After receiving a "fresh start" through bankruptcy, you may want to return to the world of credit or start rebuilding your financial health. Bankruptcy is a life-changing event that will impact your credit report for at least a decade, but that doesn't mean you need to wait 10 years to start making strides toward a productive relationship with credit, loans, and your credit report.
Hopefully, you're already aware of the details on your credit report if you've gone through bankruptcy. At the very least, you've gotten your annual credit report (free once a year) and are aware of what's being reported. Remember that the credit reporting agencies are not infallible, and that you may need to deal with inaccuracies and mistakes on your report.
When Your Discharge Papers Arrive
Although you'll already want to know what's on your credit report before, during, and after your bankruptcy proceedings, the point at which the court officially discharges your debt (or approves your Chapter 13 payment plan) is when you'll want to start getting to work on rebuilding your credit reputation and standing.
According to Bankrate, your credit score will probably look quite different after bankruptcy than before you started the process.
You will see that your credit score has been reduced by as much as 200 points or more.
Correct Inaccuracies and Mistakes
The form you receive from the court will list each debt discharged by the bankruptcy process. In the months after your bankruptcy is final, you'll want to confirm that each of those debts is accurately recorded on your credit report. Make sure that none of your creditors is claiming you still owe money on debts that were discharged in bankruptcy.
The Federal Trade Commission (FTC) advises that everyone should review his or her credit report on a regular basis because your credit information is used for so many essential life events:
Credit reporting companies sell the information in your report to creditors, insurers, employers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or renting a home.
Remember that bankruptcy won't prevent you from getting new credit in the future, but that inaccuracies and mistakes may make it even more difficult to obtain credit after bankruptcy even if you've been financially responsible for several months after your discharge.
Tip: Don't just look at the accounts, creditors, and amounts reported on your credit report. Take a look at addresses, names, employers, and other demographic information reported.
You wouldn't believe how common it is that credit reporting agencies may confuse you with people who have similar names or with relatives.
Taking Care of Mistakes
If you find mistakes on your credit report, you'll need to get in touch with your creditors or with the credit reporting agency to get those errors corrected.
The FTC offers a great sample letter to dispute credit reporting errors that you can modify to your needs when disputing mistakes. In addition to sending a letter for each dispute, you'll want to make sure you send it via certified mail and keep copies of your own of everything you've sent to the credit reporting companies.
Time is Essential
One of the most important considerations during your post-bankruptcy credit sweep is time. Everything about a credit report revolves around time, and your score depends upon accurate reporting of numbers like account creation dates, discharge dates, and payment dates.
Sometimes the creditors on your debts don't notify the credit reporting agency that a debt was discharged, or they post discharged debt as a new debt even though you no longer owe the balance.
Note the age of each account reported on your credit report and whether the credit reporting agency has it accurately listed as "discharged in bankruptcy" and that none of those accounts has been accidentally renewed.
If one of your original accounts was opened in 2009, and it was discharged in bankruptcy in 2014, make sure your credit report still reflects that it was opened in 2009. Sometimes a creditor will accidentally sell debt that was discharged in bankruptcy to a debt collector, which creates a new account with a much longer impact on your credit report.
Make sure the only debt reported is the original debt that was discharged and that no new accounts were created during or after bankruptcy. Maintaining accuracy in accounts helps those old debts fall off your credit report in a timely fashion, which helps increase your credit score as quickly as possible.
The Fair Credit Reporting Act
Filing for bankruptcy will certainly put a dent in your credit report, but that doesn't mean you're at the mercy of unscrupulous creditors and reporting inaccuracies. The Fair Credit Reporting Act (FCRA) is a set of essential consumer protection provisions that will help you make sure creditors aren't taking advantage of your vulnerable financial status.
Some of the common violations you'll want to look out for include:
- Inaccurate balances reported
- Inaccurate late payments reported
- Listing debts that belong to someone else
- Duplicating negative accounts
If a credit reporting agency (CRA) doesn't correct these errors after you submit a written dispute, it may have violated the FCRA.
Is the thought of bankruptcy keeping you up nights? Unsure how to file or which type of bankruptcy might be best for you? Request a Free, No Obligation Legal Consultation today! There are no hidden fees, no obligations, no pressure and no risk in this consultation.
DISCLAIMER: All information on this website is provided for informational purposes only and are not intended to be construed as legal advice. Suburban Legal Group PC shall not be liable for any errors or inaccuracies contained herein, or any actions taken in reliance thereon