Cleaning Up Your Credit Report After Bankruptcy
by Mr Credit CardIf you’ve chosen to reaffirm some of your debt when you declared bankruptcy, you need to be sure that everything gets reported correctly to all three credit bureaus.
A reader, Randi, had this question:
have a question about reaffirmed loans and credit reporting. I have been monitoring my credit report since our bankruptcy discharged earlier this month.
I have disputed several things and have seen our FICO score improve as a result. We are now in the mid to upper 600’s vs upper 500’s before challenging.
One thing that has me confused now is that we have two car loans that we reaffirmed. One car loan continues to show as paid and current and does not state that it was included in the bankruptcy. We did not receive any confirmation from them that they accepted the reaffirmation either.
The other now shows no payment history and that it was included in the bankruptcy even though they returned the reaffirmation paperwork through the court and we continue to make timely payments.
I disputed this loan on the credit report based on the ground that it was reaffirmed. The bank which holds the loan reported back that the way it is reported is correct – included in the bankruptcy with no mention of the reaffirmation.
Will this eventually show payments being made or that it was reaffirmed? The weird thing is that one credit reporting agency dropped the account from both my husband’s and my credit reports based on the challenge while the second has kept it on there without noting t he reaffirmation.
As for the house, we were told by our lawyer that in NJ, you don’t reaffirm mortgages. We continue to pay our mortgage payment and on time. This account shows as included in the bankruptcy too. Will it someday show current payments?
I was hoping that coming out of the bankruptcy with these 3 accounts intact with current and timely payments history that we would already have some positive credit in place. Now I am wondering whether this is right.
I had not questioned any of this while we were in the process but today received a letter in the mail from the Bankruptcy Resource Center that put all these questions into my head. Thanks so much for your help!
Randi
Thanks for your question Randi.
This is a situation where it may take you some time to get everything straightened out.
You definitely want to have all of your accounts reporting correctly, the ones that were included in your bankruptcy should all say so, and the ones that were not included in your bankruptcy should not say that they were.
Start by calling your lawyer – the one that handled your bankruptcy case. As them if they had any communication with these banks about your accounts when they were handling your case.
Also, ask your lawyer why the accounts are reporting that way, and see what they recommend you do.
That is the first place I would start anyway.
The next thing to do is to send certified letters that include a copy of your bankruptcy paperwork to both places – concerning your home and your car.
Make sure you get a signature when your paperwork is delivered. That way you can prove that they did get everything.
Then follow up that letter with a phone call. Ask them why your account is being reported as included in your bankruptcy.
I very much doubt that the general rep on the phone is going to be able to help you when you call. Go ahead and ask for a manager. No sense in wasting your time.
If you are still making payments, and you reaffirmed the debt, then those accounts should not show up as being included in your bankruptcy.
So, in short:
That should get you results.
Unless you proactively fix the accounts on your credit report, they can show up incorrectly forever (well, seven to ten years after the life of your loan, so it’s very important!)
Just remember that this is your credit score, not theirs. You need every positive record, every good account to be reporting correctly.
It’s trouble to go about fixing everything, but in the long term it will be a real benefit.
I was really glad to see that you were able to raise your credit score by challenging some of the negative information. These types of problems though, are best handled with the individual company. Otherwise it’s just a case of he said / she said as far as the credit bureaus are concerned.
If you can get everyone on the same page, then you can get the accounts fixed on your credit reports.
Thanks for your question!
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March 15th, 2009 at 14:43
We are responsible for messing up our own credit report so cleaning the report should be also our responsibility. You have explained how we can clean this very nicely. After a bankruptcy it becomes very necessary to raise the positive credit score and establish a good credit report as soon as possible.
March 15th, 2009 at 18:18
My wife and I went through a short sale in 2008. We were upside down by about 150k. What happens with this difference? It seems that we can never get a straight answer. We will be filling with our accountant in a few weeks. Any and all help would be greatly appreciated.
Alan
May 30th, 2009 at 16:42
I did Bankruptcy on a foreclosure and towards the end i sold the home but the past due payments and fines still show up even though its closed what do i do??
August 27th, 2009 at 03:19
I did a chapter 7 bankruptcy and did not reaffirm my home loan. If I walk away from the house, will the foreclosure be reported on my credit reports?
November 11th, 2009 at 13:46
We filed bankruptcy in October of 2005. A reaffirmation was signed and sent to our bank, with our signature, the lawyers signatue, a bank persons signatue. I lost my job in January 2009, my husband called the bank and told them and asked for help. The person on the line was very short and rude and said I don’t have to talk to you you did not reaffirm your loan. Also we can’t do anything for anyone until you are at least 3 months behind. We were floored because we thought we had reaffirmed. We have fallen behind and received late notices and approaching the 3 month area we received a certified letter that said if we did not pay this amount they would start the forclosure process, but in the next paragraph they said they could not collect any funds from us because we did not reaffirm. They are still reporting our payments and late payments on our credit report. We called our bankruptcy lawyer and they have a copy of our reaffirmation letter, cover letter, fax cover sheet showing it was sent to our bank. They then called the courthouse to see if they had a signed and stamped copy of the affirmation in the court file. They did not. Our lawyer tells us that in light of this there is no affirmation. Our home is now upside down, the payments have gone up every year because the taxes go up every year, from 1100.00 to 1400.00 a month. They are going up another 900.00 in December so our mortgage will go up again. We no longer can afford to lve in our home. Our lawyer says we are protected by bankruptcy and can walk from the home. We now Do Not want to reaffirm. Do we have any recourse with the bank since they are the ones that dropped the ball on our reaffirmation? Also can we go after them for reporting on our credit report when they were the ones who enlightend us to the fact we did not reaffirm?
Help,
Kim