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Erase Bad Credit The basics of filing bankruptcy

(Special thanks to the FTC for providing much of this article)

The basics of filing for bankruptcy (and some ways to avoid filing for bankruptcy and going to court) are outlined in this article. This article also talks about why it's good to have a prepaid legal plan.

No matter what the ad states, a poor credit history can’t be erased...but there are some things you can do.

Under the Fair Credit Reporting Act, you can question an item in your credit report file and your complaint must be investigated. However, the negative information on your credit report will be removed only if an investigation determines it’s incorrect. A credit repair company, no matters what it claims, cannot compel the credit bureau to remove negative information from your file, if that information is accurate.

One thing you can do is use an attorney to get a copy of your report. Unfortunately, sometimes this is very cost prohibitive, as credit and tax attorneys can cost anywhere from $180-$500/hour and upwards. (As an aside, If you want to hire a credit attorney for much less, recommends that you check out a prepaid legal plan. With a prepaid legal plan, you can pay a low monthly fee (most often less than $28) and have a credit attorney (i.e. an attorney who specializes in the laws of consumer credit) offer you advice, make phone calls, and write letters on your behalf.)

Some companies claim they will work with your creditors to consolidate your debts, or reduce the size of your monthly payments. Before you pay large sums of money to these companies, you can call the FTC for referral to non-profit counseling services that provide free or low-cost help.

So, how do you request a copy of your credit report and dispute a credit reporting error?

Well, even if you don't have a poor credit history, it's a good idea to conduct your own credit check-up, especially if you're planning a major purchase, such as a home or car. Checking in advance on the accuracy of the information in your credit report could speed the credit-granting process.

You're entitled to one free report a year if you can prove that (1) you're unemployed and plan to look for a job with 60 days, (2) you're on welfare, or (3) your report is inaccurate because of fraud. Otherwise, a credit bureau may charge you up to $9.00 for a copy of your report.

Credit bureaus usually are listed in the yellow pages of your telephone book under "credit reporting agencies." Three large national credit bureaus supply most credit reports: Equifax, Experian and Trans Union. You may want to contact each of them for a copy of your report.


1-888-EXPERIAN (397-3742)

Trans Union

And what do you do when you find a credit reporting error on your credit report? recommends that you check out a prepaid legal plan. As already stated, a prepaid legal plan, lets you simply pay a low monthly fee which covers you for much more than credit reports. What you can do is simply have a credit attorney (i.e. an attorney who specializes in the laws of consumer credit) offer you advice, make phone calls, and write letters on your behalf. This is powerful because attorneys know the laws that will benefit you the most, and when you're paying for an attorney to represent you, they will do their very best. Find out more about a prepaid legal plan.

The other option is to try to dispute the credit report error yourself. According to the fair credit reporting act:

You are entitled to a free copy of your credit report if you've been denied credit, insurance or employment within the last 60 days. If your application for credit, insurance, or employment is denied because of information supplied by a credit bureau, the company you applied to must provide you with that credit bureau's name, address, and telephone number.

You can dispute mistakes or outdated items for free. Ask the credit reporting agency for a dispute form or submit your dispute in writing, along with any supporting documentation. Do not send them original documents.

Clearly identify each item in your report that you dispute, explain why you dispute the information, and request a reinvestigation. If the new investigation reveals an error, you may ask that a corrected version of the report be sent to anyone who received your report within the past six months. Job applicants can have corrected reports sent to anyone who received a report for employment purposes during the past two years.

When the reinvestigation is complete, the credit bureau must give you the written results and a free copy of your report if the dispute results in a change. If an item is changed or removed, the credit bureau cannot put the disputed information back in your file unless the information provider verifies its accuracy and completeness, and the credit bureau gives you a written notice that includes the name, address, and phone number of the provider.

You also should tell the creditor or other information provider in writing that you dispute an item. Many providers specify an address for disputes. If the provider then reports the item to any credit bureau, it must include a notice of your dispute. In addition, if you are correct-that is, if the information is inaccurate-the information provider may not use it again.

If the reinvestigation does not resolve your dispute, have the credit bureau include your version of the dispute in your file and in future reports. Remember, there is no charge for a reinvestigation, and if there is something on your credit report that doesn't belong there, you are more likely to get it removed by having an attorney who knows about credit law, which is why recommends a prepaid legal plan.

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