Client Bulletin: Building Good Credit After Bankruptcy

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

AFTER a bankruptcy case, the last thing many of my Houston area bankruptcy clients are thinking about, is getting new credit. Most of them are sick of credit, particularly credit cards, and don’t want to see another one. Some of them “swear off” of credit, and vow to only use debit cards in the future.

That can be a good thing, but it is no reason to totally ignore your credit reports. You will likely need your credit for all kinds of reasons, besides getting financing. They are using credit scores for all kinds of reasons these days.

That’s why my law firm has been helping clients for the past few years to get off on the right foot after a bankruptcy, by requesting the three major credit bureaus to “reinvestigate” their credit reports, and “zero out” all of their discharged debt balances. We call it the “credit clean-up.” We don’t charge an additional fee for doing it, we just do it following the client’s receipt of a bankruptcy discharge.

Does it immediately give you a great credit score? No. But it can increase your score from 25-150 points over what it would have been otherwise, after a bankruptcy, which can be quite low right after a bankruptcy, in the 500 range or even lower.

What other things can help your credit recover after a bankruptcy? The main thing is to pay on time. Every time. It really irks me to do a credit clean up for someone, and look down and see that they have already been paying late on their bills again, either car or house payments that they kept through the bankruptcy, or new bills for credit cards or department store accounts that they have acquired since the bankruptcy was filed.

Folks, if you pay late, your credit is never going to recover. You have to pay on time, in order to have a good credit score. Other tips: (a) Don’t apply for too much credit; you should only have one to three credit cards, at the most. (b) Don’t use much of your available balance, called your “utilization ratio.” If you are always maxed out, it hurts your score. (c) order your free credit reports every year from www.annualcreditreport.com and dispute any inaccurate information. If you wait until you have to seek financing for a car or home, it can be too late to fix some credit problems. Some take time to fix.


New Resource to Help Student Loan Borrowers!


The National Consumer Law Center (NCLC) has started a new website to help people deal with their defaulted student loans. If you are having trouble with student loans, they are not generally dischargeable in bankruptcy, absent “undue hardship,” which is very difficult to prove. Sometimes through a bankruptcy we can help people deal with their other debts, so that money is freed up to deal with the student loans. But if they are your only problem, visit http://www.studentloanborrowerassistance.org for detailed help and guidance on finding a way out of your student loan problems.


Mr. Black Obtained Advanced Legal Training in April-May at the 18th Annual Convention of the National Association of Consumer Bankruptcy Attorneys in San Francisco . Mr. Black is Texas State Chairman (Southern District) of NACBA.


QUOTES

Many people limit themselves to what they think they can do. You can go as far as your mind lets you.
—Mary Kay Ash

You never achieve success unless you like what you are doing.
—Dale Carnegie

I have found that being honest is the best technique I can use. Right up front, tell people what you’re trying to accomplish and what you’re willing to sacrifice to accomplish it.
—Lee Iacocca


SAVE $$$$$


Heard about these radiant barriers? The sun here in Houston is just relentless, pounding down on your roof. It heats your attic, and that makes your AC work harder, and raises your heating bill.
Last spring, I invested in a radiant barrier (they spray it on under your roof deck), as well as some extra insulation for the attic. It has really made a difference! It blocks a lot of the heat from coming into the house. I figure I saved $800- $1000 on my light bill, and that was just in the first year of having it (I had some new windows installed also, but I really think the radiant barrier made a big difference!)

A LITTLE HUMOR – FATHER’S DAY EDITION

Help wanted, male

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Are bill collectors threatening to take your home or garnish your wages? Are they threatening to do anything else that they are not allowed to by law?

Is your mortgage company charging you fees and costs that are not due? Are you just overwhelmed with debt?

Facing a foreclosure or repossession? Is the I.R.S. threatening to levy your wages or other property? If any of these situations describes you, contact Mr. Black at 713-772-8037 or send him an email at Email J. Thomas Black


ARE YOU IN CHAPTER 13 NOW?

Always keep the law office updated with your current address, telephone numbers, and email address. We may need to reach you quickly. 24 hours/7 days a week, you can check on the status of your Trustee payments, how much you still owe on your case, etc., by going to www.13datacenter.com to set up your user ID and password. Lose job or overtime? Expenses increase? Want to give up property to lower payments?

Go to www.jthomasblack.com , click on ” C urrent C lients C lick Here” on home page, and fill out the Motion to Modify worksheet. Fax to office at 713-772-5058. We”ll review it and contact you if a change to your plan is possible.


J. Thomas Black was licensed as an attorney in Texas by the Texas Supreme C ourt in May, 1982. Mr. Black is Board C ertified in C onsumer Bankruptcy law by the Texas Board of Legal Specialization.