Atty. Paul Allen
According to government statistics, 1.664,000 Americans filed for bankruptcy between September 2010 and September 2011. What does this mean? It means you are not alone!
For many, bankruptcy provides a second financial chance. Although a bankruptcy filing will stay on your credit record for up to 10 years, it need not be the dire problem some people seem to think. First, there are laws that forbid discrimination against you if you have filed bankruptcy. Second, providing you show consistent employment history and financial responsibility, you can rebuild your credit. Our office has the expertise to show you how.
Filing for bankruptcy is not hard, It’s the time leading up to that decision that is hard. You worry about what people may think. You worry about whether you can ever get credit again. Can you ever buy a car, or a house? Can you refinance your home? How do you begin to rebuild your credit so that you can move forward? You need credit to get credit but who will give you credit and trust you.
Don’t worry, it’s not as difficult as you may think. While filing bankruptcy is initially considered a negative on your credit report, since it lowers your fico score, it can also help you secure new credit. How is that, you may ask?
That is because a bankruptcy on your credit report also sends another message. It tells future creditors that you do not owe any more unsecured debt. Your risk of collections and lawsuits on these items have been wiped out. It also shows that your debt to income ratio has improved significantly, since you (hopefully) still have employment income, but no debt. Furthermore, if a new creditor gives you credit, it cannot be discharged in a bankruptcy for a minimum of eight years.
Bottom line, it’s easy to re-establish credit. Creditors know you cannot discharge debt again, but you can afford to service new debt. Creditors can also charge you more, because of the low fico score. There is a whole industry of banks, credit card programs and retail charge cards that are targeted to consumers discharged in bankruptcy. In fact, it’s an essential criteria for the reasons given above. Never has it been easier to rebuild credit then now.
You should be aware, that all three-credit reports will still contain adverse information from the time before you filed. This information may still show some of the charge offs, judgments, collection accounts and the like. However, once your bankruptcy has been successfully discharged, those debts are no longer collectable, and new credit granters know what to look for. They see past this, focusing instead on the date of the bankruptcy discharge.
Creditors will rarely update your credit reports to reflect “Included in Bankruptcy.” They will leave the postings as they were; since the debts are discharged, and they have already closed your account in their computer files. Remember, the credit reporting agencies do not post or un-post creditor information. That is posted directly by the creditors, who are direct subscribers to the credit reporting agencies.
According to the FCRA (Fair Credit Reporting Act), only accurate debts can be listed. Your credit reports should only show the actual bankruptcy and then the debts as “included in BK.” What this does is to give you the opportunity to dispute the accuracy of the information on your report, and clean it up.
Below are some helpful pointers so you can achieve the best possible credit reports and tips for rebuilding.
• Check your reports for errors
• Correct the errors by writing to the credit reporting agency.
• Apply for a few secured credit cards
• Open a bank account and secure credit with a savings book
• Keep employment stable
• Pay utilities on time (they may also report when delinquent)
How long may bankruptcy information be included in my credit report?
Both the Bankruptcy Code and the Fair Credit Reporting Act (which regulates what a consumer reporting agency may include in your credit report) are federal law, so the same rules apply to all states. A consumer credit report may include information on a Chapter 7 and Chapter 13 bankruptcy for 10 years from the commencement of the case. However, those clients who follow our credit building tips, have rebuilt adequate credit to qualify for credit cards and home loans within two years of a bankruptcy discharge.
For real help in dealing with debt, and re-building your credit, call the Law Offices of Paul M. Allen today. Consultations are free. We have two convenient locations to serve you.
Glendale: 818-334-5445, and Cerritos: 562-356-9931
(This article is for information purposes only, and does not necessary reflect the company’s opinions and views on general issues. We make no warranty, prediction nor representation, nor do we assume any legal liability for the completeness of any information and its effect on any case. Each case is different and results depend on the facts of each case. Consult with and retain counsel of your own choice if you need legal advice.)