I wanted to spend a bit of time today talking about what can be done after a Chapter 7 or 13 Bankruptcy to improve your credit. We have found, one of the more challenging parts of being discharged from a Chapter 7 or Chapter 13 Bankruptcy is to begin to accrue credit. Imagine this, you just filed; every tradeline on your credit report is stating ‘included in bankruptcy’, in addition, you have a Public Record reporting on your credit report as a ‘Chapter 7’ or ‘Chapter 13’ bankruptcy.
I know, it doesn’t feel good. And you may feel like you are in a hole, but.. you are not.
It is critical you begin to grow your credit once again. Indeed, you’ve gone through a rough patch; maybe made some poor decisions, or more than likely, a life event that you had no control over has lead you to the bankruptcy. Regardless, those who rebound from this experience and learn from it, are rewarded.
The first thing you want to do, is ensure that everything that was included in the bankruptcy, is reporting so. Meaning, no balances on accounts, no late payments after the filing date, etc. This is one of the most common errors on a credit report, is the language that should, and should not be included. It is imperative you scan through your report and make absolute certain that each account is reporting correctly, and in accordance with the laws. If not, there will be repercussions to both the credit, as well as your ability to qualify for future credit.
For instance, we had a client a few months back get approved for a pretty decent interest rate on their next vehicle. They had filed and been discharged from a Chapter 7 some months ago. However, when the account appeared on their report, it was showing included in a Chapter 7 bankruptcy. This was not the case, as the account was opened well after the BK was charged. So, in short, our client was not able to take advantage of building credit, because the new account was already negative.
Naturally, we got to work explaining to the creditor, in this case ‘Acura’, that they had made a clerical error and were reporting the new account incorrectly, to which they replied in letter form, ‘verified’, as they often do for the first round. It took a total of three rounds of letters to get this corrected, and it wasn’t unless we provided all the BK paperwork to them, that they actually researched the account and determined they had in fact made an error:
This is just one example of Credit Repair after a Bankruptcy. I will add more installments as time and logic dictates.