3 Things You Need to Know about Bankruptcy
It doesn't take much to find yourself drowning in debt. If you've reached that point, bankruptcy may be the best way for you to get out from under the debt. Once you file for bankruptcy, you can get a fresh start and begin rebuilding your credit. That is, unless your creditors refuse to update your information. If that happens, you can be stuck with bad debt and a bankruptcy on your credit report. Here is some information you need to know if you're about to file bankruptcy.
How Creditors Should Report Your Accounts
When you file for bankruptcy, all your debt is including in the filing. Your creditors are informed and attempts to collect on the debt must stop until the bankruptcy is discharged. Once your bankruptcy is discharged, your creditors are informed and your debt is forgiven. This is where your credit report should change.
As soon as your debt is discharged through bankruptcy, you are no longer required to repay that debt. Your creditors should then report your accounts as one of the following:
- Account closed with zero balance
- Discharged
- Included in bankruptcy
Your creditors are prohibited by law from reporting your discharged debt as delinquent, or an outstanding balance.
How You Can Prevent Errors
Your bankruptcy is going to stay on your credit report for 10 years. That alone is going to make it difficult for you to obtain credit. Having errors on your report will make it that much harder to get the fresh start you need. You can prevent errors by monitoring your credit report. Once your bankruptcy has been discharged, order updated credit reports from the three main reporting agencies—Equifax, TransUnion, and Experian.
Make sure that each of your discharged accounts are properly reported. It's also important that you look for new accounts, or old accounts with new account numbers. In some cases, creditors will sell your debt or change the account numbers in an attempt to get you to pay for debt you're no longer responsible for.
What You Can Do to Correct the Problem
If you find errors on your credit reports, you need to file a dispute as soon as possible. Be sure to dispute the accounts with each one of the credit reporting agencies. If the creditors refuse to update the information, you should contact your bankruptcy attorney as soon as possible. It's also a good idea to sit down with a consumer credit advocate. They can help you through the legalities of forcing a creditor to update your credit report.
Bankruptcy can give you the fresh start you need to regain your financial security. The tips provided above will help you avoid additional financial problems once you file for bankruptcy. Click here for more information about bankruptcy.