This article provides useful, detailed information about Types of Bankruptcy.
In the US, a party can file for either Chapter 7 or Chapter 13 bankruptcy. In Chapter 7 or \'straight\' bankruptcy, the applicant surrenders all non-exempt property and assets to an appointed bankruptcy official. These are converted into cash and the proceeds are disbursed to the applicant\'s creditors.
This process of liquidation then results in the applicant being freed of all financial obligations within a short period usually not exceeding four months. Obviously, this provision has seen a lot of abuse in the past. The new laws now state that an individual cannot re-apply for Chapter 7 bankruptcy unless he/she has been given discharge from a previous filing for it for at least eight years.
In applying for Chapter 13 bankruptcy, the applicant indicates that he/she intends to repay his/her debts over a period of time. This period may vary from three to five years. Chapter 13 bankruptcy is the preferred kind for applicants who cannot prove complete and irreversible financial insolvency, meaning that they have a source of income that allows them to eventually settle their debts.
Chapter 13 bankruptcy also protects non-exempt property from liquidation and allows the applicant to retain ownership of it. The new bankruptcy law amendments, effective from October 17, are oriented towards encouraging the maximum possible repayment of debts and make it mandatory for certain applicants to file for Chapter 13 bankruptcy.
Chapter 11 or corporate bankruptcy is typically applicable to business entities that wish to restructure and reorganize. Chapter 12 or family farming bankruptcy was a variation formulated in 1986 is applicable to people or qualify as \'family farmers\'. Functionally, it is similar to Chapter 13 bankruptcyBusiness Management Articles, except that its offers a higher debt ceiling than Chapter 13 does for wage earners to people or families who depend on farming for their livelihood.
ABOUT THE AUTHOR
Types Of Bankruptcy provides detailed information on Bankruptcy, Types Of Bankruptcy, Filing Bankruptcy, Bankruptcy Laws and more. Types Of Bankruptcy is affiliated with Chapter 13 Trustee.
Friday, May 11, 2007
Personal Bankruptcy
This article provides useful, detailed information about Personal Bankruptcy.
As mentioned earlier, personal bankruptcy can be filed for under Chapter 7(for almost complete elimination of debts) and the more conditional and restrictive Chapter 13 of the federal bankruptcy code. Basically, the provisions under personal bankruptcy allow a genuinely insolvent individual to wipe the slate clean and make a fresh beginning. If the case is bona fide and the proper procedure is followed, the debtor is guaranteed freedom from financial and mental harassment and by creditors.
People file for personal bankruptcy for various reasons. The most common ones are debt incurred by credit card misuse, divorce proceedings and eventual alimony/child support expenses, sudden illness entailing major medical expenses, accidents, etc.
Though it may often seem like the only feasible option, filing for bankruptcy should not be done without weighing all the pros and cons. No individual should consider filing for bankruptcy unless he/she has consulted with an attorney knowledgeable in US bankruptcy laws. Once filing has been decided on, all necessary forms and other documentation should be filled in consultation with an attorney.
Updated bankruptcy laws now require a person filing for Chapter 7 or Chapter 13 bankruptcy to undergo a credit counseling course within six months of actual filing. Counseling will be undertaken by officially appointed professionals. Undergoing credit counseling is compulsory and can be foregone only in cases specially exempted by the court.
Whether an individual should file for Chapter 7 or Chapter 13 bankruptcy is largely decided by two factors - the person\'s income as compared to the average income for his/her state of residence, and the ratio of his/her debts against available income. Following the October 14, 2005 amendments, debts towards government units, fines and penalties under federal election law, tax debts, debts towards certain student loans and some others, are not eliminated by filing for personal bankruptcy.
ABOUT THE AUTHOR
Types Of Bankruptcy provides detailed information on Bankruptcy, Types Of Bankruptcy, Filing Bankruptcy, Bankruptcy Laws and more. Types Of Bankruptcy is affiliated with Chapter 13 Trustee.
As mentioned earlier, personal bankruptcy can be filed for under Chapter 7(for almost complete elimination of debts) and the more conditional and restrictive Chapter 13 of the federal bankruptcy code. Basically, the provisions under personal bankruptcy allow a genuinely insolvent individual to wipe the slate clean and make a fresh beginning. If the case is bona fide and the proper procedure is followed, the debtor is guaranteed freedom from financial and mental harassment and by creditors.
People file for personal bankruptcy for various reasons. The most common ones are debt incurred by credit card misuse, divorce proceedings and eventual alimony/child support expenses, sudden illness entailing major medical expenses, accidents, etc.
Though it may often seem like the only feasible option, filing for bankruptcy should not be done without weighing all the pros and cons. No individual should consider filing for bankruptcy unless he/she has consulted with an attorney knowledgeable in US bankruptcy laws. Once filing has been decided on, all necessary forms and other documentation should be filled in consultation with an attorney.
Updated bankruptcy laws now require a person filing for Chapter 7 or Chapter 13 bankruptcy to undergo a credit counseling course within six months of actual filing. Counseling will be undertaken by officially appointed professionals. Undergoing credit counseling is compulsory and can be foregone only in cases specially exempted by the court.
Whether an individual should file for Chapter 7 or Chapter 13 bankruptcy is largely decided by two factors - the person\'s income as compared to the average income for his/her state of residence, and the ratio of his/her debts against available income. Following the October 14, 2005 amendments, debts towards government units, fines and penalties under federal election law, tax debts, debts towards certain student loans and some others, are not eliminated by filing for personal bankruptcy.
ABOUT THE AUTHOR
Types Of Bankruptcy provides detailed information on Bankruptcy, Types Of Bankruptcy, Filing Bankruptcy, Bankruptcy Laws and more. Types Of Bankruptcy is affiliated with Chapter 13 Trustee.
Bankruptcy Laws
This article provides useful, detailed information about Bankruptcy Laws.
U.S. bankruptcy laws fall under federal statutory law provided by Title 11 of the United States Code. They have been periodically revised and amended to provide full and fair cover for genuine cases and to eliminate the potential for their unlawful abuse. Since this is federal jurisdiction, individual states cannot pass legislation governing and regulating bankruptcy. US bankruptcy laws have been standardized so as to have universal application. However, state governments can lay out parameters for the definition of personal insolvency and indebtedness.
The Supreme Court formulated US bankruptcy laws in consultation with Congress, and all supervision and administration of bankruptcy proceedings fall under its jurisdiction. The two fundamental kinds of bankruptcy in the United States are Chapter 7 and Chapter 13 bankruptcy, which have been explained in some detail earlier.
In filing for either Chapter 7 or Chapter 13 bankruptcy, a debtor\'s obligations may vary to some degree depending on the circumstances. In Chapter 7 bankruptcy, the filing party is required to make a full disclosure of assets and liabilities, including secured and unsecured property. Within 30 days of making an application, the applicant must declare whether he/she intends to retain or surrender such assets. These intentions must be executed within 45 days of filing.
The applicant must further provide a complete list of creditors, after which the bankruptcy court arranges for a meeting of the applicant with all mentioned creditor. During this meeting, all their doubts can be raised and must be addressed to their satisfaction.
Chapter 13 bankruptcy can be initiated by either the debtor or his/her creditors. After filing, a trustee is appointed to supervise the debtor\'s assets. Effectively, these are then immovable asset which can neither be sold nor transferred.
US bankruptcy laws basically benefit the applicant debtor, and since recently enforced amendmentsHealth Fitness Articles, the interests of creditors are given equal priority.
ABOUT THE AUTHOR
Types Of Bankruptcy provides detailed information on Bankruptcy, Types Of Bankruptcy, Filing Bankruptcy, Bankruptcy Laws and more. Types Of Bankruptcy is affiliated with Chapter 13 Trustee.
U.S. bankruptcy laws fall under federal statutory law provided by Title 11 of the United States Code. They have been periodically revised and amended to provide full and fair cover for genuine cases and to eliminate the potential for their unlawful abuse. Since this is federal jurisdiction, individual states cannot pass legislation governing and regulating bankruptcy. US bankruptcy laws have been standardized so as to have universal application. However, state governments can lay out parameters for the definition of personal insolvency and indebtedness.
The Supreme Court formulated US bankruptcy laws in consultation with Congress, and all supervision and administration of bankruptcy proceedings fall under its jurisdiction. The two fundamental kinds of bankruptcy in the United States are Chapter 7 and Chapter 13 bankruptcy, which have been explained in some detail earlier.
In filing for either Chapter 7 or Chapter 13 bankruptcy, a debtor\'s obligations may vary to some degree depending on the circumstances. In Chapter 7 bankruptcy, the filing party is required to make a full disclosure of assets and liabilities, including secured and unsecured property. Within 30 days of making an application, the applicant must declare whether he/she intends to retain or surrender such assets. These intentions must be executed within 45 days of filing.
The applicant must further provide a complete list of creditors, after which the bankruptcy court arranges for a meeting of the applicant with all mentioned creditor. During this meeting, all their doubts can be raised and must be addressed to their satisfaction.
Chapter 13 bankruptcy can be initiated by either the debtor or his/her creditors. After filing, a trustee is appointed to supervise the debtor\'s assets. Effectively, these are then immovable asset which can neither be sold nor transferred.
US bankruptcy laws basically benefit the applicant debtor, and since recently enforced amendmentsHealth Fitness Articles, the interests of creditors are given equal priority.
ABOUT THE AUTHOR
Types Of Bankruptcy provides detailed information on Bankruptcy, Types Of Bankruptcy, Filing Bankruptcy, Bankruptcy Laws and more. Types Of Bankruptcy is affiliated with Chapter 13 Trustee.
Bankruptcy FAQs
This article provides useful, detailed information about Bankruptcy FAQs.
As far back as colonial times, every citizen has a constitutional right to file for bankruptcy. By declaring bankruptcy, one is relieved of mandatory collection activities for debts existing at the time of filing by a legal \"stay\" on these activities. The first version of US bankruptcy or Federal Insolvency laws appeared in 1800, and has been evolving ever since.
Chapter 7 or \"straight liquidation\" bankruptcy permits the retention of exempt assets and property and can be used by individuals, partnership businesses and corporations. Under Chapter 7, recent tax obligations, debts to government units and alimony/child support are not exempt. In case of debts incurred during a marriage, both spouses must file for bankruptcy – otherwise the debts are transferred to the non-filing spouse.
Chapter 13, or \"wage earner reorganization\" bankruptcy can only be filed by individuals who have a steady source of income. It can be filed by debtors with unsecured debts that do not exceed $100,000 and secured debts that do not exceed $350,000. Basically, filing for Chapter 13 bankruptcy indicates an intention and willingness to make good one\'s debts within five years. With this understanding, the applicant\'s existing assets are not liquidated.
Chapter 11 is a more flexible version of Chapter 13 available to individuals and businesses. It is generally not preferred by individuals, because it entails greater court-related expenses and calls for frequent personal appearances in court.
Once Chapter 7 bankruptcy has been legally sanctioned, creditors have no claim on future income. If assets have been concealed, misrepresented or surreptitiously transferred at the time of filing for bankruptcyFree Articles, the discharge from debts can be either refused or declared null and void.
ABOUT THE AUTHOR
Types Of Bankruptcy provides detailed information on Bankruptcy, Types Of Bankruptcy, Filing Bankruptcy, Bankruptcy Laws and more. Types Of Bankruptcy is affiliated with Chapter 13 Trustee.
As far back as colonial times, every citizen has a constitutional right to file for bankruptcy. By declaring bankruptcy, one is relieved of mandatory collection activities for debts existing at the time of filing by a legal \"stay\" on these activities. The first version of US bankruptcy or Federal Insolvency laws appeared in 1800, and has been evolving ever since.
Chapter 7 or \"straight liquidation\" bankruptcy permits the retention of exempt assets and property and can be used by individuals, partnership businesses and corporations. Under Chapter 7, recent tax obligations, debts to government units and alimony/child support are not exempt. In case of debts incurred during a marriage, both spouses must file for bankruptcy – otherwise the debts are transferred to the non-filing spouse.
Chapter 13, or \"wage earner reorganization\" bankruptcy can only be filed by individuals who have a steady source of income. It can be filed by debtors with unsecured debts that do not exceed $100,000 and secured debts that do not exceed $350,000. Basically, filing for Chapter 13 bankruptcy indicates an intention and willingness to make good one\'s debts within five years. With this understanding, the applicant\'s existing assets are not liquidated.
Chapter 11 is a more flexible version of Chapter 13 available to individuals and businesses. It is generally not preferred by individuals, because it entails greater court-related expenses and calls for frequent personal appearances in court.
Once Chapter 7 bankruptcy has been legally sanctioned, creditors have no claim on future income. If assets have been concealed, misrepresented or surreptitiously transferred at the time of filing for bankruptcyFree Articles, the discharge from debts can be either refused or declared null and void.
ABOUT THE AUTHOR
Types Of Bankruptcy provides detailed information on Bankruptcy, Types Of Bankruptcy, Filing Bankruptcy, Bankruptcy Laws and more. Types Of Bankruptcy is affiliated with Chapter 13 Trustee.
Bankruptcy Attorneys
This article provides useful, detailed information about Bankruptcy Attorneys.
U.S. bankruptcy attorneys were a pretty rushed lot in the final period before October 17 – that\'s when the laws governing bankruptcy ceased being a catchall shelter. There was a quiet stampede of almost 1.25 million applicants who wanted to take advantage of the more amenable aspects that existed till then.
The basic function of bankruptcy attorneys is to guide potential applicants as far as feasibility and procedure is concerned, and to act on their behalf in court. With the new amendments, a bankruptcy attorney must also inform a client why certain loopholes no longer exist. Finding the right lawyer is essential. As distasteful as the circumstances may be, effort put into locating such an attorney is wisely spent.
In present times, bankruptcy attorneys are having a boom time. A certain degree of complacent shoddiness appears to have crept into the lesser echelons. There are innumerable cases reported where the attorneys -- especially \"cost effective\" ones -- do not even show up at a scheduled hearing. Or, they fail to be thorough in necessary research and paper work. Such laxness can spell financial disaster.
One can pick a bankruptcy attorney out the yellow pages, but finding the right one calls for a far more astute approach. The best way is through referrals from business contacts and colleagues(not friends or relatives), who have had satisfactory dealings with such attorneys. Another suitable way is to ask attorneys from other legal disciplines for a referral.
Every state and city has a Bar Association, and the Association of Consumer Bankruptcy Attorneys is another good source. While narrowing down your final choice, ensure that the attorney is certified American Bankruptcy Institute, so that a reasonable degree of accountability is established. Finally, find out how many actual bankruptcy cases the attorney has handled in the given yearArticle Search, and how many of them yielded satisfactorily results from the client\'s point of view.
ABOUT THE AUTHOR
Types Of Bankruptcy provides detailed information on Bankruptcy, Types Of Bankruptcy, Filing Bankruptcy, Bankruptcy Laws and more. Types Of Bankruptcy is affiliated with Chapter 13 Trustee.
U.S. bankruptcy attorneys were a pretty rushed lot in the final period before October 17 – that\'s when the laws governing bankruptcy ceased being a catchall shelter. There was a quiet stampede of almost 1.25 million applicants who wanted to take advantage of the more amenable aspects that existed till then.
The basic function of bankruptcy attorneys is to guide potential applicants as far as feasibility and procedure is concerned, and to act on their behalf in court. With the new amendments, a bankruptcy attorney must also inform a client why certain loopholes no longer exist. Finding the right lawyer is essential. As distasteful as the circumstances may be, effort put into locating such an attorney is wisely spent.
In present times, bankruptcy attorneys are having a boom time. A certain degree of complacent shoddiness appears to have crept into the lesser echelons. There are innumerable cases reported where the attorneys -- especially \"cost effective\" ones -- do not even show up at a scheduled hearing. Or, they fail to be thorough in necessary research and paper work. Such laxness can spell financial disaster.
One can pick a bankruptcy attorney out the yellow pages, but finding the right one calls for a far more astute approach. The best way is through referrals from business contacts and colleagues(not friends or relatives), who have had satisfactory dealings with such attorneys. Another suitable way is to ask attorneys from other legal disciplines for a referral.
Every state and city has a Bar Association, and the Association of Consumer Bankruptcy Attorneys is another good source. While narrowing down your final choice, ensure that the attorney is certified American Bankruptcy Institute, so that a reasonable degree of accountability is established. Finally, find out how many actual bankruptcy cases the attorney has handled in the given yearArticle Search, and how many of them yielded satisfactorily results from the client\'s point of view.
ABOUT THE AUTHOR
Types Of Bankruptcy provides detailed information on Bankruptcy, Types Of Bankruptcy, Filing Bankruptcy, Bankruptcy Laws and more. Types Of Bankruptcy is affiliated with Chapter 13 Trustee.
Thursday, May 10, 2007
Life after Filing Bankruptcy
Filing for bankruptcy will undeniably have a great impact on your credit but sometimes it becomes the only option. It is important to evaluate the budgeting and financial mistakes that helped lead you to this direction. While we realize you didn’t get there on purpose you should self examine your spending habits and start working on ways to rebuild your credit. Yes you heard us right; you can still work on rebuilding your credit even AFTER filing a bankruptcy. But, it will take time and perseverance on your part.
Below are some tips to help you reestablish your credit after filing for bankruptcy.
1. Learn to live within your financial means. Spend your money wisely and do not buy luxury items that are not a necessity for living! This is an important lesson to learn and it will be hard to talk yourself out of some of those luxury purchases but you will thank yourself later.
2. Apply for a secured credit card and be sure to repay on time! This will reflect positively on your credit report and help you to start a new and on time paying credit history. Try not to jump right back in and get a card with a high deposit amount, start out small and progress forward.
3. Open a new checking and/or savings account. Lenders will take this into consideration when determining if you are responsible enough to lend money too.
4. This one can be trick, but see if you have a friend or relative that will cosign on a credit card or small loan with you and then be sure to make all the payments on time. This will help to reestablish good credit and an on time payment history.
5. When applying for new credit, try to start with a gas card or store credit card – these are items you would normally pay for in cash but now you can pay the bill monthly to reestablish credit. This may be a wise choice as to not give yourself extra credit on items you may not need right now!
6. Payday loans should always be a last resort and avoided at all costs if at all possible! The interest rates are extremely high and they can easily become a bad credit trap after all your hard work.
7. Lastly, pay all your credit card and utility bills on time!
These few small tips will help you to reestablish your credit history after surviving your bankruptcy. Don’t give up hope, it is possible but it will take timeFeature Articles, effort and a lot of hard work and determination.
ABOUT THE AUTHOR
Sam Argon is a retired banker who loves to contribute to financial message boards in his spare time. In addition, Sam has written information about www.filingforbankruptcyonline.com - a website offering information and resources for people who are thinking about declaring bankruptcy.
Below are some tips to help you reestablish your credit after filing for bankruptcy.
1. Learn to live within your financial means. Spend your money wisely and do not buy luxury items that are not a necessity for living! This is an important lesson to learn and it will be hard to talk yourself out of some of those luxury purchases but you will thank yourself later.
2. Apply for a secured credit card and be sure to repay on time! This will reflect positively on your credit report and help you to start a new and on time paying credit history. Try not to jump right back in and get a card with a high deposit amount, start out small and progress forward.
3. Open a new checking and/or savings account. Lenders will take this into consideration when determining if you are responsible enough to lend money too.
4. This one can be trick, but see if you have a friend or relative that will cosign on a credit card or small loan with you and then be sure to make all the payments on time. This will help to reestablish good credit and an on time payment history.
5. When applying for new credit, try to start with a gas card or store credit card – these are items you would normally pay for in cash but now you can pay the bill monthly to reestablish credit. This may be a wise choice as to not give yourself extra credit on items you may not need right now!
6. Payday loans should always be a last resort and avoided at all costs if at all possible! The interest rates are extremely high and they can easily become a bad credit trap after all your hard work.
7. Lastly, pay all your credit card and utility bills on time!
These few small tips will help you to reestablish your credit history after surviving your bankruptcy. Don’t give up hope, it is possible but it will take timeFeature Articles, effort and a lot of hard work and determination.
ABOUT THE AUTHOR
Sam Argon is a retired banker who loves to contribute to financial message boards in his spare time. In addition, Sam has written information about www.filingforbankruptcyonline.com - a website offering information and resources for people who are thinking about declaring bankruptcy.
Credit Repair: The Power of Post Bankruptcy Cleanup
Have you had a bankruptcy discharged? Chances are that you still have derogatory information lingering on your credit report. This is not necessary. Credit repair expert Jim Kemish discusses the benefits of a post-bankruptcy cleanup.
Your Post Bankruptcy Credit Report
Have you had a bankruptcy discharged? If you are like the vast majority of our post-bankruptcy customers you still have damaging derogatory information lingering on your credit report. This is not necessary. Once your bankruptcy is behind you it is time to take action. The law and the credit bureaus (believe it or not) are on your side. Take advantage of the opportunity. An intelligent effort will pay significant dividends.
The Post Bankruptcy Cleanup
Most people don't realize that the derogatory information associated with each of the discharged items can be removed by the credit bureaus upon request. This includes late payments that occurred on the discharged accounts, charge off and collection status notices, and past due balances. This information has an enormous impact on your credit scores. It is your right to have it removed. On the other hand, a public record of your discharged bankruptcy will appear on your report for many years, but has relatively little impact on your credit.
The Life Span of a Bankruptcy
Once you have had a bankruptcy discharged a line item will appear in the Public Records section of your credit report. This single line item will include your filing and discharge dates, and is likely to linger for the full duration allowed by law. This reporting period will vary based on the type of bankruptcy that you elected. The Fair Credit Reporting Act, also known as the FACT Act is the specific law that controls credit reporting (see section 605). The law states that credit reporting agencies must cease reporting of Chapter 7 bankruptcies ten years after the date the bankruptcy case is filed. Chapter 13 bankruptcies are treated differently and must be removed from your credit after 7 years.
The Two Year Effect
This single line item should not concern you! The presence of a bankruptcy on your credit report means little or nothing after two years have elapsed. This might surprise you. Many of the people that we speak to are under the false impression that after a bankruptcy you are destined to have bad credit for many years to come. This should not be the case. If you make the effort to clean up and rebuild your credit after your bankruptcy you should suffer little or no ongoing impact.
Planning for a Mortgage
In the credit repair business we are often contacted by people that would like to get their credit in shape for a potential mortgage application. This is very smart. You do not need any unnecessary derogatory items on your report when you are applying for a mortgage. As a matter of potential interest, Fannie-Mae offers its lowest interest rate mortgage programs to borrowers two years after a bankruptcy discharge (subject to other qualification of course). The real issue that plagues consumers is not the bankruptcy, but the unnecessary lingering derogatory items on the discharged accounts.
Credit Bureaus Can Be Stubborn
In spite of the fact that the credit bureaus are required to comply with a request to remove prior derogatory information they are typically slow to cooperate. A bankruptcy attorney will often submit a request to the bureaus to remove derogatory information. The majority of these requests are ignored or only partially completed. And so, in a terribly large number of cases old information will linger for up to seven years depressing the consumers credit score and making it impossible for them to get credit.
What to Do
Anyone who has attempted credit repair on their own is aware that the experience of dealing with the credit bureaus can be frustrating. An effective post bankruptcy cleanup can be done if you are just a little bit patient. Would you like some advice? I suggest that you keep your communications as terse as possible. Many people succumb to the temptation to tell their story to the credit bureaus. Do not ever, everFree Articles, ever include an explanation of your credit issues.
Minimize Your Communication
The people who work for the credit bureaus and process these requests are allowed to disregard your request if they feel that it is frivolous. I know that there would be nothing frivolous about your personal story. But every single extra bit of information that the clerk has to get through before they get to the essential documentation increases the possibility that you will get thrown in the “frivolous” category. Keep your communication to an absolute minimum. They will appreciate it and you will be rewarded with success.
ABOUT THE AUTHOR
Jim Kemish is the president and founder of Power Mortgage, a Florida mortgage company based in Delray Beach, Florida. Power Mortgage Corp was established in 1989 and serves the states of Florida, Georgia, Massachusetts, and Virginia. Jim is also the President of Sky Blue Credit, a national credit repair business. For great credit and mortgage tips visit the Florida Mortgage Blog. You'll be glad you did!
Your Post Bankruptcy Credit Report
Have you had a bankruptcy discharged? If you are like the vast majority of our post-bankruptcy customers you still have damaging derogatory information lingering on your credit report. This is not necessary. Once your bankruptcy is behind you it is time to take action. The law and the credit bureaus (believe it or not) are on your side. Take advantage of the opportunity. An intelligent effort will pay significant dividends.
The Post Bankruptcy Cleanup
Most people don't realize that the derogatory information associated with each of the discharged items can be removed by the credit bureaus upon request. This includes late payments that occurred on the discharged accounts, charge off and collection status notices, and past due balances. This information has an enormous impact on your credit scores. It is your right to have it removed. On the other hand, a public record of your discharged bankruptcy will appear on your report for many years, but has relatively little impact on your credit.
The Life Span of a Bankruptcy
Once you have had a bankruptcy discharged a line item will appear in the Public Records section of your credit report. This single line item will include your filing and discharge dates, and is likely to linger for the full duration allowed by law. This reporting period will vary based on the type of bankruptcy that you elected. The Fair Credit Reporting Act, also known as the FACT Act is the specific law that controls credit reporting (see section 605). The law states that credit reporting agencies must cease reporting of Chapter 7 bankruptcies ten years after the date the bankruptcy case is filed. Chapter 13 bankruptcies are treated differently and must be removed from your credit after 7 years.
The Two Year Effect
This single line item should not concern you! The presence of a bankruptcy on your credit report means little or nothing after two years have elapsed. This might surprise you. Many of the people that we speak to are under the false impression that after a bankruptcy you are destined to have bad credit for many years to come. This should not be the case. If you make the effort to clean up and rebuild your credit after your bankruptcy you should suffer little or no ongoing impact.
Planning for a Mortgage
In the credit repair business we are often contacted by people that would like to get their credit in shape for a potential mortgage application. This is very smart. You do not need any unnecessary derogatory items on your report when you are applying for a mortgage. As a matter of potential interest, Fannie-Mae offers its lowest interest rate mortgage programs to borrowers two years after a bankruptcy discharge (subject to other qualification of course). The real issue that plagues consumers is not the bankruptcy, but the unnecessary lingering derogatory items on the discharged accounts.
Credit Bureaus Can Be Stubborn
In spite of the fact that the credit bureaus are required to comply with a request to remove prior derogatory information they are typically slow to cooperate. A bankruptcy attorney will often submit a request to the bureaus to remove derogatory information. The majority of these requests are ignored or only partially completed. And so, in a terribly large number of cases old information will linger for up to seven years depressing the consumers credit score and making it impossible for them to get credit.
What to Do
Anyone who has attempted credit repair on their own is aware that the experience of dealing with the credit bureaus can be frustrating. An effective post bankruptcy cleanup can be done if you are just a little bit patient. Would you like some advice? I suggest that you keep your communications as terse as possible. Many people succumb to the temptation to tell their story to the credit bureaus. Do not ever, everFree Articles, ever include an explanation of your credit issues.
Minimize Your Communication
The people who work for the credit bureaus and process these requests are allowed to disregard your request if they feel that it is frivolous. I know that there would be nothing frivolous about your personal story. But every single extra bit of information that the clerk has to get through before they get to the essential documentation increases the possibility that you will get thrown in the “frivolous” category. Keep your communication to an absolute minimum. They will appreciate it and you will be rewarded with success.
ABOUT THE AUTHOR
Jim Kemish is the president and founder of Power Mortgage, a Florida mortgage company based in Delray Beach, Florida. Power Mortgage Corp was established in 1989 and serves the states of Florida, Georgia, Massachusetts, and Virginia. Jim is also the President of Sky Blue Credit, a national credit repair business. For great credit and mortgage tips visit the Florida Mortgage Blog. You'll be glad you did!
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