BANKRUPTCY UPDATES

• Study Says Cancer Patients More Likely File Bankruptcy (May 17, 2013)
• Investment Bank Ledgemont Capital Files for Chapter 7 Bankruptcy (May 10, 2013)
• Vacuum Manufacturer Oreck Files for Chapter 11 Bankruptcy Help (May 13, 2013)
• Gay Couple Makes History by Filing for Joint Bankruptcy Help (May 06, 2013)
• Chain of Popular Portrait Studios Files for Chapter 7 Bankruptcy (May 03, 2013)

Avoid Credit Repair Scams

Protect Your Credit after Filing Bankruptcy

In 2005, the Federal Trade Commission (FTC) issued a Consumer Alert entitled: Credit Repair: Help Yourself First. The main purpose of the alert was to let consumers know that statements like "We can erase your bad credit-100% guaranteed" or "Create a new credit identity-legally" were, quite simply, lies.

When you're in a tough financial position, either trying to avoid bankruptcy or trying to rebuild your financial life after bankruptcy, the kind of results offered by credit repair scammers may seem irresistible. Credit repair agencies know that, and they prey on it, catering to people they expect to be too stressed out or desperate to question them carefully, examine the paperwork, and make good decisions.

In early 2006, the FTC joined with the U.S. Postal Inspection Service and eight state law enforcement agencies to crack down on 20 credit repair operations that claimed they could remove negative information from credit reports even if the information was accurate and timely. That particular credit repair agency was ultimately ordered to pay more than $322,000, but many others are still operating with the same fraudulent promises.

Common Credit Repair Scams

The FTC offers this advice for avoiding credit repair scams:

• Do not work with a company that wants you to pay for credit repair services before they have provided services-that's illegal
• Don't work with a company that won't tell you your legal rights or explain what you can do on your own
• Don't work with any credit repair company that tells you not to contact a credit reporting company directly
• Avoid a company that suggests disputing all of the information on your credit report, whether or not it is accurate
• You cannot legally create a new "credit identity"; if you follow illegal advice and commit fraud, you may be charged with a crime

Credit After Bankruptcy

The good news, though, is that the primary selling point credit repair companies can use with post-bankruptcy clients is that filing bankruptcy stays on your credit report for ten years. They may imply that this means you won't be able to get credit for ten years, but that's simply not true. Your bankruptcy will appear on your credit report for ten years, and no credit repair company can change that. However, the impact of the bankruptcy on your credit score and on lender decisions decreases steadily as time passes and you create a positive payment history. With discipline and good planning, you can typically rebuild your credit within 18-24 months after bankruptcy.