Collection Attorney Ron SykstusThis is a question that we often get asked when someone is contemplating filing for bankruptcy. First of all, if someone has perfect credit, meaning that they have never been behind on any debts, then filing for bankruptcy will hurt their credit dramatically. If however, someone is already behind on their debts and they are receiving collection calls, collection letters and threats of lawsuit then, in all likelihood, the credit is already bad and hurt and filing for bankruptcy will not make it worse.

A bankruptcy filing can stay on a person’s credit for a period of 10 years from the date of filing, regardless if a Chapter 7 or Chapter 13 bankruptcy was filed. This is compared to “bad” credit which are the late payments and the like and they can remain on the credit report for a period of seven years from the date of  last activity, which is either when the debt is been paid in full or the creditor has charged off the debt, which is an internal accounting mechanism. Please note that a “charge off” does not mean that the debt has gone away –  it will most likely simply be sold or assigned to another debt collector.

Our initial advice to our clients’ concerns in ensuring that  their credit will improve after a bankruptcy filing is to make sure all of the debts are listed in the bankruptcy petition. This includes any conceivable debt or bill that that a person may owe along with any debt collector or collection agency that is trying to collect on the debt itself. Once the debts are listed, the next goal is to obtain a discharge in bankruptcy. That is the end goal of a bankruptcy case. Once that is done, get your free credit reports in writing only from www.annualcreditreport.com.  See this link here for information on exactly how to get your free credit reports in writing and why you should get them in writing.

Once you receive your credit reports, all that can be listed for each discharged debt is that the debt has been “discharged in bankruptcy” and it has to reflect a zero (0) balance. It cannot reflect that it is past due, charged-off, in collections, or that any type of balance is due and owing. If each debt that you discharged in bankruptcy is not reflected this way, there is a specific and certain way to put these items in dispute with the credit reporting agencies. Please see how to dispute mistakes and errors on your credit reports.  This article also contains a sample dispute letter to correct errors and mistakes in credit reports. When you prepare your written dispute, you will state that “I am disputing this erroneous credit information noted because (name of creditor/collector) is listed in collections (or however it is listed) and with a balance of $X. I have attached a copy of my bankruptcy discharge and the pertinent schedules showing that this creditor was discharged in bankruptcy. As a result, all that should be listed on this debt is zero balance and discharged in bankruptcy.  Please correct this information and, pursuant to the Fair Credit Reporting Act, please forward this information to the credit furnisher.

Our lawyers are sure to help you not only during your bankruptcy process but after as well, whether you are being collected on during your bankruptcy or after your bankruptcy or is negative for erroneous information shows up in your credit reports, our attorneys are here to assist you. Please feel free to contact our office nearest to you if you have questions on how to fix errors and mistakes in your credit reports.

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