How do I rebuild credit after my bankruptcy is discharged?

good credit

1. MAKE SURE THE CREDIT BUREAUS ARE DOING THEIR JOB.

The first step in rebuilding credit after your bankruptcy case is discharged is to confirm that the credit bureaus are correctly reporting the status of your pre-bankruptcy debts. Wait about 45 days after your case is discharged and obtain a current copy of your credit report. You can get one actual free copy from the website annualcreditreport.com.

Generally, the bankruptcy will not simply erase the debts. Instead, the debts should be listed, but show that there is no balance due and that the debt was discharged in bankruptcy. Most importantly, there should not be any late payments reported after the date that the bankruptcy case was filed.

If any of your pre-bankruptcy debts are not being reported as stated above, you will need to “dispute” the incorrect entry directly with the  individual credit reporting agency that is reporting incorrectly – whether it is Transunion, Equifax, or Experian. You can file the dispute on-line, but I recommend doing in writing through the mail so that you maintain a paper trail. While the dispute resolves the issue in most cases, you can actually sue the credit bureau under the Fair Credit Reporting Act if the situation is not appropriately rectified.

2REBUILD: Obtain new credit.

2. OBTAIN NEW CREDIT AND USE IT RESPONSIBLY

Get a credit card, a store card, or a gas card with a small credit line. The only way to rebuild credit is to have credit, and use it wisely. Start with just ONE card as the cards you will qualify for right after a bankruptcy are the “bad deal” cards with very high interest rates, annual fees etc. Use the card sparingly – for example, put a tank of gas on the card once a month and pay the balance in full each month. As a general rule don’t charge more than 10% of your available credit in a given month.

After you do this for about six months, you will start receiving applications for cards with more reasonable interest rates. Apply for one of these and then cancel your older, higher interest card. Continue this process every three to six months and before you know it, you’ll be receiving offers for the “good” cards with 0% interest for six months etc.

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3. EXPECT THE PROCESS TO TAKE SOME TIME.

A bankruptcy case will remain on the “public record” section of your credit reports for up to ten years. This does NOT mean that it will continue to effect your ability to qualify for credit for ten years. Time heals all wounds and as the bankruptcy, and the negative pre-bankruptcy marks get further from the present, they will have far less impact on your credit score.As negative items age, the entries have less impact on your credit score. As a general rule, if you’re following the right steps to rebuild, and depending on your income, you should be able to qualify for a reasonable interest rate on a car loan about a year after your bankruptcy and a mortgage within 2-3 years.

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I’ve just been sued by a debt-collector! What do I do??!?

Attorney Nate Herdt offers completely free, no-obligation consultations to individuals that have been sued by debt-collectors.  Call (734) 961-4699 to schedule a meeting.

Being sued by a debt-collector for past-due bills is a very stressful experience. The worst thing that you can do is to do nothing. There are time-sensitive deadlines that must be satisfied in order to preserve your rights.

In Michigan, you only have 21 days from the day that you are served with the summons and complaint to file an answer with the Court (28 days if you are served by mail). If you do not respond to the complaint within that time period, the Court will assume that you do not contest the allegations and a judgment will be entered against you for the full amount claimed, plus interest and court costs.

Even if you acknowledge that you owe the money, filing an answer preserves your rights to negotiate payment terms and/or a settlement for less than the amount owed.  Further, many debt-collectors can not prove what the law requires – you may even be able to counter-sue them!  Read the Complaint very carefully and ask yourself these questions:

1. Is the amount they claim that you owe correct?

2. Did they attach copies of the original contract or other written evidence that you owe the money?

3. Was the “evidence” just an affidavit signed by someone not employed by the original creditor? Was the affidavit signed more than 10 days before the Complaint was filed?

Depending on the answers to these questions, you may actually have defenses to the Complaint – even if you really owe the money.  Further, you may actually have the ability to sue the debt-collector and/or their attorneys!

The laws are complicated and your time to exercise your rights is limited!  Call (734) 961-4699 to speak to Attorney Nate Herdt.

 

 

 

 

Ann Arbor Bankruptcy and Debt-Relief attorney Nate Herdt has helped thousands take control of their debts and financial futures.  Attorney Herdt helps people in Ann Arbor, Ypsilanti, Adrian, Novi, Jackson, Canton, Plymouth, Saline, Milan, Tecumseh, Taylor, Belleville, Wyandotte, Dearborn Heights, Lincoln Park, Hillsdale, Grass Lake, Chelsea, Milan, Blissfield, Albion, Monroe, Dundee, Detroit, Troy, West Bloomfield, Morenci, Southgate, Southfield, Dearborn, Brighton, Manchester, Howell, South Lyon, Temperance, Quincy, Lansing and all surrounding areas.

Ypsilanti Bankruptcy Lawyer.  Adrian Bankruptcy Lawyer. Ann Arbor Bankruptcy Lawyer. Jackson Michigan Bankruptcy Attorney.  Belleville Bankruptcy Attorney. Novi Bankruptcy Lawyer.

 

(734) 961-4699 – Ann Arbor Office

(517) 256-2222 – Adrian Office

(888) 395-9941 – Tollfree

nate@herdtlaw.com

Chapter 7

Chapter 7 is the type of bankruptcy that is designed for folks who legitimately cannot afford to pay their debts.

If you need every dollar that comes into your household to pay your household’s necessary living expenses then you are eligible to discharge most types of debt and get a fresh start.

While Chapter 7 is the type of bankruptcy that can, in theory, lead to you losing your assets, it is actually very rare.

One of the primary goals of Chapter 7 bankruptcy is to allow an honest person a second chance financially.  The law understands that that second chance requires that  a person have the ability to keep their home, vehicle and the other necessities of life.

 

 

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