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A Virginia Foreclosure Attorney’s Advice On Rebuilding Your Credit

After you file for a  bankruptcy, whether a Chapter 7 bankruptcy or a Chapter 13 bankruptcy, you should think about rebuilding your credit. Upon receiving a discharge, you will be amazed by the number of creditors that will be interested in giving you a new credit card or selling you a car. Do not give into these offers because they may place you in a vicious cycle of high interest debt once again.

Instead, you should step back from these offers and focus on using credit to rebuild your financial standing. You need to be very careful not to just give up on rebuilding credit and resign yourself to the thought that your credit will be bad for 7 to 10 years. Rather, you need to focus on a road map to repairing your credit.

First, you must acquire a small amount of debt after your discharge. For example, you can get an unsecured credit card and then make the monthly payments on time to establish a new credit history. I recommend reading “Bounce Back from Bankruptcy, 4th Edition” by Paula Langguth Ryan. You can purchase the book here. This book has some great pointers about reestablishing your credit. It also will give you a list of companies (with phone numbers and costs) that offer credit cards to specifically rebuild your credit. Note that after you use the new credit card for several months, you should obtain a free credit report from all three credit reporting agencies and make sure the card shows up and is noting a new credit history. You should also review the credit report to make sure they have the correct information. It has been reported that millions of credit reports are inaccurate. It is important that you review your credit reports on at least an annual basis to check for errors. If you should find any errors, our firm may be able to assist you in correcting them.

If you follow these steps, you should be able to rapidly repair your credit. As an example of this, our VA bankruptcy lawyers have represented many clients that have been able to purchase a new home 1 to 3 years after completing a bankruptcy.

1. Create a Budget  In order to avoid future financial problems, it is important to get a grasp on your budget. You should make a note of all of your expenses during a 2-3 month period. At the end of each month, subtract your total expenses from your total income. If you are spending more than you are earning, you need to adjust accordingly. You should take this information and make a budget showing how you will spend your monthly income.

2. Obtain Your Credit Report  Each Prince William County bankruptcy lawyer recommends that it is best to get a credit report that gets information from all three of the credit reporting bureaus. Please click here if you are interested in obtaining a credit report.

3. Make Sure Your Credit Report is Accurate  If you find errors after reviewing your credit report (such as incorrect personal information, inaccurate account information or a failure to list your accounts as discharged through bankruptcy), you can contact the individual credit bureaus by sending a letter stating each incorrect item and explaining exactly what is incorrect about it.

Upon receipt, the credit bureau must investigate the disputed items and contact you within 30 days. If you are correct, or if the creditor who provided the information to the bureau can no longer verify it, the credit bureau must remove the information from your report.

If you would prefer that a Prince Georges County bankruptcy attorney assist you with this process, please contact our office. Click here to read about the services we offer to assist you with this.

4. Obtain New Credit  Creditors look for positive credit payment history when reviewing your credit report. As stated above, you should acquire a small amount of debt after your discharge. For example, you can get an unsecured credit card and then make the monthly payments on time to establish a new credit history. This will go a long way towards reestablishing your credit score.

However, do not go overboard and acquire several credit cards. Creditors may look negatively on you if you have too many open credit accounts.

Correct Your Credit Report

Our clients are often searching for alternatives to bankruptcy for a variety of reasons. Our firm is also prepared to offer various credit repair services to assist our clients with their needs.

The Credit Services Organization Law of 1997 effectively reorganized the credit repair industry and made it illegal for credit repair agencies to operate. Attorneys, however, are still able to assist debtors with this process. Our VA bankruptcy lawyers are allowed to contact creditors and reporting companies and demand, without litigation, compliance of the law and the permanent resolution and settlements of disputes, including the correction or deletion of information in credit reports. In some circumstances, this can be better for our clients than filing for bankruptcy.

Our clients are often in need of corrections to their credit reports. This may occur after filing for bankruptcy or may simply be a result of an error by the creditor or the credit reporting bureaus. These errors can dramatically affect your credit score, and make a tremendous difference when you are looking to buy a new home or vehicle.

Our firm can act as an intermediary between the lenders and the credit bureaus to speed up correction of these errors. We directly contact the creditors and obtain documentation acknowledging any mistakes. We then provide this information to the credit bureaus. If the credit bureaus agree an error was made, they can rapidly update the credit report to account for this change, which will calculate a new credit score for you. This can save you thousands of dollars in interest costs on the purchase of your new home. If the creditor refuses to comply with demands to correct a mistake on your credit report, it could be in violation of several federal laws. We may be interested in such a case.

Debt Negotiation Services

Our firm can enter into negotiation with creditors to reduce the outstanding balance on our client’s accounts and provide for a settlement payment to pay-off the outstanding debt. This negotiation and settlement service may be able to reduce outstanding debts by 40-80%, depending on the circumstances of the case.

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