Bankruptcy should always be a last resort (see our Debt Relief section for bankruptcy
alternatives). However, if you are determined to file bankruptcy but have not
done so yet, then please take your time and don't rush the process - it is more
important to ensure that all your bases are covered rather than to make a
mistake that may cost you later.
·Obtain Credit Reports. You absolutely need to obtain your credit reports from
the three major credit-reporting agencies (Experian, Equifax, and
TransUnion). Fortunately, you can conveniently obtain all three of your reports online in only minutes.
With the reports direct
from each bureau you will have access to a file number and a phone
number needed for accessing customer service.
You will see the
addresses for each creditor on the credit report.If it is not there, then you can call customer
service to ask them to provide you with the missing information.
When you call the
bureau you can ask them to provide you with the phone numbers for each of
the companies showing on the credit report.
·Get Updated Information. You need the most up to date information you can have
when filing for bankruptcy.
Call each creditor and
ask them how much is owed and for the address where payment
should be sent.
If they don't handle
the account, then ask them for the name and address of the
collection agency that will take payment.
Call the collection
agency and ask them how much is owed and for the address where
payment should be sent.
When dealing with
creditors and collection agencies don’t let them bully you or upset
you over outstanding balances. Just collect the information you need.
All you have to say is, "Thanks. I will call your company back
soon regarding this matter."Don't
give them time for a rebuttal - just hang up.
If they push the matter, then only as a last resort tell them you will be
filing bankruptcy. Give them the name and number of your attorney and end
the call.
Some companies will take this as a reason to step in and offer a
settlement to reduce the amount owed in order to get you to pay. And
sometimes people do call creditors and suggest bankruptcy just for this
edge in negotiating a settlement, even when they don't intend to file.
You absolutely don't want to use this tactic if you are going to follow
through with the bankruptcy. They will try to default your bankruptcy
petition if they can.
·Identify All Accounts. It is important to identify all of your accounts.
1.If you don't see a creditor or collection agency
on the credit report you know for a fact you owe money to, then you need to
find any billing statements or collection letters you may have received. These
statements and letters will have necessary address information and phone
numbers along with amounts still owed.
If you have no such
information, then try to skip trace online to locate these companies. I
personally like using this site for look up:
·Make a list of accounts for your bankruptcy attorney. Your
attorney will need the addresses, balances, and account numbers to complete the
bankruptcy papers.
·If there are creditors that you want to continue paying,
then it is very important at this time to tell your attorney that you want to
offer reaffirming on the debt. The attorney will then send the
offer to the creditors you have selected who must accept it. Then the judge
must accept the offer too.
The creditors will continue reporting the balance owed and show the status
“reaffirmed” on your credit report.
·All other creditors depending on the bankruptcy:
Chapter 13.Once
discharged then the balance will show as zero. The public record listing will
remain 7 years from the file date. The accounts included in
bankruptcy will remain on your credit report 7 years.
Chapter 7.Once
discharged then the balance will show as zero. The public record
listing will remain 10 years from the file date. The
accounts included in bankruptcy will remain on your credit report 7
years.
For further information on reporting periods please review
the Fair Credit Reporting Act at the Federal Trade Commission web site, www.ftc.gov.
Other recommended reading is the staff opinion letters regarding reporting
periods.
·Usually prior to filing bankruptcy defaulted accounts
go into collection or charge off status. The creditor stops reporting account
information to the credit reporting agencies and turns the defaulted account
over to a collection agency. The collection agency then picks up on the
collection efforts and will from that point on report account information to
the credit-reporting agency. The creditor is taken out of the loop.
Because account
information is now handled by collection agencies instead of creditors, by the
time your attorney sends your creditors notice of the account being included in
bankruptcy, it is typically no longer “in their system” to properly notify the
Credit Reporting Agencies to update zero balance and include in bankruptcy
status.
Creditors have the means and responsibility to manually update account
information with credit reporting agencies. But at this point no one is
requiring creditors to change their policy and address this issue. If you have
a complaint, you can do the following:
oFile a complaint with the Federal Trade Commission. They
regulate the Credit Reporting Agencies.
oFile a complaint with your attorney generals office.
oFile a complaint with the regulating company over each of
the creditors.
oYour bankruptcy attorney can file complaints against
creditors who do not report accurately.
When creditors don’t update account information with the credit reporting
agencies, then you get an incorrect credit report that still shows you owe on
the accounts in question, and that they are currently in collections or charge
off status when in fact they are not.
The problem with this is that if you apply for new credit after your bankruptcy
is discharged, then you are likely going to be declined because the new lender
will assume that you still owe on the debt.
The clear, quick way to fix this problem is to:
Obtain a copy of your
bankruptcy and discharge papers from your attorney or the courthouse. This
may include a copy fee.
Make three copies
of the section of papers that list all of the creditors and collection
agencies that were included in the bankruptcy - usually this is called the
Schedule F.
Forward these documents
along with the discharge to all of the credit-reporting agencies (listed
below) requesting that each creditor included in the bankruptcy be updated
to properly reflect a zero balance with the status included in
bankruptcy.
Experian
PO Box 2002
Allen, TX95013
Equifax
P.O. Box 740256
Atlanta, GA30374
TransUnion
P.O. Box 1000
Chester, PA30374
Be sure when mailing correspondence to the
credit reporting agencies to include a copy of your driver’s license
and mail “certified return receipt requested”. This will ensure
disputes are processed with little delay.
Finally, if you have a
creditor or collection agency which is not honoring your bankruptcy and
continuing collection efforts, then be sure to contact your bankruptcy
lawyer.Give your lawyer the name and
address of the company bothering you so that he or she can send them official
notice.Follow up with the lawyer if the
creditor persists in harassing you.It
is a violation and they can be held accountable if they don’t cease after
notification of the bankruptcy.
As with all consumer issues,
knowing your consumer rights throughout the bankruptcy process is essential.
Taking a proactive approach at the onset of the process will help you on your “road
to credit recovery”.
Pammila Allen is a staff writer for CardRatings.com. She is also a frequent contributor
to the CardRatings.com message board and to
the Star Credit Repair forum, a forum that she administers.
Important Note! The information in this article is believed to be
accurate as of the date that the article was written. Please keep in mind,
though, that credit card offers and terms change frequently. Therefore, we can
not guarantee the accuracy of the information in this article. Please verify all
terms and conditions of any credit card offer prior to applying.
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Pammila Allen is a staff writer for CardRatings.com. She is also a frequent contributor
to the 
