Post Bankruptcy Instructions
Completing a bankruptcy and receiving a discharge is merely the beginning of your fresh start. There is still work to be done to repair your credit and move forward with your life.
Checklist for Post Bankruptcy Actions
1. Obtain 3-5 credit cards and/or installment contracts
- It may be tempting to avoid credit and debt in the future. We advise against this because of the infrastructural cost increases that you will experience.
- When you file, your credit score will typically drop into the 500’s or below. At this level, you will have difficulty renting and getting good rates on home and vehicle loans. This can cost thousands or tens of thousands of unnecessary dollars.
- We advise you get 3-5 non store cards from major banks. Pay them off or keep a low balance. Keep them active by charging something once every three months or the cards may be deactivated for inactivity. Avoid cards that require monthly fees or that are secured (these types do not build credit).
- Installment contracts are good to build credit but it is better to use credit cards initially to build credit to the 700 range if possible.
2. Check your credit report after discharge and dispute if necessary
- Generally most creditors are supposed to update your credit report to show any negative tradeline as discharged in bankruptcy, most do not
- After your discharge, pull your credit report
- Dispute any tradelines that do not show discharged in bankruptcy using a FCRA dispute letter
- If the creditor will not update or remove the negative tradeline within the safe harbor period, contact us and we can generally litigate for a discharge injunction violation
- We do not do the initial dispute on your credit post discharge due to the time intensive nature and to save you attorney fees for what is a simple but time consuming task
3. If you want to refinance or purchase a home, it usually requires two years after your discharge
- You may be able to do a loan modification sooner, however, refinances and new loans typically have a two year post discharge requirement.
- Check with a mortgage broker to verify as there may be programs or options we are not aware of.
4. Make arrangements for house payments with no re-affirmation
- For reasons only the 9th circuit deems appropriate, judges in the 9th circuit generally will not sign a reaffirmation agreement upon a house
- This is a pro and a con as you can avoid liability in the future but the bank will close your online account and not report on your credit (even positively)
- Generally you need to make special arrangements to pay by going in person or mailing payment in
- Some banks will allow you to use an online account but this is an uncommon arrangement
5. If any creditors contact you regarding debts that were discharged, escalate as per below
- First, let them know by phone and in writing that you received a bankruptcy discharge. It is important to do this in writing if possible and include a copy of your discharge as it proves that they are legally aware of your bankruptcy.
- Second, if they do not back off after your initial dispute, call us. We can generally litigate at this point.
6. If any creditors contact you regarding debts that were not discharged, contact us regarding your options
- Generally a court will give a creditor about 10 contacts or 1 month of continuous contact before a motion for contempt will be entertained. This is not a hard and fast rule but rather a guideline. If the contact is egregious, such as filing a lawsuit, we can act immediately.
- Our best practice recommendation is to let the creditor know in writing and verbally that you received a discharge. If that fails, call us for instructions. We typically can get involved or litigate at that point.
7. If you have an HOA/COA- stay current, even if you defaulted on the mortgage.
- Sometimes banks will not foreclose for years. While mortgage contracts and future payments under them are discharged, HOA/COA obligations after the date of petition are not
- If you would otherwise be leaving a house empty, it may be advisable to rent the unit to offset HOA/COA costs or to keep squatters out until a foreclosure occurs
8. Keep records of your petition, schedules, and discharge.
- If you ever lose your documents, contact us for free electronic copies.
- If you have any questions, call us.
