Credit Recovery – Phase II: During Your Bankruptcy Case

What To Do To While Your Bankruptcy Is Open

To Improve Your Preparation For Credit Recovery?

Phase II – During Your Bankruptcy

So your case is filed. Congratulations!! If what you did in Phase I can be considered “warming up” for credit recovery then Phase II, “What To Do During Bankruptcy”, is like double-checking the preparation list before the race or big celebration.

As you already know, your bankruptcy hearing will be approximately 30 days after the filing of your case. In the case of a Chapter 7, you will received your discharge in about an additional 60 to 90 days at which point Phase III, the most important credit recovery portion, starts. In the case of a Chapter 13, you do not receive the discharge until you complete the 3 to 5 year repayment plan, however, once your Chapter 13 plan is confirmed you can start Phase III to improve your credit score.

What you do while your bankruptcy is active is also essential to preparing and accelerating a successful credit recovery. Here are my top three recommendations.

1) Make sure any reaffirmation on vehicles ,which are required to retain a vehicle, is executed within 60 days of filing. Reffirmations will help your credit if you stay current with the payments by having the car company continue reporting positively on your credit report. This reporting is one of the easiest credit reporting tools to get in place early to help your credit recovery. Don’t keep a bad vehicle loan just for the reporting advantage, so think seriously about where you should keep a vehicle loan with a high interest or where the vehicle is in poor condition. There are other ways to accomplish positive credit reporting.

Tip – Learn to shout “No”. Saying yes to children, family and friend is a bottomless pit. At the bottom is your empty pockets and future financial stress. I cannot tell you how often clients have patted themselves on the back for supporting or loaning to relatives at meetings were we are discussing bankruptcy. Do not be a lender. Make the friend or relative responsible for their decisions. They can be my client instead of you that way I can send these 40 tips so the learn not to be tempted to impose on you financially again.

2) Use the bankruptcy processing time to educate yourself on the recovery tricks of the trade. Credit recovery is a life-time commitment that you should embrace before, during and after your bankruptcy case is completed. You have been given a great opportunity – a credit “do-over”. Use it wisely.

Suggestion – Try a revolutionary approach: “No new purchases for one year”. What does it really feel like to do without? Will you die if you don’t get that new watch or earrings? Will those heels really make you look thinner? Habits are the hardest thing to establish and the hardest think to break. If you can find bliss in choosing not to be a consumer you will rejoice in the satisfaction of having savings.

3) Pull your credit report 60-days after filing your case to review and insure that all creditors have discontinued reporting. It is not a requirement that creditors notate that the account was filed in a bankruptcy although many do. It is just a requirement that they discontinue the reporting. Check to make sure all reporting stopped the month your case was filed. Any continued reporting needs to be addressed. Call the creditor. Send the notice of filing you received from our office. Request confirmation that the reporting will be updated.

If creditors you listed are reporting after the time you filed your bankruptcy this is not only a violation of your bankruptcy automatic stay and possibly your bankruptcy discharge but it is also a violation of the federal Fair Credit Reporting Act. Notify us if you find this occurring. It could mean money in your pocket.

4) Pull your credit score again at the 60-day mark. Go back to the free Credit Karma account you set up in Phase I. You should see a small improvement in your score. YES!!…an improvement. Fill out the form below. We are keeping track with you. You will not be able to proceed to the most important “phase”, the post-bankruptcy recovery phase, without providing this score. So take a minute to pull it and complete the form below. You will be happy you did.

Pat Yourself On Your Back You should be seeing the first signs of the success of the program.

Phase III – After Your Bankruptcy