How to Improve Your Credit Score After Bankruptcy-Part 4

Debts incurred after you file your case are not discharged. 

1. Debts incurred after your bankruptcy filing are not usually discharged so pay them timely.
2. Don't Ignore small debts. Even small unpaid balances that are in collection or charged off can drastically hurt your credit. Don’t ignore them or think they will go away. 
3. Pay off small balances in full that have accrued since your filing
4. Negotiate with creditors on debts too large to pay off. Try to get them to take 25%-50%. If they won’t agree to that, try to get an agreed payout of a flat amount per month like $50-$100. 
5. If you reach a negotiated settlement make sure it is put in writing and it is agreed that the creditor will delete the reporting once the agreed settlement is paid, or reported as “Paid As Agreed” or “Negotiated Settlement” with a balance of -0-.
6. Student loans and taxes often are not discharged and must be addressed. Consolidate student loans or get them deferred. Once you do that make sure the creditors involved remove and adverse reporting. If they won't, then dispute it.
7. Work out an installment agreement with IRS if you can’t pay the full amount immediately. That can usually be done with a telephone call or a meeting at your local IRS office. Don't let them file a federal tax lien. That will do great damage to your credit. If one is filed, get it released once the agreement is in effect.
8. If the amount of taxes is so high you could never pay it, try an offer in compromise. You’ll probably need a lawyer of accountant to help you with this, but if you qualify you could save a lot of money and avoid having a federal tax lien messing up your credit.
9. Child support won’t be discharged so keep it current and work out a payout on past due sums if they weren’t dealt with in your bankruptcy. Past due child support really looks bad on a credit report, so get it paid off as soon as possible.

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Common Mistakes Made by Bankruptcy Filers and Their Attorneys - #8

  8. Laziness can lead to disaster for bankruptcy filers.

We all have a lazy streak in us. It's just human nature. We want to get a job done with the least amount of effort. The attorney, who may have filed hundreds or even thousands of bankruptcies, begins to see them as routine or fitting into a common mold. So he begins to assume facts or take the word of the client rather than confirm them on his own. To do a bankruptcy correctly takes a lot of time and effort. Many times it may seem like a thorough review of every pay stub, bank statement, loan document or tax return is  a waste of time, but often this diligent scrutiny pays off and a serious problem can be dealt with rather than left to chance. 

Clients are lazy too. They hate to dig back through their records, if they even have any, to get the information needed to properly fill out the bankruptcy schedules. They often figure that if they don't have a record of it, nobody else will, so they can forget about it. Unfortunately, it doesn't work that way. The debtor has an obligation to fill out the schedules completely and the burden is on him to find the records if he doesn't have them himself. This means requesting records from the bank, credit card company or the IRS. 

I am amazed at the looks clients give me when I tell them I need a complete list of all their personal property along with a fair assessment of the market value of each. They often just stare at me like I have told them they have to travel to the moon for their 341 meeting. In actuality preparing a personal property inventory shouldn't take more than an hour or two and is a handy thing to have around anyway if you ever have a fire or other casualty loss. 

Another priceless look on a client's face is when you hand him his completed petition and schedules and ask him to review them carefully. Of course, the completed petition, schedules, statement of financial affairs, matrix, and means test can be several inches thick. The reality is most clients won't have the patience to read every question and then review his answer to for accuracy and completeness. This means the attorney must sit with the client and read every question out loud to make sure he understands them and has answered them correctly.

Clients may also be reluctant to ask questions because he really doesn't want to know the answer if it means he will have to do more work or disclose things he'd rather not deal with. He mistakenly believes his ignorance will be an excuse if the facts are later discovered. In this case the attorney must observe the client carefully so he can pick up on the signs of possible omissions that might come back to haunt both of them. 

Attorneys and clients are often tired and frustrated with the complexity of a bankruptcy filing and there is often a persistent urge to ignore possible irregularities or unwanted complexities. These urges must be resisted.

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