The last thing you have to do when it’s time to restore your credit after bankruptcy is to consider any information that has been reported post-bankruptcy. Do you have any new accounts that have been opened/active since you received your discharge of debt? Make sure that any new accounts and/or new collection accounts that appear after filing are reporting accurately.
Step Six: Negative Reports Post-Bankruptcy
For this section of the tutorial, it’s a good idea to understand what makes a collection account. When does an account turn into a collection account?
When a creditor decides that they are not going to receive payment on an account, they “charge off” the account. In most cases, charging off the account means that the entire account (and the balance of debt owed) is sold to a collection agency. The collection agency will then assume the debt and attempt to collect payments or a lump sum payment to pay it off in full from the responsible party or parties.
In many cases, collection agencies that assumed the debt around the time of your bankruptcy do not receive the information regarding your filing. Due to the timing, the original creditor may have been notified that the debt was being included in your bankruptcy and the new “owner” of the debt has no idea. This can leave negative information reporting to your credit report post-bankruptcy that was actually discharged. Collection agencies that assumed the debt from your original creditor could continue to report the account delinquent to your credit report even though you have filed for bankruptcy and received your discharge of debt.
In this type of situation, regardless of when the collection agency makes the negative report to you credit, the seven-year clock to have it removed begins from the date you filed bankruptcy. It does not depend on when the collection agency posts to your credit report.
If you have questions about how to get started restoring your credit post-bankruptcy we hope you feel comfortable contacting our experienced southern California bankruptcy attorneys at Westgate Law.