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Your Credit History: The Fair Credit Reporting Act
When you apply for a loan (or an apartment, insurance, or some jobs), your credit history will be checked to determine whether you are “creditworthy.” A credit reporting bureau compiles information from various sources – stores where you have charge accounts, the bank where you have your car loan or bank charge cards, and the like – and puts together a credit report on you. A credit report essentially is a list of your current and previous loans, credit cards, and other debts, and your record of paying them. The date each loan was made or each charge account opened is listed, as are the initial loan amounts or credit limits and the current balances of each loan or credit account. The amount of the monthly payment and other terms are shown also. Most important to the prospective lender and your credit rating are any delinquencies, including missed payments, past due accounts, whether a company has ever written off a loan, whether you have been arrested or sued, and whether you have filed for bankruptcy.
What rights do you have if your application is denied because your file at the credit bureau is incomplete or contains inaccurate information that indicates you are a bad credit risk? The Fair Credit Reporting Act protects consumers from having inaccurate, incomplete, and obsolete information about their credit histories circulated. Under the Fair Credit Act, a credit report is called a “consumer report”, and the credit agency that furnishes the report is a “consumer reporting agency”. The Fair Credit Reporting Act mandates that bad credit marks – “negative information” – can be kept on file no more than seven years, except bankruptcy, which can be reported for up to ten years. It also requires credit reporting agencies to adopt fair standards for gathering, maintaining, and reporting information concerning your credit. The Fair Credit Reporting Act applies only to consumer credit and insurance, and does not cover commercial credit or business insurance.
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Does your spouse have to file bankruptcy if you file?
No. Should your spouse file bankruptcy if you file? Maybe.
A lot depends on your situation. Are you both liable on the debts? If only one spouse is liable on all or most of the debt, then the debtor spouse can file individually, leaving enough income to pay the debts of one spouse and keeping their credit rating higher. If both of you are jointly liable on all or most debts, you should probably file together, since the attorney fees and filing fees are usually about the same whether you file jointly or individually.
If you are lucky enough to live in a community property state, only one spouse need file the bankruptcy to get rid of all the community debts. Community debts are all the debts incurred by either by either spouse during the marriage. So your solo filing can discharge your spouse’s debts, too without the necessity of that spouse’s filing.
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Suppose you filed your bankruptcy and got your discharge. Then six months later, you got a letter from a collection agency on an old hospital bill you forgot about, threatening to sue you if you don’t pay up. Too late? Maybe. This debt may not be discharged, because the creditor didn’t get notice of your bankruptcy. If you neglected to list the correct name and address of this creditor on your schedules and mailing matrix, the court couldn’t have mailed them the notice. You might be saved if you can prove that you gave other notice to the creditor, such as by telephone or better yet, in writing. No such luck? You just completely forgot about this creditor until they contacted you? Talk to your bankruptcy attorney, who can advise as to whether the courts in your district may discharge the debt anyway, or who may be able to reopen your case to include the creditor. Unfortunately, the error will probably cost you filling fees and attorney’s fees above your original filing, but will save you the amount owed.
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To repair your credit, you need to show lenders that it is safe to lend you money again. You should begin this process as soon as your bankruptcy case is over (right after the discharge in a Chapter 7 case, and after the repayment plan ends in a Chapter13). You can do many things to show you are now a good risk, but one thing you must do is make sure that your credit reports are accurate. Nothing you can do to improve lender confidence will mean much if your credit reports still show lots of overdue bills.
If you are having financial hardship and are considering filling for bankruptcy, please call bankruptcy lawyer at our office at (916) 971-8880 for a FREE confidential bankruptcy consultation.