Attorney John Mlnarik
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Spring Forward from Bankruptcy
Many people know that bankruptcy can affect their credit, but aren’t sure exactly how. This article focuses on your credit report after bankruptcy and the steps you can take to ensure that you are rebuilding your credit after you complete your bankruptcy case.
Most individuals file either Chapter 7 or Chapter 13 bankruptcy. Chapter 7 bankruptcy takes about three months to complete, while Chapter 13 takes between three and five years. Once a discharge is entered, no creditor who was listed in the bankruptcy schedules can thereafter try to collect the debt (unless the debt was non dischargeable, such as a mortgage or tax debt). While the bankruptcy notation stays on your credit report for ten years after entry of discharge, it becomes increasingly insignificant in the decision to grant new credit with every year that passes.
Following your case, you are entitled to have the balance of each discharged debt shown as zero on your credit report. We suggest you order a credit report about a month after your discharge is entered in order to ensure that no discharged debts are still showing a balance due. Your goal in rebuilding your credit after bankruptcy is to ensure that current, positive information is reported.
Your rights to fair credit reporting including the right to accurate information; the right to exclude information that is older than the law permits; and the right to include your comments to negative entries. If there are inaccuracies on your credit report, you have the right to have the information corrected or removed.
The fact that you have filed bankruptcy will not prevent you from obtaining credit. In fact, you are a better credit risk after bankruptcy than before, because you have gotten your “fresh start” under the bankruptcy code. But, be wary of new credit offers. Some creditors monitor bankruptcy filings, and use that data to send high-interest credit offers to bankruptcy debtors.
All bankruptcy cases require the debtor to take a course in personal financial management before the debtor can receive a discharge of debts. This course helps debtors assess their budget and plan for their future after bankruptcy. We also recommend working with an accountant to formulate a repayment plan if you are likely to incur more non dischargeable debt, such as taxes. Additionally, a lawyer can assist with inaccurate credit reporting and possible Fair Credit Reporting Act violations.