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How to do credit repair after bankruptcy?

By Derek Brown
Published: Wednesday, November 11th, 2009

Bankruptcy is the financial doom of a person who faces it. Credit repair after bankruptcy includes the most cautionary taking of debt. Credit repair after bankruptcy is a slow process. The proposals for new lines of credit are drastically reduced after a person is announced bankrupt.
Credit repair after bankruptcy is done to improve credibility. The relations with creditors and bankers are improved. This credit worthiness improves after filing bankruptcy because the old debts of a person don’t exist any more. If a debtor applies for bankruptcy and it is dismissed before the release of debts, then the credit reporting agency must include the filing and dismissal in the credit report.
This credit repair can be attained with the help of a lawyer. A duplicate copy of the credit repair report is obtained before going to a lawyer.

Credit repair can be done easily by applying for a credit card with a lower balance. The use of credit cards should only be limited to the amount a person can afford to pay at the time of bill payments. Bills have to be paid on time after bankruptcy so that no harm to the credit score occurs further. 30% of the credit score consists of timely credit payments.

Under the new bankruptcy act of 2005 , The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), restrictions are placed on applicants on clearing any debt. If the application for bankruptcy has been made under chapter 7, then no debt payments have to be made. Under this chapter 7, the monthly disposable income of an applicant is less than $100. Disposable monthly income consists of monthly incomes less certain allowable expenses. A monthly incomes of less than the median monthly income of the state of residence qualifies a debtor for chapter 7 of bankruptcy act. The fair credit reporting act or FACTA makes sure that the balance of released debts by a debtor is nil under federal law. The history of the delinquencies is stated in the report but the balance of accrued debts is nil. If the report does not contain zero balances of pending debts, such claims can be disputed.

This new law has also made it mandatory for a bankrupt person to take a course in personal financial management after application for bankruptcy. It is mandatory for bankrupt people to get mandatory debt management from an authorized credit counselling agency before filing bankruptcy claim.

The applicants under the chapter 13 of this bankruptcy act are faced with a super discharge provision which has increased the release of some debt under the old bankruptcy law. The changes under this law have increased the amount of debt to be discharged.

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