BANKRUPTCY REVIEWS

Chapter 7 Credit Repair

CHAPTER 7 BANKRUPTCY CREDIT REPAIR

The one thing people dread the most about bankruptcy is that it can stay on your credit report for as much as 10 years, and if your credit is good going in, bankruptcy will tarnish it.

It is a safe bet that you already have bad credit and if you do not, it will soon get bad when you are not able to make your minimum credit card payments.

If you already have bad credit, filing bankruptcy will not make it any worse. If you file chapter 7 bankruptcy, it will actually improve your credit.

Yes, chapter 7 bankruptcy can be good for your credit, in fact, very good.

Here are the reasons. If you are considering bankruptcy chances are that your credit is already shot. Filing chapter 7 bankruptcy will not make it any worse. In fact your ability to borrow money or to finance a car goes through the roof the moment your debts are discharged in the chapter 7 bankruptcy.

The reason is that lenders like auto finance companies know that you can file chapter 7 bankruptcy only once every 8 years so they are assured that you will not have bankruptcy as an option when the finance your auto purchase. Secondly, they know that because chapter 7 bankruptcy has erased your debts, you will now have spare money to pay your new debts. 

Yes it is true that chapter 7 bankruptcy can stay on your credit for 10 years, but if you have bad credit and do not do anything about it, your bad credit could dog you for 20, 30 or even 40 years and more. 

If you decide that you cannot have chapter 7 bankruptcy on your credit for 10 years, it is possible to have it removed from your credit in a matter of one to two years after your chapter 7 discharge.

One or two of the companies we review such as American Online bankruptcy Center have information that can enable you remove the bankruptcy from your record in as little as 12 months after the discharge. In some rare cases, it can come off in even less time.

How to remove bankruptcy from your credit

If you are filing your own bankruptcy without any help from a lawyer or a full-service bankruptcy company and you want to remove bankruptcy from your credit in less than the usual 10 years, here is a general outline of how it is done.

You must keep in mind that there is no law that orders credit bureaus to report bankruptcy against your credit for 10 years. The law says that they cannot report it for more than 10 years. Do you see the difference? So there is nothing legally wrong with removing bankruptcy from your credit soon after the discharge or to even try to hide it from your credit report entirely.

It comes down to your knowing how to do it. There are several ways to approach this matter. I will start off by saying that I have not had to help anyone remove bankruptcy from their credit report, so the following is from what I have been told by some of the few of the full-service companies we have reviewed.

This first technique supposedly works only for chapter 7 cases. 

When you file chapter 7 bankruptcy, all the derogatory information in your credit report is replaced by the phrase, "included in bankruptcy." If you have a derogatory that says," XYZ Credit card - Charge off", after the discharge, the credit report will say, "XYV Credit card - Included in bankruptcy". This will be the case with all your derogatory entries on your credit report. While there were many different phrases such as 180 days late, collection, charge off, closed by lender, etc, they will all be replaced by "included in bankruptcy."

The next step is to dispute the "included in bankruptcy." This approach is not the traditional approach of disputing against each individual creditor entry.  If this dispute works in your favor, all of the "included in bankruptcy" come off at once, peeling off with it all of the derogatory entries. The result is that you have a blank slate. You do not have any credit entries on your report, good or bad. It is as if you just turned 18 and are ready to get credit for the first time.

But this is not as simple as it sounds. The difficult part is getting the credit bureaus to decide the dispute in your favor. As the famous quote from the Lord of the Rings movies goes, "one does not just walk into Mordor". You do not just walk up to the credit bureaus and ask them to remove the bankruptcy from your record. 

This is where it gets murky and that is all we know. We have tried to get the full-service bankruptcy experts we talked to spill the beans but they have kept it guarded as their proprietary knowhow. A few of their past customers we contacted and asked for feedback would only say that it worked but did not want to elaborate.

This leads me as a reviewer to conclude that it is not a magic bullet that works for everyone. The degree of its effectiveness I guess will depend on how hard one is willing to work on it after the debts have been discharged in bankruptcy. But it does work.

The other approach we are aware of is not a do it yourself one but involves hiring the services of a very small select group of lawyers who do nothing else but credit repair and purge bankruptcy from credit reports. Some of the companies we reviewed also provide access to these lawyers, in addition to whatever else they include in their bankruptcy knowledgebase for their paid customers.

As a reviewer, my personal opinion is that when you hire a bankruptcy company or expert, it should be solely for the preparation of the bankruptcy, and these other peripheral features such as help with credit should not be a deciding factor.


Do it yourself credit rebuilding

You can rebuild your credit by yourself after filing bankruptcy and you do not need any special proprietary secrets to do so. In a nut shell, it involves starting with getting a pre-paid or secured credit card, they kind they give to anyone without a credit check. You put up a deposit with your local bank and they will give you a VISA or MasterCard allowing to charge up to the amount of cash deposit you gave them. When you demonstrate responsible repayment on the card for 12 months, they then issue a regular credit card. This real unsecured credit card opens the doors to getting whatever other credit that you need.

If you are looking to finance a mortgage, you are required by the major lenders to wait for two years after the discharge. This is pretty automatic. In contrast, if you did not file chapter 7 bankruptcy, you would be stuck with heave debt and bad credit, possibly for the rest of your life, and would never be able to own your own home.


Created with Artisteer

0 comments:

Post a Comment

Please add to the reviews by leaving us your comments. Indicate the number of stars you want us to apply to the reviewed site. To use images, include the Gravatar url.