I Have My Bankruptcy Discharge. Now What?
You should obtain a copy of your credit report immediately after receiving your bankruptcy discharge. Federal law entitles you to one free credit report from the “big three” credit reporting agencies, Experian, Equifax, and TransUnion, every twelve months. The easiest way to obtain your free credit report from each of these agencies is by visiting AnnualCreditReport.com.
After receiving your free credit reports, check each report for errors. First, any debt discharged by your bankruptcy should be listed as “Discharged in Bankruptcy” with a “Zero Balance.” Second, there should not be any negative activity reported after the date that you filed your bankruptcy case. This includes any new collection agency report after your filing date. Third, any debt that was reaffirmed should not be listed as “Discharged in Bankruptcy,” and should list your on-time payments. Finally, in some cases inaccurate information will be reported. For instance, a car voluntarily surrendered back to a creditor during a bankruptcy is not a “repossessed vehicle” and should not be reported as such.
Correcting any errors on your credit report is simple and easy. Each reporting agency has procedures from contesting erroneous information, either by mail or on-line. Once the credit agency has updated its records, it must issue you a free corrected report. Review this new report for errors; do not assume that the report has been correctly amended. You may need to correspond with the agency several times and supply documentation regarding your bankruptcy case. It is your responsibility to ensure that your credit report is accurate. Neither the bankruptcy court, nor your attorney, nor your creditors are responsible for sending the credit reporting agencies information regarding your bankruptcy case.
Updating and correcting your credit reports is the first step on the road to rebuilding your credit after bankruptcy. Fortunately, this step is free and takes very little effort. Be sure to correct your credit reports and then closely monitor your credit regularly for the first two years after your bankruptcy discharge. With timely payments and by carefully protecting your credit file, your credit score will increase quickly.
How Long Will Bankruptcy Stay On My Credit Report?
When a bankruptcy case is filed, information about the case is reported on the individual’s credit file. The report lists the date filed, the type of bankruptcy case (i.e. chapter 7, 11, 12 or 13), the case number, the case status, and closing date. The federal Fair Credit Reporting Act (FCRA) permits credit reporting agencies to keep this information on an individual’s credit report for up to ten years. Note that the FCRA does not mandate that reporting agencies list the bankruptcy for ten years; only that bankruptcy information must be removed from the individual’s credit report at that time.
Each credit reporting agency has its own policy regarding the length it reports a bankruptcy case as a public record. In general, Chapter 7 cases are reported for ten years and Chapter 13 cases are reported for 7 years. However, the FCRA does not distinguish between Chapter 7 and Chapter 13 cases and a bankruptcy case under either chapter may be reported for up to ten years.
The FCRA is very clear regarding when the ten year period commences. Credit reporting agencies are directed to exclude bankruptcy case information from an individual’s consumer report ten years after “the date of entry of the order for relief.” The “order of relief” is a bankruptcy term defined in Section 301 of the Bankruptcy Code as the date the bankruptcy case is filed. The day the bankruptcy case is filed is the day the ten year clock begins to run. For instance, if a case is filed on January 1, 2012, then the bankruptcy record must be removed from a credit report before January 1, 2022.
Knowing the time limitation for reporting your bankruptcy information is an important part of the “fresh start” promised by the bankruptcy laws. Filing bankruptcy does not brand an individual for life; bankruptcy relieves the individual of overwhelming debts and provides the opportunity for a second chance at a better future. If you need a financial fresh start, discuss your options with an experienced bankruptcy attorney.
Three Easy Steps To Rebuilding Credit After Bankruptcy
There are many misconceptions about the possibility of obtaining credit after bankruptcy. The truth is that improving your credit score takes time and vigilance. If you are willing to commit your attention to rebuilding your credit, your score will improve dramatically and quickly by following three easy steps.
First, immediately after your case closes (usually soon after you receive your discharge), obtain your credit reports from the three largest credit bureaus: Experian, Equifax, and TransUnion. You can obtain an absolutely free credit report from each of these companies by visiting this site: https://www.annualcreditreport.com
Review your credit reports for errors. All debts discharged by your bankruptcy should be listed as “Discharged in Bankruptcy” with a “Zero Balance.” There should be no activity reported on these accounts after the date you file bankruptcy. Each credit bureau is required to provide assistance in correcting errors on your credit report. Once the credit bureau has corrected the erroneous information it will send you an updated report.
Second, obtain new credit. Many debtors are reluctant to take this step either out of fear of rejection or fear of abusing available credit. The only way to improve your credit score is to demonstrate a responsible use of credit over time. Approximately 1/3 of your score is based on your payment history; 1/3 is your available credit; and 1/3 is various items like types of credit and length of credit history. Obtaining new credit is necessary to improve your credit score after a bankruptcy.
Many debtors are amazed at receiving credit card offers in the mail just after they receive the bankruptcy discharge order. Some of these offers carry very high interest and fees, so select your new credit card account wisely. If you do not already have an installment loan, like a car loan or home loan, you should consider obtaining a secured loan from your local bank. This loan is secured by a deposit held by the lender. For instance, you deposit $500 in a savings account or CD, and the bank loans you $500. If you decide to arrange a secured loan, make sure that the bank will report your monthly payments to the credit bureaus.
Third, make your payments on time! Bankruptcy is a serious negative mark on your credit report, but it stops all other negative reports. Lenders place considerable weight on how you have handled your credit accounts since your bankruptcy. One 30 day late entry on your credit report can significantly harm your credit score when coupled with a bankruptcy. Safeguard your credit by ensuring your bills are paid on time.
Rebuilding your credit is not difficult, but it takes time and vigilance. Fixing errors on your credit report, obtaining new credit, and dealing with your creditors in a responsible manner are the three steps on the path to improving your credit score. Make the most of your fresh start by taking these steps to improve your credit score.
What To Do When A Creditor Is Left Out Of The Bankruptcy Petition.
It is extremely important to list all of your creditors in bankruptcy. Only the debts listed will be discharged. This is why we run a credit report and ask our clients to give us a list of every creditor. Usually we find all of the creditors this way, but sometimes a forgotten (or unknown) creditor that does not appear on the credit report will be inadvertently left off of the schedules, meaning their debt is not subject to discharge, and the Client can still be held liable for that debt regardless of the bankruptcy UNLESS action is taken.
The most common occurrence of this involves debts associated with hospital visits. When you receive services through a hospital, you will generally receive invoices from not only the hospital, but also the doctor who treated you. So, if you only list the hospital, the debt to the physician who bills you separately from his office is not going to be covered. It is very important to list both. If your trip to the hospital was so close to your filing date that you have not yet received bills, you must make a phone call to the hospital to find out who you should expect to receive bills from.
This also happens when a Debtor has no recollection of a creditor’s details and the debt does not appear on the credit report. In these situations I encourage the Debtor to try their hardest to remember as much as possible. Even if we do not know an account number or the amount owed, as long as we get the creditor’s name and address, we can include it in the bankruptcy.
If a creditor has been left off of the schedules and you realize it while your case is active, we are required to file amended schedules and identify the creditors. There is a small fee to the Court for filing amended schedules, but it is necessary to complete your bankruptcy petition. If you do not realize it until after your case has been closed out, we may have to petition the court to re-open the case in order to amend the schedules and discharge that debt. There is a more substantial fee for that, but again, it is usually necessary.
Obviously, debtors are expected to be open and honest in describing assets and debts, so if a debt was unintentionally left off of the Petition, you must bring that to your attorney’s attention RIGHT AWAY. It can be fixed. An intentional failure to list a creditor, on the other hand, can cause that debt to be declared non-discharged and survive the bankruptcy. In extreme cases courts have denied a bankruptcy discharge because of the debtor’s intentional failure to list all debts.
My Credit Card Company Is Offering A Credit Monitoring Service: Is This Service Worth It?
Several companies have sprung up that promise to help protect you against identity theft. How do they do this? By monitoring your credit. An alert is sent to you when changes to your credit occur such as when a new account is opened or a new address associated with you is logged with a credit reporting company. Some credit monitoring services are independent companies and some are operated by credit reporting agencies such as Trans Union and Experian.
While there are advantages to using these services, there are some problems with them such as:
1) If you receive a Notification from a monitoring company, your information may have already been used illegally by someone who has opened up a new credit account with your stolen identity.
2) The monitoring services cannot catch certain forms of identity theft that don’t access your credit report such as a person using a stolen identity to a) obtain a Payday advance loan, b) apply for a job; or c) apply for a driver’s license.
3) Most of what these services offer, you can do yourself. You can file fraud reports and place fraud alerts and credit freezes on your credit files with credit reporting companies.
Many people believe that credit monitoring activities will make them completely secure against identity theft. That simply isn’t true. However, credit monitoring can be an important piece of your protection package. Some other things you can do include:
- Leave important documents in a safe place at home.
- Only carry the credit cards or other cards you plan on using that day (do not carry your Social Security Card).
- Properly destroy old credit cards, checks and unneeded receipts
- Shop only on secure Web site with companies you trust.
- Check your bank and credit card statements monthly for any suspicious activity.
- Personally check your credit report at least once a year.
Since the cost of a monitoring service usually runs $10 to $15 a month, it may be worth it for the peace of mind in knowing that you are purchasing a little added insurance to avoid being the next victim of identity theft.