Michigan Bankruptcy Lawyer

No matter what negative items are on your credit report: bankruptcy, charge-offs, late payments, judgments, or any other derogatory information, under the Fair Credit Reporting Act (FCRA), you have the legal right to challenge and remove items that are inaccurate, erroneous, misleading or outdated. A  qualified michigan bankruptcy lawyer can advise you of your legal rights and provide information on legal ways you can have negative items removed from your credit report.  

Your credit report is how creditors and lenders determine their financial risk in granting you a loan or line of credit. These reports are provided by credit reporting agencies (CRAs), also known as credit bureaus, and sometimes they contain inaccurate, incomplete, outdated and sometimes even misleading information that could cause you many problems including:

• Being denied a loan or line of credit;
   
• Having to pay a much higher interest rate on any credit or loan amount for which you are approved than someone who has good credit would have to pay;
   
• Having to settle for much smaller lines of credit and greatly increased difficulty in getting an increased line of credit than someone with good credit;
   
• Insurance coverage denial or loss; and
   
• Loss of employment opportunities as employers are also requesting credit reports for prospective employees.

What are derogatory or negative credit items?

A derogatory or negative credit item is a bad mark on your credit. For example, if a creditor says you are 30 days late on a payment, it’s considered a derogatory or negative credit item. Other examples of derogatory or negative credit items include: other late payment information in increments like: 30, 60, 90, 120, 180 days late; loan default; collections; charge-offs; judgments and foreclosures. Judgments are also considered public information. Bankruptcy is also considered a derogatory or negative credit item.

What is a charge-off?

If you become seriously delinquent on an account, which most people who have filed bankruptcy have, the creditor may decide that you probably won’t pay the debt. If this happens, the creditor writes the debt off as a loss for tax purposes—the charge-off. However, even though the creditor writes off the debt, they still will continue to attempt to collect on the debt until they are notified that you have filed for bankruptcy. Charge-offs, like other derogatory items are bad news for your credit report and your credit score. If the debt has been discharged through your bankruptcy, the charge-off should no longer appear on that account because it is included in your bankruptcy.

Do negative items have to remain on my credit report for 7 years?

No, they do not. This is a myth that creditors and collections agencies want consumers to believe. While the law mandates that a negative item must remain on your credit report for no more than 7 years, the creditor can remove it sooner if they see fit to do so. Inquiries can only stay on your credit report for up to 2 years. However, if an account has been discharged through your bankruptcy, all negative items must be removed and the account should instead indicate that it was included in your bankruptcy.

To start the process of repairing your credit, contact each of the three major credit bureaus (listed below) for a copy of your credit report. You probably will have to pay around $9 for each report. However, if you've recently been turned down for credit, you can get a report from the reporting agency for free. It is important for you to get a report from EACH agency because your credit report could differ by quite a bit and information from each agency is requested and used by lenders, creditors and other companies requesting financial information about you. Once you receive your credit report from each credit bureau, you have the legal right to dispute any items that are outdated, erroneous, inaccurate or misleading.

If you decide to dispute the item yourself, write a letter to each credit bureau and explain how you feel the account is inaccurate, outdated, erroneous or misleading. Be sure to send documentation that supports your claim. It’s also a good idea to include a copy of the credit report with the disputed item circled or otherwise marked. Your letter needs to include:

• Your full name
• Your complete mailing address
• Your date of birth
• Your Social Security number
• The name of the creditor and account number of the disputed item
• The reason for your disagreement with the disputed item (be specific)
• What action you would like the credit bureau to take (e.g., remove derogatory information, update the account balance to properly reflect a $0 balance, indicate the account is included in bankruptcy, etc.), and
• Your signature.

The following are the addresses to each of the major credit bureaus:

To assure that the credit bureaus get your letter, you should send your letter by certified mail with a return receipt requested. Or, if you want to expedite the matter, send it by Express Mail (2 - 3 business day delivery service) or by overnight mail via the U.S. Postal Service Express Mail service (FedEx and other carriers don’t deliver to P.O. Boxes, but the U.S. Postal Service Express Mail overnight service will). When sending it overnight don’t check the box to waive the signature. This way, you’ll have record of their receipt of your letter.

The credit bureau has 30 days to investigate each disputed item and either verify it or delete it. The law requires that each disputed item must be verified and accurate for it to stay on your credit report. If an item is found to be partially inaccurate, the credit bureau must update the information so that it is completely accurate. At the end of the credit bureau’s investigation, you will receive a copy of the results and an updated credit report.

If you are not satisfied with the credit bureau’s findings, you may be able to dispute it again, especially if you have additional information for the credit bureau to investigate. There have been cases where the credit bureau verified the debt to belong to the consumer and later had to delete it because the consumer was able to prove that the debt was indeed inaccurate or didn’t belong to them. It takes a lot of hard work sometimes, and you may have to dispute an inaccurate item more than once.

There are times that the credit bureaus don’t investigate thoroughly and simply take the word of the person answering the phone that a debt belongs to you or is otherwise accurate and verifiable. If you find that you continue to be unsuccessful by going through the credit bureaus, you may want to consider contacting the creditor directly. Many consumers have been successful in having negative items deleted by contacting the creditor directly because creditors don’t want inaccurate information being reported any more than you do. You’ll find each creditor’s contact information at the end of your credit report.

There are a lot of unscrupulous companies and individuals who make outlandish promises and when it’s time to put their money where their mouth is, no results are yielded. Some of these companies may try to entice you to change your Social Security number or get an Employer Identification number (EIN) to create a new credit report. Don’t do it. It could cost you early because you could be charged and prosecuted for mail or wire fraud if you use the mail or telephone to apply for credit and provide false information. It’s a federal crime to make false statements on a loan or credit application, to misrepresent your Social Security Number, and to obtain an Employer Identification Number from the Internal Revenue Service under false pretenses.

The Federal Trade Commission (FTC) provides a brochure about credit repair scams in Adobe Acrobat Portable Document Format (PDF). Click here to download it.

Contact an experienced and reputable michigan bankruptcy lawyer for more information on your rights under the Fair Credit Reporting Act (FCRA) and the Consumer Credit File Rights Under State and Federal Law. If you need to file for bankruptcy, contact MichiganBankruptcyLawyer.com now.