Bankruptcy is usually a hectic time, sometimes it is even quite emotional, consumers are not thinking straight. They just know they want it over with as quickly as possible, so they go out hire a lawyer and listen to what they tell them to do. The only problem with that is if the consumer does not know what is relevant they can’t cover their basis if the lawyer does not volunteer crucial information.
The first thing a consumer needs to do when they are going to file bankruptcy is to gather all documents:
1. Ordering Credit Reports from all 3 major Credit Reporting Agencies:
• Experian 888-397-3742
• Equifax 800-685-1111
• TransUnion 800-916-8800
• Annual Credit Report 877-FACT-ACT
I only posted the numbers because that is the absolute best reports to be obtained; they contain more data than the online credit reports. It is worth the time to wait for them to be mailed to you. These reports will contain creditor addresses, balances, and account numbers needed for the bankruptcy.
2. Use the most recent statements you have from your creditors to obtain address, balance, account numbers, and phone numbers.
3. Use the most recent collection letters sent to you by collection agencies to obtain address, balances, account numbers, and phone numbers.
Note if you do not see a lender in the credit reports, or you are missing statements or collection letters, you are going to have to find them on the internet at their web sites to get the address, and phone number to call them.
Note if you do not have the most current information on statements, collection letters, or credit reports you are going to need to call the company to get that information.
• You need the address, balance, account number from the company.
• If they ask you to make payment over the phone, tell them you can’t right now, but you will be sending them a letter soon.
• Don’t and I stress don’t tell them you are filing for Bankruptcy. Often times they will just hang up on you without having given you the information you needed. You Bankruptcy lawyer will officially notify them at a later date.
• If a customer service representative gives you any trouble just say ”thank you, good bye” and hang up, then later call back to get a new customer service representative to help you.
*** Make sure you have ALL creditors: medical, credit cards, installment loans, utilities, mortgage loan, auto loan, personal finance, foreclosure, judgments, collections, charge offs, and the sort accounted for.
Exception to who can be included in Bankruptcy is: Child Support, Liens, and Student Loans, there may be more you just have to ask your lawyer to be sure.
Give all of this information to the Bankruptcy lawyer so he can include them on the schedule presented to the judge when you go to court.
When the Bankruptcy has been filed, I believe it can take up to 6 months for a chapter 7 Bankruptcy to be given the discharge, unless you filed Chapter 13 Bankruptcy that can take longer since it is a repayment plan. But once discharged, you need to go to the court house and obtain a copy of the Bankruptcy papers as well as the discharge. This you will need to forward to all 3 of the major credit reporting agencies. If you kept copies of the credit reports you ordered, the dispute address will be on these reports where you need to mail the documents to. Send only copies, always keep originals for yourself.
The Bankruptcy public record listing on the credit report should be updated to show discharged. All of the creditor and collection listings should say “Included in Bankruptcy, zero balance”.
Rules of Reporting:
• Chapter 7 Bankruptcy wipes out all debt owed, and the credit reports will show the public record listing for 10 years.
• Chapter 13 Bankruptcy is a repayment plan at a reduced cost, and the credit reports will show the public record listing for 7 years.
• All creditors and collection agency listings will show on the credit report for 7 years from the date of delinquency.
Bankruptcy can wreak havoc something terrible on the consumer’s credit rating. It is important that consumers file Bankruptcy just as soon as they know they are going to have to file. If you can go from paying as agreed to Bankruptcy then the damage is going to be minimal.
If a consumer starts to fall behind, and they have month to month late listings updated to the credit report it is just going to compound the damage. Each late listing can do 20 – 50 points damage. And if the account charges off – by 6 months you may have lost more than 100 points to the credit score!
If you are pro-active and set a plan of attack from the get go, you can come out of this with minimal damage to the rating. Consumers can obtain Mortgage Loans 2 years out of Bankruptcy if they obtain new credit and take care of it. Albeit the new credit obtained might have to be secured credit cards, or secured installment loans.
• It is so important to make sure all creditors were included in the Bankruptcy, because if you fail to add one, they may come back years later to sue you for an old debt. And you may be required to contact your lawyer again to re-open the Bankruptcy to add that missing creditor. And it will be costly.
• You Bankruptcy will be listed at the court house in public records long after it has expired off of your credit report. There will be some lenders that check public records and they will find out you have filed Bankruptcy in the past. So it is never a good idea to lie about having had to file in the past.
• Some creditors will not extend credit to consumers who have filed bankruptcy. But there are others that will.
