We ask the CRA’s to re-investigate each of the creditors’ reports that were listed in the bankruptcy, to be sure they are reporting accurately. If they were discharged in bankruptcy, the balance due should be listed as zero, and there should be a notation that the account was “discharged in bankruptcy.”  This is a derogatory item on your credit report, but at least it shows a zero balance. If you don’t do this “re-investigation” or dispute process, it’s possible that the creditors will continue to report a balance due (or just not report anything new), which makes it look like you charged up debt after the bankruptcy, and didn’t pay it. That is worse.

And once it shows discharged in bankruptcy, the item must be removed in 7 years. Not only that, the older that item becomes, the less it hurts your credit score. Not sure how to dispute items on your credit reports? You can go to the web address http://www.myfaircredit.com/s/correcting-your-credit, it tells you exactly how to do it.

Most of the time, it works quite well. If a bankruptcy client pays their bills on time after filing bankruptcy, and uses credit responsibly, their credit scores can recover into the mid 600′s after one year after bankruptcy, and possibly to 700 or so after two years.

We do the credit clean-up for clients, because even though we tell them how to do it, after bankruptcy many of them just either: (1) don’t get around to it; or (2) are just too overwhelmed by going through the bankruptcy, it is just not the most important thing to them at that time. Then when they decide they have to finance a new car, or buy a house, they decide to fix their credit, but unfortunately it can take a long time to work on your credit to get it right.

If you review your credit reports once a year, you can stay on top of the situation. By law, you can obtain free credit reports once per year from https://www.annualcreditreport.com. Review the reports, and follow the instructions to dispute any inaccurate information. Not sure how to raise your credit score? You can purchase your credit scores (they are not free, like your credit reports) at www.myfico.com, and also learn what you need to do to raise your score, and what it holding you back.

If you were turned down for credit, you should receive an “adverse action notice” or similar notice, which may also include your credit score, at no charge to you. Federal law was changed to require this starting in 2011. If you want more information about this, go to http://www.scoreinfo.org.

It takes time to get your credit back, once you have had problems with it, including bankruptcy. Whatever you do, to get your credit score headed in the right direction, make a budget and live on what you make. If you can help it, don’t default on medical bills, cell phones, or other items. But of course you must prioritize your bills, so never put those types of bills ahead of truly important things like housing, transportation, and other necessities of life for your family. There are more important things than a good credit score.

If you have been a victim of violent crime in Texas, you may be entitled to a cash award from the Texas Crime Victim’s Compensation Fund. And it is flush! The total amount that it has for victimized Texans is now $1,000,000,000! That’s billion with a “B.”

You can be eligible for up to $50,000 if you are a violent crime victim in Texas, and another $75,000 if you are totally and permanently disabled.

An excerpt from the Texas Attorney General’s website reads as follows:

The Crime Victims’Compensation Program is administered by the Office of the Attorney General and is dedicated to ensuring that victims of violent crime are provided financial assistance for crime-related expenses that cannot be reimbursed by insurance or other sources.

State law requires that reimbursement first be sought from other sources, such as health insurance, Medicaid, Medicare, auto insurance, or Texas Workers Compensation. CVC program staff assists applicants in coordinating the use of all available resources.

Claims may be approved for benefits up to a total of $50,000. Individuals who suffer total and permanent disability as a result of the crime may qualify for an additional $75,000, which may be used for specific and limited expenses, such as lost wages, prosthetics, rehabilitation or making a home accessible, depending upon the law in effect on the crime date.

The financial assistance may be limited or unavailable depending on laws in effect when the crime occurred and is dependent upon the applicant providing necessary and required documentation.

For More Information

In your community, contact your local law enforcement agency’s Crime Victim Liaison or your prosecutor’s Victim Assistance Coordinator.

Or e-mail:crimevictims@oag.state.tx.us or Call (800) 983-9933 or (512) 936-1200 (in Austin) or Fax: (512) 320-8270.

The article explains that even though it is not a must to be out of debt at retirement, it is an excellent idea. I have had a number of older folks come in recently that have a lot of equity in their home, but no money to pay the mortgage.

While I’m not usually a fan of “reverse mortgages,” that is one option if you are over 62, have a lot of home equity and either can’t pay the mortgage anymore, or just need the money, and don’t want to move.

I’m shocked by the number of people that come in that are in their 60′s and have just taken out a mortgage. And they are about to retire, or they’ve already retired. What are they thinking? In some cases, the folks had sizable retirement plans until the recent stock collapse changed their plans.

I think home ownership is overrated, particularly if you are older. Who needs the headache of lawn care, pest control, things breaking, having to clean a larger place, etc. I’m for renting after you reach a certain age, and not worrying about things. You can’t take it with you!

But a lot of the debt older folks get into is credit card debt. Some borrow it to help their children. Some use it for necessary medical bills or prescriptions. Others were working, but lost their jobs and have been using the credit cards to live on, until they find that new job.

Unfortunately, for some older folks, there may not be a new job, at least one like they had. And they’ll be lucky to get health insurance. They way the health care system is now, older workers just cost too much to insure.

My advice to older folks that find themselves in debt over their head: if there is no other reasonable option, go ahead and file bankruptcy.

View from Max Gardner's Farm, No. Carolina

The American Bankruptcy Institute (ABI) reported recently that the July 2009 consumer bankruptcies reached the highest monthly total since the Bankruptcy Code was reformed in 2005, according to the records of the National Bankruptcy Research Center (NBKRC). The July 2009 total was a 34.3% increase over a year ago, and an 8.7% increase over June 2009 filings of 116,365. Chapter 13′s are about 28.3% of all consumer cases, with the rest Chapter 7′s.

Obviously, the economy is pushing a lot of people into bankruptcy, with job layoffs and downsizing. I also see a lot of medical debt and people that can no longer work because of medical issues and disability.

One prospective client that came to see me with a chronic, life-threatening disease was told by his car finance company to “go ahead and die,” so that they could repossess his car. It’s really pitiful when one human being treats another like that.

Yours truly in the law office

It may be coincidental, but I had two clients last week that are having to file bankruptcy just for medical debt.

One fellow had $90,000 in medical debt, because he was between jobs and had an accident that put him in the hospital. A big local hospital Memorial Hermann sued him and got a judgment against him for it, and he had no way to pay it back.

Another very young lady, here in this country studying at college, had to have her appendix removed, and two days in the hospital without insurance resulted in a $60,000 hospital bill, plus bills from all the doctors and laboratories that are still coming in. She may also need to file a bankruptcy, or face a lawsuit or years of debt collector calls.

I don’t know what the best answer is for this country, whether it is President Obama’s plan or something else. But something should be done so that people get the medical help they need, and the expense is covered so that they don’t have to file bankruptcy. I also don’t understand the incredible cost of medical procedures and hospital stays, but I’ll save that for another blog.