The Credit Report Confronter
Congratulations! You’ve taken an important first step by checking your credit report and identifying errors. Keep that momentum going. You have a clear action step: dispute those errors and get your credit report cleaned up.
If you don’t know how to dispute those inaccuracies, don’t worry. The Federal Trade Commission (FTC) spells out the process for you here: How to Dispute Credit Reporting Errors
After You Dispute…
A dispute may or may not result in inaccurate entries being corrected or removed from your credit report. Even when items are removed, they sometimes reappear after a few months. So, you can’t afford to dispute and move on. You must monitor the outcome of your disputes and then regularly review your credit reports to make sure those items don’t come back to life.
If the credit reporting agency doesn’t respond appropriately to your dispute, or if the creditor re-reports inaccurate information, you may have a claim under the Fair Credit Reporting Act (FCRA). Below are some resources to help you understand your rights under the FCRA and why enforcing them matters.
If You Need Help…
If you have difficulty getting your credit report corrected, you don’t have to fight the battle alone. Barshay Sanders PLLC is here to help.
Next Steps Toward Conquering Debt
Cleaning up your credit report is a great first step, and may even improve your credit score. But, if you’re struggling with debt, it’s just the beginning. You’ll also need to explore the best way to manage your debts, whether that means negotiating an agreement with creditors or exploring other options, such as bankruptcy.
If You Haven’t Talked to Creditors Yet…
Be prepared before you pick up the phone.
Every debt collector will want the maximum payment possible, but you’re looking for a solution to all of your financial problems, not just one. That means creating a plan before you ever make the first call.
- Calculate how much money you have available each month to put toward those past-due bills, and at what point in the month those funds will be available.
- Write down all of the debts you’re attempting to resolve, with full balances and past-due balances.
- As you talk to creditors and debt collectors, remember to deduct whatever you promise to one from your available funds before starting the next conversation.
- Keep detailed records of your calls, including the agreement reached, the person you talked to, the date and time, due dates, and any other pertinent information.
- Follow through on your plan! If you run into a snag and can’t make a payment, contact the creditor or collector right away to keep your agreement on track.
Learning More about Your Options…
If negotiating with creditors isn’t the answer, it’s time to explore other options. Unfortunately, there are pitfalls associated with many of the first options that come to mind. So, it’s important to educate yourself before acting.
Converting Assets to Pay Unsecured Debt
You may be tempted to cash in retirement accounts or take out a second mortgage to pay unsecured debt. But, this type of “solution” may actually put you on shakier financial ground. For example, when you take out a loan on your home to pay off credit card debt, you transform unsecured debt into debt that is secured by your most important asset. And, the amount of your debt doesn’t get smaller.
Debt Consolidation and Debt Settlement
If you’ve been searching the Internet for debt solutions, chances are that you’ve seen quite a few advertisements for debt consolidation and debt settlement. The pitch probably sounds great, but there are things you should know before committing to either of these options.
First, debt consolidation can be very expensive. Although the new plan typically lowers your monthly payment and perhaps your interest rate, this is often accomplished by stretching out payments. That means you pay more interest in the long run—sometimes a lot more.
You can learn more about how debt consolidation works here: Is Debt Consolidation the Right Answer for You?
Debt settlement, when it’s successful, results in a lower payout amount. But, not all creditors will cooperate with a debt settlement company, and your credit may worsen significantly while the debt settlement company collects funds from you over time and negotiates with creditors.
Finally, you should be aware that there are many debt settlement and debt consolidation scams. The Federal Trade Commission (FTC) provides information on how to avoid debt relief scams:
For some people, bankruptcy is exactly the right tool to create a more stable financial foundation. But, it’s not for everyone. Like every possible solution, it’s important to do your homework and thoroughly understand the pros and cons for you.
This brief overview and additional resources will help you get a basic understanding of the bankruptcy process and the different bankruptcy solutions available.
Chapter 7 bankruptcy is the most common type of consumer bankruptcy, and allows many people to wipe out unsecured debts such as credit card debt, medical bills, and unsecured loans. Chapter 7 can provide a fresh financial start for those with mostly unsecured debts, but may not provide relief for people who have a lot of secured debt and want to keep the property or who have valuable assets.
Chapter 13 bankruptcy often provides a solution for people with significant secured debts, or who have too much income or property to take advantage of the Chapter 7 bankruptcy process. In Chapter 13, you create a plan to catch up past due balances over three to five years. As long as plan payments and current bills are current, creditors and collectors included in the plan can’t take further action against you.
The best way to determine whether Chapter 7 or Chapter 13 bankruptcy could be the solution for you is to talk to an experienced bankruptcy attorney.
If You Start Getting Collection Calls and Letters…
Know that collection agencies and debt buyers sometimes break the rules and play dirty. If that happens, here are a few resources to help you understand your rights and decide what to do next:
When debt collectors violate the FDCPA, you may be entitled to monetary damages. Contact Barshay Sanders PLLC for more information about your rights and how you can fight back.