How To Improve Your Credit Score After Bankruptcy-Part 10

Retained but Not Reaffirmed Mortgage Debt:

1. If you are trying to refinance your home mortgage but didn’t reaffirm this debt in your bankruptcy you could be facing a serious problem.  Without a reaffirmation some mortgage companies are refusing to report any payments received since the bankruptcy filing. This may severely hurt your credit score and jeopardize any change of refinancing.
2. Unfortunately, a reaffirmation can only be done while the bankruptcy case is open and before the discharge, so it is too late usually to do anything about it when the typical consumer discovers the problem.
3. Why not reaffirm? If you reaffirmed your bankruptcy attorney would have had to certify to the court that it wouldn’t be a hardship for you to make the mortgage payments. A lot of times debtors can’t really afford to keep their homes, so the attorney encourages them not to reaffirm just in case they have to eventually surrender it. That way the debt is discharged and the lender can’t come after them later.
4. Since the debt has been discharged the mortgage companies only have an obligation to report the discharge, a zero balance owed and report the status as “Discharged in Bankruptcy.” They usually won’t report continued payments because that would require showing a debt owed and would be a discharge violation. I have been able to get some mortgage companies to accept a waiver and consent from the debtor authorizing them to continue to report the mortgage debt despite the discharge, but you can’t force them to do it. Once the debt is discharged all they are legally required to do is report the discharge and a balance of zero.
5. Some creditors will not give credit to any person who has gone through a recent bankruptcy period, so don’t be discouraged if you get turned down. It is their choice whether to extend credit or not. But just because one turns you down it doesn’t mean others won’t extend you credit. There are other factors too like income, employment, marital status, and recent credit activity since the bankruptcy that they take into consideration.

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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 Bankruptcy-Part 7

Handling Home Owner Associations After Bankruptcy

1. If you surrender real estate: Homeowner’s association debts are dischargeable in bankruptcy but only what was due on the date you filed. Homeowner Association dues that accrue after the bankruptcy and while you still own the property are current debt and you still owe it. That means if you don’t pay it you can be sued, the debt can be turned over to a collection agency or attorney for collection, and it can be reported as a delinquent debt to the credit bureaus.
2. Delays in Foreclosure: Mortgage companies don’t have any timetable they have to follow in foreclosing. They often will take months, if not years to foreclose. This puts the debtor is a bind because if he doesn’t pay the monthly dues he can be subjected to collection letters, phone calls, municipal fines, diminished credit, and even litigation and there is nothing he can do about other than pay the debt.
3. If you fee like gambling: You can ignore the homeowner's dues if you are willing to take the risk. Often times when the foreclosure finally happens the delinquent homeowner's dues are paid by the lender to clear the title to the real estate. This takes the debtor off the hook, but there is no guarantee this will happen and until the foreclosure actually takes place all the aforementioned collection horrors may still be inflicted on the debtor. 
4. If you stay in your homestead after bankruptcy: If you reaffirm the debt or just keep making payments each month to your mortgage company, don’t stop paying your homeowner’s dues. These dues are a lien on the homestead and eventually must be paid. The best practice is just keep them current. Even if you have the delinquent dues in your chapter 13 plan you should still make your current payments on time.
5. Dispute any erroneous credit reporting by homeowner associations: These associations are often run by individuals who don’t understand bankruptcy, so if they report to the bureaus make sure the reporting is correct and dispute it if it is not.

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How to Improve Your Credit Score after Bankruptcy-Part 6

Dealing with Judgments That Don’t Seem To Go Away After Bankruptcy

Pre-filing judgments

1. Judgments that have been obtained before you file bankruptcy often cause problems. Whereas the underlying unsecured debt will be discharged in your bankruptcy the judgment itself may still be a matter of public record. In Texas the judgment will not attach to your homestead due the Texas exemptions laws, but they will attach to non-exempt real estate and become a secured claim and a surviving lien against that real estate.
2. Bankruptcy attorney’s often ignore this problem and debtors only learn about it after the bankruptcy is over when they try to refinance or sell the non-exempt property. You would think non-exempt real estate would be seized by the bankruptcy trustee, but sometimes there is little or no equity so the trustee abandons the property.
3. How judgments affect homesteaded property. Even though the judgment lien does not attach to the homestead, title companies will still require a partial release of the judgment to remove any possibility that the judgment may have attached. They are only in the insurance business, so why take any risk, right?
4. Creditors can be forced to sign these partial releases but somebody has to prepare a form of release, present it to them and demand they sign it. It they refuse you will have to hire an attorney to file suit to compel them to do it!
5. Getting judgments off your credit report. Sorry, it’s a matter of public record and wrong or right you are stuck with it. I have noticed some cases where the credit report will show the judgment as “paid” and give the date of the bankruptcy discharge. If this happens to you, be happy because I am not sure they really have to do that since it is not always clear from the information in the credit report that the lien might not have attached to something.
6. Get a release. The best practice is to get a release of the judgment if you can and be sure to file the deed in the judgment records at the County Clerk's office. That recording of the release should eventually show up on your credit report and put the judgment behind you.

Post-filing Judgments

• Judgments that are entered after a bankruptcy is filed for debts owed at the time of filing are a violation of the automatic stay or discharge injunction. Your attorney shouldn’t have any trouble getting those quickly released. If a creditor refuses to release them and cease and desist from enforcing them you have an attorney file a contempt motion or adversary proceeding in the bankruptcy court to put a stop to it. .

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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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