Re Establishing Your Credit After Bankruptcy

Learn the Best Practices for Re-establishing Your Credit After Bankruptcy

Building a Better Credit Report

Your credit report is a file about you. It is full of information on where you live, how you pay your bills, whether you have been sued, arrested or filed for bankruptcy. Creditors use this information to evaluate your applications for credit, insurance, employment or a lease. A credit score is a way for creditors to find out whether to give you credit and how much to charge you for it. A credit score is a total of points from different factors. The factors are your bill-paying history, the number and type of accounts you have, late payments, collection actions, outstanding debt, and the age of your accounts. The higher your credit score, the better the chance of you getting a loan.

To re-establish your credit, consider applying for a secured credit card. A secured credit card requires you to open and maintain a bank account or other asset account as a financial institution as security for your line of credit. Your credit line is usually a percentage of your deposit, typically from 50 to 100 percent. It is not uncommon to incur application and processing fees. Further, secured credit cards usually have higher interest rates than non-secured cards.

Improving your Credit Report

Ensure that your credit report is accurate and complete. The creditor and credit bureau are responsible for correcting inaccurate or incomplete information. To correct any erroneous information, follow the instructions at www.equifax.com, www.experian.com, or www.transunion.com. Once the erroneous information has been verified, all three consumer reporting agencies will correct the information and send you a free credit report with the correct information. This credit report does not count as your free annual credit report.

If you have any negative information on your report, which is accurate, time is the only way for it to be removed. Most accurate negative information stays on your reports for seven years and bankruptcies stay on for ten years.

Identity Theft and your credit report

Here are some indications that you may have been the victim of identity theft:

  • Failing to receive mail, signaling an address change by the identity thief.
  • Receiving credit cards for which you did not apply.
  • Receiving calls from debt collectors about merchandise or services you didn’t buy.
  • Denial of credit for no apparent reason.

If you suspect that your identity has been stolen then there are two important steps to take right away.

First, place a fraud alert on your credit reports. Contact any of the three nationwide consumer reporting companies and place a fraud alert on your credit report. The initial credit bureau will contact the other insurance companies and they will also put an alert on your report.

Equifax: 1-800-525-6285 or www.equifax.com.

Experian: 1-888-397-3742 or www.experian.com.

TransUnion: 1-800-680-7289 or www.transunion.com.

Second, close the accounts that you know or believe have been tampered with or opened fraudulently and contact the security or fraud department of each company. Follow up in writing and include COPIES of supporting documents.

The Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) promotes the accuracy, fairness, and privacy of information used by nation’s consumer reporting companies. There were recent amendments that were made to the FCRA. Those amendments expanded consumer rights and placed additional requirements on consumer reporting companies and businesses that provide information about consumers to consumer reporting companies.

Types of Information that Can be Collected

There are four basic types of information that consumer reporting companies can collect and sell:

  1. Identification and employment information: This includes your name, birth date, Social Security number, employer, and your spouse’s name. It also includes your employment history, home ownership, income, and a previous address.
  2. Payment history: This shows you how much credit has been extended and if you have paid on time. Also, it shows if a creditor has referred your account to a collection agency.
  3. Inquiries: The consumer reporting companies must keep a record of all the creditors who have asked for your credit history within the last year. They must also keep a record of individuals or businesses that have asked to see your credit history for employment purposes within the last two years.
  4. Public record information: This shows events that are a matter of public record, such as bankruptcies, foreclosures, short sales, or tax liens.

If you have questions about rebuilding your credit after Chapter 7 bankruptcy then contact the Dunaway Law Group at 480-389-6529 or message us HERE.

Eviction Judgment and Credit Reports

Do Eviction Judgments Appear on Credit Reports?

Eviction judgments are a very powerful tool that dramatically increases the odds of a creditor collecting on the debt. In evictions cases, a judgment will order the Arizona tenant to pay all back rents, late fees, court costs, and attorneys’ fees associated with the eviction.

An eviction judgment is basically a court order requiring the tenant to pay the landlord the sum of these damages. After making a written demand for the awarded damages most people will not voluntarily pay. However, this is where the judgment itself can help an Arizona landlord recover their money.

A judgment can give creditors the power to garnish wages, levy bank accounts, or place liens on certain assets. Without the judgment all a creditor can do is beg for the money. But with the judgment you can get people to pay whether they want to or not.

credit report

When a landlord obtains a judgment against someone, many people think it automatically go on their “record”, or credit report, but this isn’t always the case. The eviction judgment is a matter of public record, but the only way to guarantee that a judgment will show up on a credit report is to record the judgment with the relevant Arizona county. The eviction judgment will stay recorded until the debt is paid, it expires, or the debtor files bankruptcy.

In Arizona, most residential evictions occur in a Justice Court. In order to record the judgment with the county, a certified copy of the judgment must be sent to the Arizona Superior Court to receive a new case number. Once a Superior Court judgment has been established a certified copy can be recorded with the appropriate county. Each of these steps requires a filing fee–as of 2021–the total fees are just over $120.

A judgment will remain on the credit report until it is paid, or for as long as the judgment is valid. In Arizona, judgments are automatically valid for 10 years. However, a credit can renew the judgment which will extend it’s life for another 5 years. If the debt is paid in full then the creditor must file a satisfaction of judgment with the county to demonstrate that he debt has been paid in full.

In summary, here are the main things to know when recording a judgment with an Arizona county.

  • The only way to ensure a judgment shows up on a credit report is to record it;
  • If the judgment is paid in full then the creditor MUST file a satisfaction of judgment with the court and then with the county recorder;
  • If not paid, the judgment will remain valid for 5 years, and possible an additional 5 years if it is renewed.

It is a common misconception that eviction judgments automatically appear on a former tenant’s credit report. However, this is not the case. The judgment is a public record, and a diligent background checker will find it, but the only way to ensure the judgment appears on someone’s credit report is to record it with the county. Once this happens, it will appear on their credit report as a monetary judgment, but there won’t be any indication that it was also an eviction judgment.

Ideally, a background check will reveal the eviction judgment even without it being recorded with the county. If you are a landlord, you should always perform background checks on prospective tenants.

However, for more everyday occurrences that don’t require a full-blown background check (like applying for a credit card or loan), having a blighted credit report can make life difficult, even if it doesn’t specify that it is an eviction judgment. In Arizona, judgments are initially valid for ten (10) years–and can be renewed. A defendant can have a judgment removed from his credit report at any time – all he or she has to do is contact the plaintiff and pay off the judgment.

satisfaction of judgment

Once a former tenant has satisfied the eviction judgment, it is the landlord’s responsibility to file a satisfaction of judgment with with the court. This will provide notice to all interested parties–including future landlords–that the debt has been satisfied. 

If you need help from an Arizona real estate attorney then contact the Dunaway Law Group at 480-389-6529 or message us HERE.

Defending Credit Card Lawsuits

Reasons to Defend a Consumer Collection Complaint

The distressed debt buying industry is a multi-billion dollar industry in which debt collectors purchase literally millions of old debts for pennies on the dollar that the original creditors have written off. The debt buyers receive minimal information on each account, and certainly do not receive the contract or copies of any communications in which the consumer might have disputed the amount owed. In addition, after having unsuccessfully attempted to collect the accounts, these debt buyers regularly resell repackaged portfolios of uncollectable debts to other debt buyers whose connection to the original creditor—and to original documentation and proof—is even more attenuated.

Statute of Limitations

Because debt buyers purchase very old debt, the statute of limitations is an important consumer defense. Debt buyers who cannot produce the written contract often bring the case on an account stated or other claim not based upon a written contract. In many states, such causes of action have a shorter limitations period than a claim based upon a written contract. Credit card collection cases, even when brought on a contract theory, may have to be brought within a shorter limitations period applying to non-written contracts. Moreover, the action may have to be brought within a shorter limitations period found in the law of some other state than the forum state.

Because the debts are old, the consumer often will have moved after the credit account was closed, and the debt buyer must first try to locate the consumer’s present residence. Debt buyers may try to serve the consumer at the wrong address or even sue the wrong consumer. Debt buyers rely on credit reports to locate the consumer, but the credit reports themselves are filled with errors, including incorrectly merged information that mixes the credit reports of two or more people with similar names and other identifying information, and that results in the collector then suing the wrong person.

Quite often, the debt buyer does not have sufficient evidence to prove its case, relies on business records that are not properly introduced into evidence, or tries to prove its case based on clearly defective affidavits. Debt buyers frequently cannot even prove that they own the debt they are collecting and they may not have access to better evidence or may not want to expend the resources acquiring that evidence, so they try to win cases by default without an ability to prove that money is owed.

Creditors also may commit billing errors which may be the reason the creditor stopped collection efforts—the consumer did not owe all or part of the money claimed. When these debts are sold, the debt buyer does not receive or retain this information concerning consumer defenses. The consumer can then defend the collection action based upon the original dispute the consumer had with the creditor.

Too often debt buyers will bring actions against spouses and other parties knowing these defendants do not owe the debt, but hoping to either pressure them into payment or obtain a default judgment against them. Examples includes suits against authorized user not liable on the account and against family members of a deceased debtor. The debt buying business model is to cast a wide net without consideration as to whether the consumer owes the money, and see what money is recovered.

Reason #1: Prevailing Can Improve Your Credit Rating

If your case is dismissed, the consumer can take action to ensure that credit reports indicate that the current balance of that debt is now reported as zero. If the judge also rules that the consumer never owed the money (for example, because the collector sued the wrong consumer), then the consumer can seek to delete information in their credit report that the debt had been in default in the past. In addition, the attorney can help the consumer dispute inaccurate information in a credit report, and the consumer has a cause of action under the Fair Credit Reporting Act (FCRA) if that information is not properly investigated and corrected.

Reason #3: Alleviate Stress

Being sued is an extremely upsetting and difficult experience. You probably have never been sued in your entire life and may be feeling distressed over the suit, even for a relatively minor debt. That distress can place strain on your intrafamily relationships, work, and health. Medical problems can be accentuated under stress. You need legal representation to explain what is happening and how to depend your interests.

Reason #4: Protection of Your Assets and Income

A judgment against you can have serious financial consequences. Your assets and income may be at risk. Bank accounts, even those containing certain exempt funds, may be frozen for days or even weeks, and may eventually be seized unless exemptions are properly pursued. Your wages can be garnished. Cars and other property can be seized. Defeating this collection action eliminates those threats. Even if a default judgment has already been entered, an attorney can assist the consumer either in setting aside the default judgment or in minimizing the impact of these creditor remedies.

Reason #5: You May Have Legal Claims Against the Debt Collector

Often we discover that the consumer has separate affirmative actions under the FDCPA, FCRA, and other federal and state statutes, resulting in significant actual and statutory damages and attorney fees, either on an individual or class-wide basis. Investigating the facts relating to the collection action will often uncover various systematic law violations.

Reason #6: Debt Collector May Have to Pay the Consumer’s Attorney Fees

Often Debtors wonder how they may be able to pay for an attorney. However, there are a several ways that we may be able to recover our legal fees from the debt collector. Fees may be recovered by statute in about twenty states. Fees are also available to the consumer for prevailing on certain counterclaims, or as a result of the collector’s bringing an action without adequate facts.

Reason #6: Stopping Systematic Abuse of the Court System

Debt buyers today are using the courts to engage in wholesale litigation abuse. They sue huge numbers of consumers with no real knowledge of whether the consumer owes the debt or whether the statute of limitations has run. Debt buyers sue with little or no evidence to prove that the consumer owes the money, that the debt buyer in fact owns the debt, or even that they are suing the right consumer. This litigation strategy is effective because very few consumers obtain legal representation, and the overwhelming majority of consumer defendants default in the collection action.

When the consumer contests an action, the collector utilizes various techniques to win without having to produce admissible evidence to prove its claim. The collector may take advantage of the unrepresented consumer by working out a stipulated judgment without disclosing that the collector cannot prove the debt. Another technique is to send the consumer a long list of requests for admission to which the consumer does not timely respond. The requests are deemed admitted, and the collector needs no other evidence to prove its case. Alternatively, collectors seek summary judgment on junk evidence—attachments that are not attached, affidavits from debt buyer employees (or even non-employees) who state conclusory facts about which the affiant has no personal knowledge, or about pretend business records created years after the fact.

Consumers fare much better in court when they obtain legal representation. Many debt buyers will not even pursue the case once they realize the consumer has legal representation. Such an individual consumer victory has no adverse impact on a debt buyer that has purchased the debt for pennies on the dollar.

If you have outstanding debts or judgments then let an Arizona bankruptcy attorney help you come up with a solution. Contact the Dunaway Law Group at 480-389-6529 or message us HERE.