Posts Tagged ‘credit’

Dispute Negative Entries on Your Credit Report

Aug 14, 2011 • No Comments • Personal Finance

The law allows you to request an investigation of information on your credit report that you feel may be inaccurate, incomplete or outdated.  No one can legally remove from a credit report accurate negative information, such as bankruptcy, tax liens, judgments or child support.   However, it is perfectly legal to request an investigation of any item on your credit report. There is no charge to you for requesting an investigation.

Inspecting Your Credit ReportIf the credit bureaus cannot verify the information on your credit report, they must remove it.  Under the Fair Credit Reporting Act (FCRA), credit bureaus have 30 days to get back to you with the results of an investigation on your dispute. If you do not hear from them, within 30 days, they must remove the item from your report.

The first step is to review the information on your credit reports. Every person gets one free credit report once a year from each of the three major credit bureaus — Equifax, Experian, and TransUnion.  You can obtain your credit reports at http://www.annualcreditreport.com.  The credit bureaus often have different information, so you should carefully review the information on all three reports before deciding which entries to dispute. Don’t ignore mistakes, thinking that they will be automatically removed. It is up to you to dispute incorrect or outdated information.

Once you have thoroughly reviewed the information in your credit reports, follow these five steps:

1.  Send a letter to the credit bureau. Be as specific as possible about the disputed item. You should send the letter via certified, return receipt mail.  Include a copy of your credit report with the disputed information highlighted.

2.  Send a demand letter. If the credit bureau does not verify the disputed item within 30 days, send them a letter explaining that the bureau has exceeded the statutory 30-day investigation period and requesting that they remove the item from your credit report. Include a copy of your original dispute letter,  and a copy of the return receipt.

3.  Send a second demand letter. If the credit bureau does not respond within 15 days, send a second demand letter. Say that 45 days have passed since you filed your original dispute and renew your demand that the disputed item be removed. Include copies of the original dispute letter, return receipt and original demand letter.

4.  File your dispute directly with the original creditor. The Fair Credit Reporting Act requires the creditor to verify disputed information within 30 days. Ask for written proof, including account statements, and ask the creditor to request removal the item from your credit report with the credit bureaus.

5.  Add a 100-word statement to your credit file. If a disputed item is verified by the credit bureaus and the negative information remains on your credit report, you can add a 100-word statement explaining the item.

Once the investigation is complete, the credit bureau will provide you with the results, along with a free copy of your credit report if the dispute resulted in a change. You can request that the credit bureau send a correction notice to any company that accessed your credit report within the past six months.  If you are dissatisfied with the results, you have the legal right to sue a credit bureau or creditor that violates the Fair Credit Reporting Act. Filing a lawsuit is time-consuming and expensive, however, so it should be a last resort.

A couple of hints and tips:

    • ALWAYS dispute each item in a separate letter. Always include your name, address, and Social Security number for verification.
    • ALWAYS dispute your negatives with the credit bureaus first because as many as 20% of all dispute items will drop off your report after the first dispute.
    • ALWAYS fully document your efforts and never send original documents, only copies.  Keep everything in a single file.
    • NEVER dispute any item at the website of the credit bureau.  You will not have any written records of your dispute (e.g., return receipts), and you are making it much easier for the creditor to respond. Moreover, you will not be able to send documentation supporting your dispute.

If your credit report is in really bad shape, and contains many negative items, don’t expect a quick fix. The process repairing your credit will take time, often from 6 months to a year. Be persistent.

Here are the addresses for the three major credit bureaus:

Equifax
P.O. Box 7404256
Atlanta, GA  30374

Experian Dispute Department
P.O. Box 9701
Allen, TX  75013

TransUnion Consumer Solutions
P.O. Box 2000
Chester, PA  19022

Your credit report says a lot about you and your credit history. The process of cleaning up your credit report may seem overwhelming at first, but if you take it step by step, over time you will find your creditworthiness improving. And that is definitely worth the effort.

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Top 10 Myths About Bankruptcy

Jun 17, 2010 • No Comments • Bankruptcy

If you are considering filing bankruptcy, consult with an attorney to help you understand your options.   Filing bankruptcy in DC is not a decision to be taken lightly, however bankruptcy is often unnecessarily dreaded for all of the wrong reasons.  It’s time to dispel a few myths. 

Myth #1:
You will lose everything you own. 

In most cases, you will be able to keep all of your property.  Both the District of Columbia and Virginia have “exemption” laws that allow you to protect your assets, such as your house, car, qualified retirement plans, household goods and clothing.  The government is not going to sieze and sell everything you own.  In fact, most people keep everything they have.  If you have a mortgage or a car loan, you can keep those as long as you keep making the payments.

Myth #2:
Everyone will know you filed for bankruptcy.

Bankruptcy is public record, but unless you are a very prominent person or a major corporation and the media gets word, only your creditors will be notified that you have filed bankruptcy.  Newspapers in D.C. and Virginia do not carry bankruptcy filing information, except in large Chapter 11 (business) cases. 

Myth #3: 
Filing for bankruptcy hurts your credit for 10 years.

A bankruptcy will stay on your credit report anywhere between seven and 10 years.  However, you can start rebuilding your credit immediately after your bankruptcy is discharged.  Fore more about this, read my article Repairing Your Credit After Bankruptcy. 

Myth #4:
If you are married, both spouses have to file. 

Whether you and your spouse file together or separately depends on who owes the debt.  Any spouse who is a signor on a debt is liable for the debt.  If there are debts that a married couple wants to discharge on which they both signed, they will need to file together.  Otherwise, the creditors may be able to collect from the spouse who does not file.  It is common, however, for just one spouse to owe a significant amount.  In that case, only the spouse who owes the debt will need to file.

Myth #5:
Creditors can still harass you if you file for bankruptcy.

Once you file for bankruptcy protection, the Automatic Stay takes effect, and creditors are absolutely prohibited from contacting you for any reason – no calls, no letters, no bills.  Once your bankruptcy is complete and you have received a Discharge Order, your creditors can no longer attempt to collect against the debts in any way.  They are required to report the debt to credit bureaus as satisfied or discharged.  In short, a bankruptcy discharge entirely eliminates your personal liability on all discharged debts.

Myth #6:
You can only file for bankruptcy once. 

While you can file for Chapter 7 bankruptcy only once every eight years.  The wait between Chapter 13 bankruptcies is only two years.  You may file a Chapter 13 bankruptcy immediately after a Chapter 7 discharge.  There are many valid reasons for multiple bankruptcy filings, but you should consult with your attorney to determine what options are best suited to your situation.

Myth #7:
You can max out all your credit cards before filing the bankruptcy. 

Taking out personal loans, or maxing out your credit cards, just before filing for bankruptcy is called bankruptcy fraud, and it is easily detected.  There are two possible results from running up your debt before filing.  First, your other eligible debts may be discharged, however you will have to repay the entire balances of the cards (or loans) that you used immediately prior to filing.  And second (and much worse) the court may simply dismiss your case.  Neither option is very palatable.  The trustee assigned to your case will review all your purchases leading up to your filing, as will your creditors.   

Myth #8:
You will never get credit again. 

Actually, bankruptcy will improve your debt-to-asset ratio dramatically, and as a consequence you will seem quite attractive to creditors.  Within three months of filing a Chapter 7 bankruptcy, you will likely be bombarded with credit cards offers.  You may be offered very high interest rates at first, but over time, you will receive the same rates as everyone else.

Myth #9:
All debts are eliminated by a Chapter 7 bankruptcy. 

Unfortunately, many debts cannot be discharged by a Chapter 7 bankruptcy.  Child support, alimony, student loans, DUI restitution, back taxes, and debts incurred as the result of fraud are generally not eliminated by the bankruptcy.

Myth #10:
Only deadbeats file for bankruptcy. 

If you are living paycheck to paycheck and never getting ahead, then bankruptcy may be the most responsible choice you can make.  Many people file bankruptcy after a life-altering event, such as the loss of a job, a divorce, or a serious illness.  Falling further and further behind is not going to help you, and it’s not going to help your creditors, either.  Over a million people filed for bankruptcy protection in 2009, and the number is predicted to be larger this year.  Bankruptcy is a legal way to help hard-working people with a financial fresh start.

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Top Ten Movies About the Economic Crisis

May 3, 2010 • 2 Comments • The Economy

Understanding how the economy got to where it is today is no easy task.  Elizabeth Warren, Harvard Law Professor and supersmart economic wonkette, succinctly summarized the frightening state of our economy today:

Tens of millions of once-secure middle class families now live paycheck to paycheck, watching as their debts pile up and worrying about whether a pink slip or a bad diagnosis will send them hurtling over an economic cliff.

Most people intuitively understand this without Warren’s extensive study of economics.  But how did we get here, and how will we pull ourselves out?  For those who want to learn more about the history and future of the American economy, the following films will take you a long way.

TOP TEN MOVIES ABOUT THE ECONOMIC CRISIS

1.  In Debt We Trust

Danny Schechter’s documentary explores “financialization,” or the powerful emergence of a debt-and-credit industrial complex.  Middle-class Americans are likely modern-day serfs to the credit card and mortgage industries.  Examining the relationship between Congress and the credit complex, this film asks whether we should be tearing down all of our factories and replacing them with shopping malls.

2.  Capitalism: A Love Story

An entertaining docu-romp by Michael Moore explores the disastrous impact of corporate dominance on the everyday lives of Americans.  Elizabeth Warren (yes–I’m a huge fan) is featured on one of the bonus tracks, “How Wall Street Got Away with Murder.”  As she says, “Responsibility is not just about blame.  Responsibility is about making sure we fix this, and it will not happen again.”  Unfortunately, Moore seems more concerned with blame, and often tends toward oversimplification/histrionics.  Still, the film’s looks at personal aspects of the subprime mortgage meltdown is at times heart-wrenching.

3.  I.O.U.S.A

Patrick Creadon’s film follows former U.S. Comptroller General David Walker as he explains to Americans their elected leader’s unsustainable fiscal policies.  The film contains absolutely stunning visual demonstrations of otherwise dry economic statistics.  The Bush-baiting is a bit dated, but the excellent visual depictions of stagflation and the trade deficit make this film well worth your time.

4.  The Ascent of Money

British historian Niall Ferguson explores in four one-hour sections the dual relationships between money and empire, war and revolution.  Section One, From Bullion to Bubbles: Fibonacci’s contribution to financial calculations, the Medici’s usurpation of Italian Jews as money-lenders, war as “the father of the bond market,” and the Dutch invention of the corporation.  Section Two, Bonds of War: John Law’s Ponzi scheme leads to the French Revolution, the effects of war and peace on bonds, the first modern “property crash,” and the rise of a middle class.  Section Three, Risky Business: the birth of modern insurance industry, Japan as a welfare state, the economy of Chile under Pinochet, personal retirement accounts, and how George Soros short-sold the Bank of England.  Section Four, Planet Finance: the invention of the “property-owning democracy,” the ethnicity-credit nexus, the savings and loan bust, financial deregulation under Ronald Reagan, the IMF and the World Bank, “subprime nations,” microfinancing, and China as banker to the United States.

5.  Maxed Out: Hard Times, Easy Credit and the Era of Predatory Lenders

The raw truth is that credit card companies flood our mailboxes with four billion credit card offers each year.  James Scurlock’s documentary brings into sharp focus the tragic consequences for individuals who find themselves overextended.  One collection agent from the film: “You’re like this pirate on a pirate ship, and you’re walking them out on the plank.  And you want them just as far as you can get them out on that plank without pushing them off.”  The tagline of the film: “Nothing is Priceless.”

6.  Frontline: The Warning

Michael Kirk’s PBS documentary explores the high-stakes fight between Brooksley Born, head of the Commodity Futures Trading Commission, and former Fed Chairman Alan Greenspan.  Henchmen Robert Rubin and Larry Summers play prominent roles here.  Illuminating the struggle between regulation and laissez-faire on the battleground of OTC derivatives, Born describes derivatives as a “black box.”   In Washington there are five financial lobbyists for every congressman.  Want to see high-stakes Washington fireworks fly?  UPDATE 6/14/2010: See “Do the Math: The Role of Derivatives in Fiscal Fallout” in the June 2010 Washington Lawyer for more information about Born.

7.  American Casino

Leslie Cockburn’s film delves even more deeply into the subprime mortgage meltdown.  The film basically posits that the major mortgage companies preyed upon the lower and middle classes to the eventual detriment of all homeowners.  Former Bear Stearns and S&P employees provide insight into how the mortgage companies profited by putting families into homes they could not afford.  Some of the devastated, all-American neighborhoods in the film distressingly resemble actual war zones.

8.  We All Fall Down: The American Mortgage Crisis

The mortgage crisis also led to a sudden halt of business and personal lending.  Gary Gasgarth’s documentary features an vertitble army of mortgage brokers, appraisers, bankers, and scholars who expose how the “mortgage machine” was able to securitize subprime mortgages.  The film concludes with the sobering possibility of the impact of the mortgage crisis on the American economy.

9.  Capitalism Hits the Fan

A lecture by Professor of Economics Richard D. Wolff that asserts that the crash of October 2008 defies categorization as a “usual” economic downturn.  A socialist, Wolff believes that “the businesses of America ought to be operated and run by the workers who work in them.”  I am not a socialist, and I do not agree with many of Wolff’s assertions, but he does make several interesting points, especially with regard to the historic instability of capitalism, and the “vast diminution of confidence” in the economy that has apparently taken root in the younger generations of America.

10: The Story of Stuff

Although focused less on the economy than on the promotion of environmental sustainability, this short film by Annie Leonard is included here for its examination of the roles of governments and corporations in our economy.  An exploration of the “materials economy,” or the linear system of extraction, production, distribution, consumption, and disposal.  Surprising: on average Americans are exposed to about three thousand advertisements a day.

ABOUT THE AUTHOR

Brian V. Lee is a bankruptcy lawyer in Washington, D.C. and Virginia.  Lee Legal is a debt relief agency as defined by Section 528(a)(4) of the Bankruptcy Code.   We help people file for relief under the Bankruptcy Code.  Call (202) 448-5136 or visit http:/www.lee-legal.com for more information.

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Repairing Your Credit After Bankruptcy

Apr 28, 2010 • 2 Comments • Bankruptcy, Personal Finance

If you are considering filing for bankruptcy protection, you have likely considered what effect it will have on your future finances.  After all, bankruptcy is a matter of public record, and the bankruptcy will remain on your credit report for 10 years.  In addition, your credit score will take a major hit when you file.  Reality check: it won’t be as bad as you might think.

The first few months following your bankruptcy filing will be the hardest.  Most lenders run a credit check and will see your bankruptcy, making obtaining financing or credit more difficult.  The older the bankruptcy becomes, the less effect it will have on your credit.  In fact, the impact of the bankruptcy on your credit score will begin to diminish immediately after your case is closed.   The more committed you are to rebuilding your credit, the more quickly it will improve. 

GET A CREDIT CARD

Ironically, the very best way to go about repairing your credit after a bankruptcy is to obtain new lines of credit.  Potential lenders’ reasoning is this: the worse your credit history, the more you need access to open credit lines to demonstrate that you are a trustworthy borrower.

Most of my clients begin receiving credit card offers almost immediately after their bankruptcies are finished.  If you cannot obtain an unsecured credit card, however, you should take out a secured card.  Secured cards are like prepaid lines of credit, and will allow you to book hotel rooms, purchase airline tickets, and travel without cash.  In addition, many secured card lenders punctually report timely payments to the three major credit bureaus.  This will give your credit score a big boost, making it easier to get an unsecured card or a line of credit down the road. 

While credit cards are one of the best ways to repair credit after bankruptcy discharge, you must pay your credit card balances entirely, on time, every month.  Even one late or missed payment will set you back significantly. 

GET AN AUTO LOAN OR MORTGAGE

Car loans usually become possible after about a year from your bankruptcy discharge.  The rates are  usually not very attractive, but these will improve the longer you wait after your bankruptcy case is closed.  Mortgage loans are usually possible after two years from your bankruptcy discharge.  With either auto loans or mortgages, be sure to shop around for the best rates.

MONITOR THE CREDIT BUREAUS

Approximately four months after you receive your bankruptcy discharge, you should run your credit reports to ensure that they are accurate.  After all, your goal post-bankruptcy is to boost your credit score quickly.  Inaccurate information on your credit report will only prolong the time it takes to score high enough for conventional credit.  You should request reports from all three of the major credit bureaus: Experian, TransUnion, and Equifax.  Carefully review all of the entries on each report.  Debts that were discharged through bankruptcy should be accurately reported along with “good items,” including accounts that were “paid as agreed” and any other accounts that you continue to pay on time that were not discharged in the bankruptcy.

If you find any discrepancies, you must contact each of the bureaus separately, in writing, and request that they change the information.  It may also help to contact the creditor and request that they report the accurate information to the bureaus.  In another four months, you should repeat the process.  Credit bureaus generally have 30 to 45 days to investigate your claim.

You can request a free copy of your credit reports once a year at http://www.annualcreditreport.com. 

BE PATIENT

If you pay your bills on time and in full every month, your credit will steadily improve.  The more time that elapses since your bankruptcy discharge and the more quickly and effectively you engage the above strategies, the quicker your credit score will recover.

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Easing the Stress of Bankruptcy

Apr 27, 2010 • No Comments • Bankruptcy

If you find yourself in an impossible financial situation and can’t see any way out, bankruptcy may be a good solution for you.  Bankruptcy can help you reduce or even eliminate your debts.  Bankruptcy also provides potent protection against creditor collection efforts and harassment.  While bankruptcy can help ease your mind financially, however, it can also cause stresses of its own.  Below we will explore some techniques to prepare you for getting through the bankruptcy process with your sanity intact.

UNDERSTAND THE PROCESS

An experience bankruptcy lawyer in D.C. should thoroughly explain to you the basic process and timeline of your bankruptcy.  A Chapter 13 bankruptcy will typically last three to five years, while a Chapter 7 bankruptcy will typically be completely administered in just three to four months.  You should remember that the effects of bankruptcy will not be with you forever.  Over time, you will not feel the effects of the bankruptcy at all.  Within the first year, you’ll begin getting credit card offers and be able to obtain car financing.  After another year, depending on your circumstances, you may even qualify for a home loan.  The bankruptcy will remain on your credit report for up to 10 years, but the impact of the bankruptcy on your credit rating and score will begin to diminish immediately after your case is closed. 

TALK ABOUT IT

For many people the idea of declaring bankruptcy is embarrassing.  You should have a close friend or family member with whom you can candidly and confidentially discuss your financial situation.  Talking about your situation is very therapeutic and can help you to identify the problem areas in your life.  A person with a different perspective on your situation can help you decide how to solve the problems you are having, and how to accept and manage the things you can’t fix.  Through discussion, you can find ways to help minimize the impact of the bankruptcy on your life. 

THINK AHEAD

You should establish a clear plan for reestablishing good credit once you emerge from bankruptcy.  You attorney can help you fashion a strategy catered to your specific situation.  Your primary objectives should be to steadily rebuild your credit and your savings.  You will want to create a budget that is both realistic and geared toward your personal financial goals.  Being debt-free is a liberating feeling.  You should consider your bankruptcy a fresh start, and an opportunity to stabilize your long-term finances.

TAKE A BREAK

Once your bankruptcy case is closed, you should plan on resetting your mental state, too.  Although you might not be in a position to take an expensive vacation, you should treat yourself to a dinner out or a special night with your friends or family.  Make some time for some activity or pastime that you find enjoyable.  Bankruptcy will help ease your mind financially, but you may need to employ several of these techniques to help you ease the stress of the process itself.

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