J Thomas Black
Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization

After one of my clients receives a discharge in bankruptcy, either under Chapter 7 or Chapter 13, we perform what we call a "credit clean-up" for them. What this is, is sending a letter to each of the major credit bureaus or "credit reporting agencies" (CRA's), along with a copy of the Bankruptcy Court's Order of Discharge, and a list of all of the creditors and collection agencies, etc. that were listed in the bankruptcy.

We ask the CRA's to re-investigate each of the creditors' reports that were listed in the bankruptcy, to be sure they are reporting accurately. If they were discharged in bankruptcy, the balance due should be listed as zero, and there should be a notation that the account was "discharged in bankruptcy." This is a derogatory item on your credit report, but at least it shows a zero balance. If you don't do this "re-investigation" or dispute process, it's possible that the creditors will continue to report a balance due (or just not report anything new), which makes it look like you charged up debt after the bankruptcy, and didn't pay it. That is worse. And once it shows discharged in bankruptcy, the item must be removed in 7 years. Not only that, the older that item becomes, the less it hurts your credit score. Always dispute inaccurate items on your credit reports.

If a bankruptcy client pays their bills on time after filing bankruptcy, and uses credit responsibly, their credit scores can recover into the mid 600's after one year after bankruptcy, and possibly to 700 or so after two years. We do the credit clean-up for clients, because even though we tell them how to do it, after bankruptcy many of them just either: (1) don't get around to it; or (2) are just too overwhelmed by going through the bankruptcy, it is just not the most important thing to them at that time. Then when they decide they have to finance a new car, or buy a house, they decide to fix their credit, but unfortunately it can take a long time to work on your credit to get it right. If you review your credit reports once a year, you can stay on top of the situation.

By law, you can obtain free credit reports once per year from https://www.annualcreditreport.com. Review the reports, and follow the instructions to dispute any inaccurate information. Not sure how to raise your credit score? You can purchase your credit scores (they are not free, like your credit reports) at www.myfico.com, and also learn what you need to do to raise your score, and what it holding you back. If you were turned down for credit, you should receive an "adverse action notice" or similar notice, which may also include your credit score, at no charge to you.

It takes time to get your credit back, once you have had problems with it, including bankruptcy. Whatever you do, to get your credit score headed in the right direction, make a budget and live on what you make. If you can help it, don't default on medical bills, cell phones, or other items. But of course you must prioritize your bills, so never put those types of bills ahead of truly important things like housing, transportation, and other necessities of life for your family. There are more important things than a good credit score.

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