Bankruptcy and Credit Repair: Answering A Few Questions
by Mr Credit CardOne of our readers, Jnet, sent us this question:
Due to a permanently disabling illness, I lost my job and had to file bankruptcy 2 years ago. I wish things were different. I have worked hard everyday of my life, until I got sick 4 years ago. I struggled for another 2 years to attempt to work, pay Dr’s bills and all the rest of my debt. I had no choice. Here it is, two years later and one of the Company’s hit my credit report with 4 dings, listing 4 charge offs? Can they do this? Will all the rest hit me too? my credit number was low as a result of the bankruptcy, now it’s hit rock bottom. For all of you that are unsympathetic to a person that could file bankruptcy, I will pray you never get sick.
Hi Jnet, thanks for your question!
Sometimes bankruptcy cannot be avoided, and it can actually be the very best option. It’s wonderful that you are monitoring your credit and working to improve it!
To answer your question, no, the company should not be able to do that if:
You incurred the charges before you filed for bankruptcy (not before it was discharged, but before the day you filed).
As long as the charges are at least that old, then the company has no right to collect from you, or to report that information on your credit score.
How to fix it:
Get your bankruptcy paperwork together. You will need to know the date you filed, and the date of your discharge. You will need a case number, and the information for the lawyer who helped you file (if you used a lawyer).
Once you have all of that information, give the company a call. If possible, speak with a manager, but if you can’t et a manager just make sure that the person you speak to takes down all of the information. Also get a mailing address for the company.
Ask them to quit reporting the account on your credit report, and if possible as them to remove what they have already reported. (They probably won’t – but you can do that part yourself)
Send copies of your bankruptcy paperwork with the lawyers info to the collections company via certified mail.
That’s step one. Step two is getting this incorrect info off of your credit report. If you monitor your credit reports you have access to them at any time. If you do not regularly monitor your reports, all you have to do is go online to each of the three credit bureaus.
If you request your report with the intent to dispute these items you should be able to access all three of your reports any time. Here are the websites where you will need to start out:
It’s probably best if you don’t attempt to dispute the information online. For some reason, the only one of the bureaus that actually processes online disputes is TransUnion. At least, that was my experience.
Instead, print out your report, circle the bad information and dispute it via certified mail also.
We wrote an article on Disputing Items On Your Credit Report a little while ago. It has step by step instructions, and a sample letter of dispute for you to work from, so hopefully that will be a little help for you.
Good luck with this company! I am so sorry that you are still having to deal with this, and I hope that you can get everything resolved quickly so that you can continue rebuilding your credit.
Thanks again for your question!
We also had another reader, Glaze, send us this question:
Hello,
I recently came across your blog and I am forever thankful to you because of the
many tips and advice you provide on your site.I would really like your advice on my own personal situation. About a year ago, I was 19 with no credit but really needed a car because my commute to work would be too long if I took the bus (winter in Canada is not the greatest). So I was able to get into a car but received a really high interest rate (about 28%) on a car loan and payments are about $400 (2005 Kia Spectra LX). They told me to keep the car for about 12-15 months to re-finance my interest rate and car payment and possibly get
in to any car I want.Problem is this: I am due to go back within the next 3-4 months but my credit score
is 590. I’ve never missed any payments but I think the only reason why I have a low
credit score is because of the large balances I carry every month on my 2 credit
cards.TD Visa – $1000/1000
Capital One Gold Card – $1500/$1400They are practically maxed out…please help!
What can I do to drastically raise my credit score in time for my dream car!!Thanks!!!!!
Thanks for your question Glaze!
I don’t really know if it’s possible to get your credit up to the point you would need it to be at in three months. You can easily improve your credit score some in three months if you take the right actions, but I don’t know if it would be enough to qualify you for better interest rates.
Credit scores are a reflection of your past behavior, and they take into account information that is up to ten years old. However, you can definitely try your best to get things in order since it will benefit you in future loans, if not this one.
Steps you can take to raise your credit score:
1) Pay off those balances - you are right, repeatedly carrying balances that high is keeping your credit score lower than it has to be. If you can get those balances under 30% for both cards you should see your credit score start to go up.
2) Challenge any bad information on your credit report. You can check out our article, “How to Dispute an Item On Your Credit Report” for a complete guide.
3) Shop around before you do another loan to try to get the best rates. As long as you do it within the same month, the the repeated inquiries for a car will not lower your credit score dramatically.
4) If you can’t pay down the credit cards before you apply for a new car, then just do the best you can. You could also consider shopping for a used car in good shape, and possibly buying it outright without a payment. This would free up the amount of the payment for you each month, and allow you to pay your credit card balances down faster.
Thanks for your question!
Mr. CC