The whole purpose of bankruptcy is getting you a financial fresh start. This happens in several different ways. First is that you get to unload most of your unsecured debt (other than student loans, alimony, child support and some tax debts) so you have less debt to pay. Second is that it allows you to get a grip on paying the debt that remains. Third is the ability to begin improving your credit score right away.
The Importance of Your Credit Score
Even if getting deep in debt and going through the bankruptcy process has made you swear off credit cards for good, your credit score will matter for myriad other things. If you ever want to refinance your home (or buy one), get a car loan, car insurance, homeowner's insurance or a new job, your credit score matters. It's the standard by which we are judged for many purchases, even those we're not financing (as with auto insurance) and the higher your score, the more money you'll save in the long run which can help you avoid debt.
How to Rehab Your Credit Score After Chapter 7
You should pull your credit report prior to bankruptcy to ensure that you include all your creditors on your Chapter 7 petition. There are likely some you've forgotten, particularly if they are older and the creditor isn't trying to collect from you anymore. So definitely get a report and take it with you when you go to see your bankruptcy attorney prior to filing. After you get your discharge, which takes roughly three or four months, wait 60 days then pull another credit report that includes all three agencies – Experian, TransUnion and Equifax.
First, make sure that all of your accounts that were discharged in bankruptcy reflect a zero balance due and shows that they were included in the bankruptcy. For any accounts that aren't displaying properly, send a dispute letter with the incorrect items circled and explain that you filed bankruptcy, received a discharge and that the account info on your report is inaccurate. Be sure to send the letter with return receipt notification so you have proof you sent it. Alternately, you can file a dispute online. Here are the links for TransUnion, for Experian and for Equifax.
Second, aggressively pursue any items that aren't corrected. After you send the dispute letter or file a dispute online, if it's not corrected within 60 days, contact your attorney about filing suit against the creditor for violating bankruptcy laws. This will get it corrected and may put a few hundred bucks in your pocket depending on how egregious their actions were. But usually the dispute will be enough to correct it.
Clearing up your credit report is the first step on the road to rehabbing your credit after Chapter 7 bankruptcy. Once you've got your credit cleaned up, then it's time to get aggressive with improving your FICO score. Read this blog on seven steps to rebuild your credit after bankruptcy.
In North Carolina, you can get expert advice on the benefit of bankruptcy with a free consultation at the law offices of John T Orcutt. Don't let debt ruin your life – find out how you can get a fresh start today.