Bankruptcy will not end credit report problems

Most people will never have to go through filing for bankruptcy, and that is a good thing. It is a last resort for people who simply cannot get a grip on their financial problems and finally give up. True, the courts will wipe out most debts, provided that the consumer involved passes the required means test for a Chapter 7 filing. But having the debts wiped out does not necessarily mean that all is rosy. The bankruptcy will stay on the debtor’s credit report for the next ten years, a shining beacon that warns most potential lenders away. True, some people will send credit card offers to the bankrupt, but for the most part, bankruptcy is a ten year roadblock to a good credit report.

Still, it is possible to dig out after declaring yourself insolvent, and the sooner you start to work on improving your overall credit health, the better. The first thing you should do after being discharged by the courts is to look at your credit report. At this point, it will probably be a mess, since you will have many listings for creditors who have listed you as delinquent.

Once you have been discharged, your debts should no longer be listed as “active”, since they have been effectively eliminated. In all likelihood, some of your debts will still show as actively overdue or delinquent on your credit report. This happens often, due to a lack of communication between your creditors and the bureaus that handle the reports. The only way to be sure that the information is correct is to fix it yourself. How do you do that?

You must contact each of the three credit bureaus directly.  Experian, Trans Union and Equifax all keep separate records of your financial transactions, so you will have to contact each of them separately. Send each one of them a photocopy of your driver’s license, Social Security card, and a copy of your bankruptcy petition. Explain to them that the creditors shown as active on your report are in error, as the bankruptcy petition should have had them removed. Each of the bureaus has their own process for resolving disputes; you will have to check their Websites to see exactly how to proceed.

The process may be cumbersome and time consuming, but it will be worth your while to do so. The whole point in filing is to start over, and that will be quite hard to do if your history shows that you still have unresolved debts. It will be hard enough to establish new credit while working your way out of a Chapter 7 filing without having your report cluttered with remnants from your past. That being the case, it is much to your benefit to start as soon as possible to clear up any errors you may find.

After that, the next step is to make sure that you pay all of your bills on time from now on. It is the first step in a new direction.

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