejection by the Luxembourg District Court sitting in commercial matters of ESPIRITO SANTO FINANCIAL GROUP SA (ESFG) and ESPIRITO SANTO FINANCIERE SA (ESFIL) applications for controlled management on last Friday, 3 October 2014, both entities filed for bankruptcy according to an ESFG press release of today.

In this press release, ESFG and ESFIL expect the said Court to have bankruptcy orders passed and receivers appointed still this week. We are however of the opinion that if the application might be heard tomorrow the Courts decision will likely not be available prior to expiry of the period for creditors to appeal the verdicts of 3rd October that runs in principle until close of business of next Monday 13 October 2014.