How To Improve Your Credit Score After Bankrutcy-Part 5

Applying for New Credit to Improve Your Credit Score

a. If you have an auto or home loan that you have reaffirmed you won’t need to apply for a credit card to reestablish your credit. Just paying these bills on time is all you need to worry about.

b. If you are still paying on a car or home loan but didn’t reaffirm the debt the creditor may not be reporting to the credit bureaus so your credit won’t bounce back the way it should. Sometimes you can get these creditors to begin reporting again but you will have to contact their bankruptcy department and ask them to start reporting. They will probably need you to sign a waiver since reporting a discharge debt would be a discharge violation. Because of this some creditors will still refuse to report current house or car payments to the bureaus even if you offer to give them a waiver. But it won’t hurt to try. 

c. If you have no open credit accounts that are reporting to the bureaus after you get your discharge, you may want to apply for an auto loan or credit card so you can start building your credit again. If you do, follow these rules:

i. First you need to do a family budget to see if you can afford a credit card.

(1) write down your family net income (after taxes and deductions)

(2) make a list of all your expenses each month including the cash you spend. Be realistic. Then add it up and subtract it from your income.

(3) If you have a surplus, then you can apply for a credit card or auto loan as long as the minimum payments are less than the surplus amount.

(4) If you have more expenses than income, don’t get any new credit or auto loan. You can’t afford it.

ii. Only get a new credit card or auto loan if you can easily make the minimum payments each month. If you miss payments your credit score will go down instead of up.

iii. Put the card on automatic pay from your checking account for the minimum payment due each month.

iv. When the paper credit card bill comes in, pay as much more as you can by check.

v. Don’t ever max out your credit card.

vi. Borrow less than one half of your credit limit, if possible.

vii. Try to pay the full balance when the bill comes at least once or twice a year.

viii. Only use the credit card for emergencies or to cover short term shortfalls.

ix. Don’t ever apply for a new credit card so you can use it to make payments on another credit card. 

x. Avoid adding family members as authorized users of a credit card as that makes it much more difficult to manage properly.

          For more information you can visit our website, see us on Facebook or follow me on Twitter.

    

How to Improve Your Credit Score After Bankruptcy-Part 4

Post-Bankruptcy Debt

Debts incurred after you file your case are not discharged. 

1. Debts incurred after your bankruptcy filing are not usually discharged so pay them timely.
2. Don't Ignore small debts. Even small unpaid balances that are in collection or charged off can drastically hurt your credit. Don’t ignore them or think they will go away. 
3. Pay off small balances in full that have accrued since your filing
4. Negotiate with creditors on debts too large to pay off. Try to get them to take 25%-50%. If they won’t agree to that, try to get an agreed payout of a flat amount per month like $50-$100. 
5. If you reach a negotiated settlement make sure it is put in writing and it is agreed that the creditor will delete the reporting once the agreed settlement is paid, or reported as “Paid As Agreed” or “Negotiated Settlement” with a balance of -0-.
6. Student loans and taxes often are not discharged and must be addressed. Consolidate student loans or get them deferred. Once you do that make sure the creditors involved remove and adverse reporting. If they won't, then dispute it.
7. Work out an installment agreement with IRS if you can’t pay the full amount immediately. That can usually be done with a telephone call or a meeting at your local IRS office. Don't let them file a federal tax lien. That will do great damage to your credit. If one is filed, get it released once the agreement is in effect.
8. If the amount of taxes is so high you could never pay it, try an offer in compromise. You’ll probably need a lawyer of accountant to help you with this, but if you qualify you could save a lot of money and avoid having a federal tax lien messing up your credit.
9. Child support won’t be discharged so keep it current and work out a payout on past due sums if they weren’t dealt with in your bankruptcy. Past due child support really looks bad on a credit report, so get it paid off as soon as possible.

                  For more information you can visit our website, see us on Facebook or follow me on Twitter.

How To Improve Your Credit Score After Bankruptcy-Part 2

Review Your Reports Carefully 

1. Don’t just glance at the reports and look only for the obvious errors.
2. Check the names they have listed for you and make sure they are all correct. If a name listed was never used by you, dispute the listing.
3. Also, look at the addresses they claim you have lived at. If you didn’t live at any of the addresses listed, dispute that item.
4. Check each credit line and the creditor that claims your have an account with them. If you don’t have an account with them, dispute that listing. 
5. When you check a credit line make sure the amount is in the ballpark. It will never be exact, but if it is way off, dispute it.
6. Look for negative comments like “charge off,” “collection account” or “Past Due.” If this notation is not correct you should dispute it.
7. Look at your regular inquiries (hard pulls) and make sure you have applied for credit with each of these creditors. If you haven’t it may be illegal.
8. Look at the account reviews (soft pulls) on TransUnion and Equifax. You won’t be able to find them on Experian as them lump them in with promotional pulls. If you don’t have an account with a creditor who has done an account review it may be illegal.

For links where you can dispute inaccurate reporting or for more information you can visit our website, see us on Facebook or follow me on Twitter.

Does Bankruptcy Ruin Your Credit

DOES BANKRUPTCY RUIN YOUR CREDIT?

It is a common belief that bankruptcy ruins a consumer's credit, but that's not necessarily true. The fresh start consumers are searching for when they file bankruptcy can apply to their credit too. When a consumer files bankruptcy all of his existing debt should be reported as "discharged in bankruptcy" and "balance -0-." If that actually happens, filing bankruptcy gives the consumer a clean slate. Sure, the bankruptcy is a negative, but its impact on the consumer's credit score will diminish in time. This gives the consumer an opportunity to re-establish their credit fairly quickly--often in six months to a year. Sure, a consumer won't have perfect credit with a bankruptcy on his record but his credit score will often be high enough to get car loan, rent an apartment or even refinance a home at market interest rates.

Unfortunately, this won't happen automatically. Creditors often do not report the bankruptcy to the credit bureaus, Experian, Transunion, and Equifax, correctly which will prevent the credit score from recovering the way it should. This is why is imperative for consumers to monitor their credit after bankruptcy. This can be done with a credit monitoring service or simply by going to AnnualCreditReport.com and doing it themselves.

For our clients it is part of our service. We help them get copies of the credit reports and then review them to be sure the reporting is correct. If it turns out to be wrong we get it corrected and do our best to make the offending creditors pay our fees. Either way, our client's never pay us a dime out of pocket.

For information on how to obtain your credit reports follow this link or, if you would like our assistance in getting a fresh start on your credit, visit our Website.

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Creditors Confused by Chapter 13 and Consumers Suffer

Creditors have a difficult time properly reporting a chapter 7 bankruptcy to the credit bureaus. Whether it’s anger or resentment over having to write off the debt, ignorance or incompetence is anybody’s guess. The proper reporting of a discharged debt is to report the account as “closed,” the balance at “zero” and some mention of the bankruptcy. Sometimes it is shown as “included in bankruptcy” or “chapter 7 bankruptcy.” Rarely do creditors state that the debt has been “discharged in bankruptcy” even though that would be the most accurate way to report it. The fact is creditors are vindictive and if there is anyway to legally hurt a consumer coming out of bankruptcy, they’ll do it. So, it is important for consumers to review their credit reports three or four months after discharge to be sure the chapter 7 debt has been properly reported.

It is even worse with a Chapter 13. A lot of creditors don’t understand how a chapter 13 works and they tend to either treat it like a Chapter 7 or they just freeze the account and quit reporting it because they know they will eventually be paid all or a portion of their debt. The proper way to report the debt is to show the account as “Open,”state that it is included in a “Chapter 13 bankruptcy and report any changes that occur if payments are made by the Chapter 13 Trustee. But, rarely do creditors properly report a chapter 13 bankruptcy to a credit bureau and when the discharge order is finally signed three to five years later, its often ignored.

There is a lot of chapter 13 debt that is sold to debt buyers and by the time the debt is discharged it may have changed hands several times and the odds of the holder of the debt getting notice of the discharge is slim. So, long after the bankruptcy was filed it is common for consumers to suddenly get phone calls and letters trying to collect a discharged debt. Or, the consumer will have credit denied and discover it was because debts that were discharged in bankruptcy have suddenly appeared on his credit report.

Our firm offers a free discharge compliance review including an examination of your credit reports. For more information check out our website at http://mancheelawfirm.com/. You have nothing to lose but your bad credit.