After Bankruptcy, Credit Repair is Your Job

After filing bankruptcy, many people wonder what happens next.  In fact, there is no fanfare when a bankruptcy is completed.  Debtors just receive a letter from the Court stating that their debts are discharged.  Some lawyers do not even contact their clients to let them know that their bankruptcy is over.

Once debtors get that letter of discharge, their case has been closed with the bankruptcy court and they now have your fresh start.  Debtors should take that fresh start for the opportunity that it presents and take control of their credit.

Goal: Rebuild Your Credit

Although debtors will have the word bankruptcy in their credit report, it does not mean they are denied from the credit world.  Credit cards, car loans and even mortgages are available to debtors who have finished bankruptcy.  But to get the credit, the debtors must rebuild their credit to qualify for the loans.  Debtors should not squander their fresh start but rather take control of their credit right away.  By rebuilding their credit, debtors will get the loans they want much sooner at the rates that they want.

Start By Checking Your Credit Report

The first step is to check your credit report about 3 to 6 months after the discharge.  You can get a free copy online at www.annualcreditreport.com.  You can also get the information by phone or mail if you prefer.  The contact information is on the site.  Although everybody talks about their credit report, there are actually three credit reporting agencies that each has their own report.  The agencies names are Experian, Equifax, and Trans Union. (Contact information is at the website above).  Each agency generates a “credit score” for the debtor based on their own information.  The most confusing part is that the three agencies rarely have the same information on the debtor.

Since there are three credit agencies, debtors will have to get all three reports.  Once debtors get the report, look through them CLOSELY.  Check each creditor that is listed there by looking at the account numbers and amount owed.  Was that creditor discharged in the bankruptcy?  Does the report reflect that you have a $0.00 balance or a closed account? Do collection agencies related to this creditor report a balance?

OK, I Found Some Problems

After scrubbing through the credit report, the next step is to remove the errors such as remaining balances or open accounts that should be closed.  We would all like to think this is done automatically but there are hundreds of millions of credit reports so it is much too easy for information to fall through the cracks or be overlooked.

The first step is contact the credit reporting agency.  Do not bother calling them unless you like being put on hold or getting vague promises to take care of the issue. Do it in writing so that you create a paper trail.  Send supporting documents such as your discharge letter. (copies only, never send originals)  The agency has 30 days to verify that their information is correct with the creditors.  If not verified then they must remove the error.

The next step is to contact the creditor so that their records are correct. The worst thing that could happen is to have an error removed only to have it appear again in 6 months.  Even worse, they may try to collect the debt months or years later if not cleared up in their system.  Again, provide supporting documents.

It’s still there!

If these steps did not work, then contact a bankruptcy lawyer.  You do not need to use the same one as before but you can.  The lawyer should take your case back to the bankruptcy course for relief.  If the creditors are doing this on purpose they may be liable for penalties because these debts are not supposed to be there. If you want to more information on your situation, contact us for a free consultation.

Eddy Hsu is an attorney experienced in the areas of Bankruptcy and Family Law.  He is admitted to practice in California and the Northern District of California Bankruptcy Court. He may be reached at 415-230-5388, and via email at eddyhsu@ehsulaw.com. The above article is informational only and not legal advice for your specific situation.  Always consult directly with an attorney to obtain legal advice.