How to Improve Your Credit Score After Bankruptcy-Part 9

Options If Your Chapter 13 Case Gets Dismissed?

Chapter 13 cases often get dismissed for a variety of reasons including failure to make payments, failure to turn in paperwork, failure to cooperate with the Chapter 13 Trustee, multiple filings, etc., so what should you do if this happens to you?

1. Get your case reinstated. This is often easy to do if it is a technical issue like paperwork, or attending a 341 meeting. Do whatever it takes to get your case confirmed so eventually you will get the fresh start you so sorely need.
2. If you can’t afford your current payments: Talk to your attorney and request he do a modification or sometimes the Chapter 13 Trustee will let you pay out a delinquency over a period of time. Don’t ignore the problem. Deal with it head on because you need a discharge if you are ever going to get your credit score back up.
3. If you absolutely can’t afford any Chapter 13 Payment. In this case you should request your attorney to convert your case to one under Chapter 7. This may or may not be possible depending on your personal income situation, but if you truly couldn’t afford the chapter 13 payments then you may qualify. Once you convert, in a few months you will have your discharge.
4. If you can’t reinstate or re-file your case. Then your final option is to contact each creditor and try to settle with each for less than the full balance. Often you can get them to take 25-50% or less if you make them understand how dire your situation is. If you make an agreement, be sure it is in writing and the creditor agrees to delete the negative credit reporting or at least show the status as “Settled” and “Balance -0-.” It would be better to hire an attorney to help you negotiate but that isn’t required. Many debtors do it themselves because attorneys are expensive. Just be careful and put everything in writing, if you decide to do it yourself.
5. Settle the claim: If you settle and a creditor doesn’t report the settlement properly to the credit bureaus, dispute it. It is dangerous for a creditor to verity false reporting as it then becomes a Fair Credit Reporting violation.  If the creditor doesn’t verify it within 30 days the adverse reporting will go away. If it is verified, you may then have a valid claim against that creditor.
6. Reinstate or Re-file: By far the best thing to do if your case is dismissed is to get it reinstated or re-file it. Obtaining a bankruptcy discharge is by far the best way to get your credit score jump-started back up where it belongs, so you can get your life back on track.

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How To Improve Your Credit Score After Bankruptcy-Part 8

Dealing With Non-Discharged Student Loans

1. A lot of filers are under the impression that their students loans are discharged just like all other unsecured debt, but this is not usually the case.
2. Occasionally I see a loan that is called a student loan but it isn’t guaranteed by the government and is really just an unsecured debt, but these are rare.
3. Government guaranteed student loans are not discharged in bankruptcy unless there is an express court order determining that a “hardship” exists like disability, age or mental impairment and the court expressly declares the student loan discharged, but this rarely happens.
4. Since the debt is not discharged the filer must take immediate steps to cure the default on these accounts or consolidate them. If this isn’t done they will be reported on the debtor's credit report as “Past Due,” “Delinquent,” or “Government Claim Filed.” This reporting will seriously impair the debtor’s credit, so it should be dealt with as soon as possible after the discharge.
5. The best practice is to pay these loans and keep them current throughout and after the bankruptcy to avoid a credit disaster.
6.  If the student loan is “deferred” or “current” but it is listed as “past due” or “delinquent” on the credit reports, the reporting should immediately be disputed with the credit bureaus.

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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.

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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.

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How to Improve Your Credit Score After Bankruptcy-Part 3

Dispute All Reporting Errors Discovered

 It does no good to review your credit reports if you don’t dispute the errors you find.

1. Unsecured debts that were included in your bankruptcy should be reported as “included in bankruptcy,” “Chapter 7 or 13 Bankruptcy” or “Wage Earner Plan.” If the bankruptcy isn’t mentioned you should dispute the account.
2. Debts included in your bankruptcy that were discharged should have a -0- balance. If they show a balance owing then the account should be disputed.
3. Debts included and discharged in your bankruptcy should have no other derogatory statements in the “Status” line other than the bankruptcy notation. If the status line includes things like “collection account,” “past due,” or “Charge off” it should be disputed. You should argue that it can't be a collection account because the creditor can't try to collect it, it can't be past due because nothing is owed, and it can't be a charge off unless it was was reported as a charge off before the bankruptcy was filed. If it is reported as a charge off after the bankruptcy is filed, it would be a stay violation.
4. If you have forgotten to list a creditor in your bankruptcy you should immediately send them a copy of your discharge by certified mail. There is case law in some jurisdictions that says in a Chapter 7 no asset case the unlisted unsecured debt is still discharged. So, give the creditor 60 days after you send it a copy of the discharge and if the reporting is not corrected, dispute it. If the creditor doesn’t respond within 30 days the reporting will be removed. If the creditor responds and confirms the reporting then you should consult a consumer attorney to help you get it removed.
5. Debts you have incurred since the bankruptcy was filed won’t be discharged, but you can still dispute them if they are reported incorrectly. If you don’t recognize the account as your account, the amount is incorrect, or there is something else wrong with the way it is being reported you should dispute it.
6. If you are in Chapter 13 each credit line included in the bankruptcy should show a status of “Chapter 13" or “Wage Earner Plan” with the current balance due on the debt after any payments made by the Chapter 13 Trustee. When you file chapter 13 and a plan is confirmed all defaults on your debts are cured so there should be no other negative remarks in the status line such as “Collection Account,” Past Due” or “Charge off.” If there are dispute them.
7. In Chapter 13 cases review your credit reports again 3-6 months after your discharge to make sure the discharge is reported correctly

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