Credit reporting companies are not listing my mortgage payments after my bankruptcy

Getting rid of bad credit is one reason to file bankruptcy. If your credit has gotten off track bankruptcy, is the fastest way to fix it for most people. I encourage all my clients to rebuild your credit after bankruptcy.  So you may be disappointed, and even angry, about how the credit reporting companies show your mortgage payments. Making your after bankruptcy mortgage payments on time doesn’t help your credit score one bit. Those payments don’t show at all. Your mortgage will be reported “included in bankruptcy.” “I didn’t include my mortgage.” is what I hear from my clients.

When you file bankruptcy, you “include” everything. That’s what the law requires. You pick and choose what debts you want to keep paying-keep paying the house if you want to live there; keep paying the car if you need it to get to work. But you don’t pick and choose what debts are covered. Paying your house payment on time after bankruptcy, gives you a place to live. But it does not Boost your credit score. Even if you are keeping the house, the discharge is an important benefit to you. If real estate values don’t recover-or drop again-and you can’t sell the house when you are ready to move, you are still protected. You can move out and not owe them anything. Also, after bankruptcy late payments don’t count against your after bankruptcy credit. If you complain to the mortgage company about your credit report, they will tell you that “you should have reaffirmed your mortgage.” Reaffirming takes the house out of the bankruptcy.

Is reaffirming a benefit to you maybe you get back to good credit a month or two sooner than you would just be getting and paying new credit cards. The disadvantage if you can’t pay or can’t sell the house, you will still be responsible for the mortgage. That disadvantage is alot bigger than the benefit.


If you are filing for bankruptcy when is it the best time to move out of your house after a bankruptcy?

  1. When you know you can’t afford it?
  2. When you fall three months behind?
  3. When the bank tells you your house will go to foreclosure?
  4. Right before you file bankruptcy? 5. Right after you file bankruptcy?
  5. None of the above.

The answer is none of the above. Leaving the house before you have to, can be a very expensive mistake. Especially if you have a home owner or condo association. This is a common bankruptcy questions. When you move out-even if you file bankruptcy-you still own the house. You are responsible. You are responsible if there’s an accident. You are responsible for zoning. You are responsible for paying the association. You are responsible until your name is not on the tittle. Those after bankruptcy association payments are after bankruptcy debts. That means, they are your responsability.

I’m seeing people who stoped paying and filed bankruptcy; and four months later the bank has foreclosed them. I’m also seeing people who stopped paying and filed bankruptcy in 2009 and the bank still has not foreclosed. If you are still residing there, two years for free (except for the association) is a good thing. If you move out and pay rent somewhere, two years of still paying that home owner association-that’s a real headache.

When people talk to me about filing bankruptcy and giving up the house, I tell them, don’t move out! If you have already moved out, rent it! Before therecent economic crisis mortgage companies were quick to foreclose. Five months after you stopped paying, you were foreclosed. In the sixth month, if you hadn’t moved out, you would be evicted. Filing bankruptcy right before the foreclosure would get you three more months, but that’s all. This still happens but a lot of times it doesn’t.

There’s no way to see the future when the foreclosure will happen. Some of the reasons foreclosures are slow have been in the news. The whole loan modification thing paperwork problems the fact that the foreclosure lawyers can’t keep up with the volume. Some delay is just an investment decision by the mortgage companies. Suppose there are thirty houses in a little neighborhood and ten of those had mortgages with a bank I’ll call Big Bank. Two of those ten have already filed bankruptcy and gone to foreclosure. Big Bank fixed one up and sold it; the other is sitting empty. Seven are current; and the last one is yours-you just filed bankruptcy and you are five months behind. You and your eight neighbors owe $225,000 on the mortgage and the last house Galaxy fixed up and actually sold went for $110,000. The best offer they have on the one sitting empty was $101,000 and they figure if they have to sell your house too they’d be lucky to get $95,000. Well, $95,000 is better than nothing, right? Not necessarily. Big Bank is worried about your seven neighbors who are still paying. Those families ask themselves, every month or maybe every week, why are we still paying a $225,000 mortgage on a $110,000 house? When your house sells for $95,000, Big Bank figures one of your seven neighbors will say, that’s it! That neighbor stops paying, files bankruptcy, and now they have another house on their hands.

Big Bank would rather have you sit in your house, for a while, then tell everyone in the neighborhood that the houses they thought were worth $110,000 have now dropped down to $95,000. Now I said at the beginning, you should not move out until there has been a foreclosure. As your bankruptcy lawyer, that’s easy for me to say; it’s harder for you to do. Because you need to have a place to live lined up. But if you panic and move out before you have to, you could end up paying the association on an empty house for another six months or a year.

Chapter 13 Bankruptcy Laws and Credit Bureaus

Chapter 13 can be much worse on your credit. After five years of Chapter 13 bankruptcy, your credit will still stink. Why is that? About half the companies you owe money to, will have given you five more years of bad credit. They are not allowed to do that but hey do it anyway.

For years, the credit bureaus had no rules on how chapter 13 should show on your credit. But they corrected that, finally, in December 2009. In December 2009 the credit bureaus told the credit card companies, and other creditors what to do when a Chapter 13 plan is approved. They said that once the Chapter 13 plan is confirmed, creditors can’t keep reporting you as past due. And they have to reduce the balance on your credit report down to what the judge said you had to pay.

The credit bureaus did this because of a case that a Wisconsin Bankruptcy judges ruling in 2008. So far, even with a court decision in 2008 and new credit reporting rules in 2009, about half the creditors are not doing what they are supposed to do.

I saw that one the credit report of one of my clients, Sara. (Not her real name.) Sara had to file a chapter 13 to catch up the mortgage on her home. When things at her job got slow, Sara got behind, and she needed Chapter 13 to give her time to catch up. Two years into her five year Chapter 13 plan, Sara’s car broke down. She still needed to get to work, so she asked the bankruptcy Judge for permission to borrow money to buy a used car. The Judge was glad to give her permission to borrow $5000 to buy a used car. But when she went to get a car, 25% interest was the best she could do. No choice, she paid it. What was the problem with her credit report? Apple Federal Credit Union, Capital One, and Capital One Auto had reported her as late every month since she filed Chapter 13 bankruptcy in June 2009.

When she bought a car in May 2011, she had two years of being late every month with them. Chase, HSBC and Dell stopped reporting in June 2009-the same way they would have in a Chapter 7. So her last reported late payment on those three accounts was two years old when she went to buy the car. Sara had done what she should do to get back to good credit. She had three new, current credit cards in good standing-paid in full every month, never late. Capital One, First Premier, and HSBC. If all Sara had was three current credit cards, two years after a chapter 7 bankruptcy, she’d have probably been below 10%. That difference, on a $5000 car loan, is $1885. Call each of the big three credit bureaus and order your report to see if the companies are following the new chapter 13 bankruptcy laws and reporting the correct information.


If you are about to file bankruptcy it is a smart idea to find a new bank

A lending institution is allowed to take for itself for the money you are obligated to them by the money you have in accounts held by them. For instance if you have money in Bank of America and you have a equity loan, signature line or a mortgage they can use the money you have in their accounts and hold on to it for themselves.

Credit Unions are quick to do this as well one of the promptest is America First in Utah. One thing a credit union might do that banks cannot do is use money in the accounts to pay the credit unions credit card accounts. It is a smart idea to get your money out of banks and credit unions you owe money to if you foresee you are not going to be able to stay current on your obligations at that particular bank or credit union.

If you have money in a Wells Fargo even if you don’t owe them any money, Wells Fargo will freeze your bank account when they learn about the bankruptcy. They think bankruptcy law requires them to do this even though no other bank thinks that way. It is a smart idea to close your Wells Fargo Bank account if you are close to bankruptcy.

Once a creditor has a judgment against you they can garnish your bank account. Creditors will look at the last check you wrote them and they will send garnishment papers to that bank. It is not fun to have your bank accounts garnished so If you think a creditor has a judgment against you do not keep more money then you have to in your bank accounts.

After Bankruptcy the Creditor will not reposes the car I want to get rid of

Bankruptcy gets you out of and away from harassing creditors you don’t like, but not items you don’t want to keep. It won’t make the lending institution tow your car. Or the vacation share people take the timeshare. And it won’t make the bankruptcy court take anything even if you want to surrender the item.

Peter got a terrible auto loan and a worse car from a buy here, pay here Creditor. The car is a 1999 model with too many miles and it refuses to work. Peter still owes too much to be reasonable. Before, the bankruptcy was taken out the car seller called Peter nonstop, questioning payment, and threatening to garnish Peter and repossess the car. Peter wanted the car dealer to repo the car-because he can’t afford to repair it. But car dealer never does. The car dealer knew it it was worth little when he sold it and he now knows it’s not profitable in towing away. Now, the car sales man can’t contact Peter.

He can’t garnish Peters pay. But he still won’t reposes the car. Peter still can’t afford to fix it-and now its getting citations because the inspection has lapsed. Peter still has a issues. Bankruptcy got rid of the debt, but it does not get rid of things nobody wants. One solution for, people like Peter can locate a junk yard or small repair shop which will take the car off his hands if he pays them a small fee. But he can’t make anybody reposes the car. You need to talk your way or buy your way out of the problem.


Credit counseling classes are required before and after a bankruptcy is filed in a chapter 13 or chapter 7 in Utah

If you are thinking about to file a Chapter 7 or Chapter 13 bankruptcy, you must complete two court-approved courses: 1. A court-approved pre-petition credit counseling course no more than 180 days before you file bankruptcy. 2. A court-approved post-petition financial management course must be completed within 45 days after your § 341 Creditor’s Meeting.

If your case is filed without proof of completing the credit counseling course, you must file proof of completion within 15 days, or your case will be dismissed. Failure to take both of these courses in a timely manner will result in the dismissal of your case or the denial of your discharge.

Both the credit counseling course and financial management course are offered by a number of agencies and organizations. Courses may be completed on-line, over the telephone, and in person. Costs range from approximately $25.00 to $50.00 per course.

If you are filing a joint petition and married, you and your spouse can take the course together. Many providers offer a joint fee, and will allow you to save on both the cost of having to purchase two separate courses, and the time of having to complete the courses separately.

There are exceptions to the credit counseling and financial management course requirements. If you are disabled, and the nature of your disability prevents you from completing the course, the requirement may be waived with permission of the Bankruptcy Court. Similarly, if the debtor lacks the requisite mental capacity to understand the nature of the information provided in the course, the requirement may be waived. Finally, military debtors in active service in a designated combat zone are not required to complete the course.

Utah Bankruptcy and not having your Social Security Card

At your Utah bankruptcy 341 meeting, you are need to show your bankruptcy trustee a picture ID along with evidence of your social security number. The simplest way to prove your social security number is with your social security card. However, a W-2 will also work or a tax transcript provided by the IRS or Utah State Tax Commission. (At the bankruptcy court here in Utah, your own tax form is usually not good enough.) For some one who is self employed, there may be no W-2. So what to do?

Being self-employed myself-and having lost my own social security card. I decided to see how hard it is to go to the social security office and get them to send me a new card. I hadn’t seen my social security card for quite some time. So I went to their office and got a new one. It wasn’t too bad. I went to the social security office in Ogden Utah on 25th street, a few blocks from my office. The whole process took about an hour. Wait in line, fill in a form, wait some more, show my driver’s license to somebody, who put info into a computer and had a new card mailed to me. (They will also give you a letter on the spot, saying what your social security number is.) To fill in the form, I needed to know what my social security number is, know my parents names and know where I was born. (The form asks for my parents social security numbers, but not having them wasn’t a problem-there was a box to check unknown.) And of course I needed my Utah driver’s license. A passport would also work.

You can also apply by mailing to your nearest social security office. But that doesn’t work very well. Why? You need to mail your ORIGINAL picture id. I don’t recommend mailing your driver’s license to social security and driving around without it for a month until they get back to you. If you have a passport and you aren’t going anywhere, you could mail that. At least once a month, we have utah bankruptcy clients who only figure out at the last minute that they don’t have their social security card. As I said, a W-2 or a 1099 will also work. But in this security conscious time we are living in, probably getting a replacement social security card issued is a good idea.

Credit Repair after Bankruptcy

I receive many questions about credit repair after filing bankruptcy . Credit scoring and reporting is not a bankruptcy law issue; it is more a matter of personal finance . It’s no secret that bankruptcy wreaks havoc on your credit . Based on bankruptcy and credit reporting law , bankruptcy can be listed on your credit for up to 10 years. In the meantime, you’ll find it hard to get approved for new credit cards and loans. You don’t have to wait the full 10 years to start getting credit again, and you shouldn’t, since there are techniques to repair your credit after bankruptcy.

Credit reporting law allows accurate data to be reported on your credit report, so trying to delete a legitimate bankruptcy from your credit report early will be a waste. You should, however, see your credit report to be sure your bankruptcy is reported correctly .

Accounts that were discharged in bankruptcy should show a $0 balance and bankruptcy status. Or, it appears you have outstanding delinquent debt. If a discharged account isn’t reported accurately, you can dispute it with the reporting agency. second, you should look for new credit within a year or two after your bankruptcy discharge. don’t bother with regular credit cards at all because you’ll most likely be rejected.

Instead, try to get for a secured credit card which is a type of credit card that requires you to make a payment against the credit limit before you can be qualified . The security deposit is the credit card company guarantee that you won’t not pay on the balance. The creditor can take your security deposit if you default or file bankruptcy. But, if you use your credit card responsibly and make all your payments on time for several months, you can get your deposit back. Try not to make the mistakes that led you to bankruptcy. Keep your balance minimual, ideally below 30% of your credit limit, and pay it off before the due date every month. Doing this begins to re-establish a positive payment history on your credit report.

A history of timely payments will improve your credit – payment history is 35% of your FICO score. Staying out of debt will also help since your level of debt is 30% of your FICO score. Credit repair takes time, especially after a bankruptcy. Keep taking the right steps, making timely payments on a few credit lines with low balances and your score will improve.”

Which Bankruptcy option looks best a chapter Seven or chapter Thirteen

I get asked all the time which looks better on my credit report a Chapter 7 or a Chapter 13? A bankruptcy does impact your credit negatively and can stay on your report up to 10 years.

Having a large amount of debt, several late payments, repossessions, and charged-off accounts can also stay on your credit report and impact it negatively . So the question , which one will affect you least as an individual? For most people , filing for a Chapter seven bankruptcy will allow a short amount of time and will discharge large amounts of unsecured debt, like credit card debt or medical debt. This bankruptcy makes the most logic for some individuals.

A Chapter 7 bankruptcy can allow you to recover your credit quickly. It also helps in freeing up your disposable income through take out a Chapter seven is at times the greatest change you can do for your credit as a whole. It can also be believed that a Chapter 13 bankruptcy could be better appropriate for some people. A lender may look more tolerant on a Chapter thirteen.

The Chapter thirteen can permit you to make your monthly payments on terms that are more convenient for you and your family, while still successfully making your monthly car and house payments.



What to expect at your 341 meeting or Meeting of Creditors

After you file your Chapter 7 bankruptcy case, you will be scheduled for a 341 Meeting, also known as the “meeting of creditors.” It will take place at least 21 days after filing your case but no later than 40 days after you file for bankruptcy. It is mandatory that you attend the meeting or else your bankruptcy case can be dismissed.

Knowing what to expect at a 341 Meeting can help you prepare for and successfully complete it so you can have your debts discharged.

Facts About the 341 Meeting of Creditors

The Meeting Doesn’t Take Place in a Courtroom

Your meeting will usually take place in a regular room located in the bankruptcy court. It will essentially be a public meeting with other bankruptcy filers present.

Who Attends the Meeting

There will be no judge present since judges are not allowed to attend. Your Chapter 7 trustee will be there since he/she will conduct the meeting.

Creditors usually will not show up for a 341 Meeting since they are not required to attend. However, there are certain situations where you can expect to see them at the meeting. If, for example, you have a boat that you didn’t disclose, the creditors will attend to find out the location of the property. Also, if you owe creditors money for a home or car, they will appear to find out if you intend to keep the property and ask about the condition of the property.

Another common situation where creditors will attend the meeting is if you used your credit cards just before filing for bankruptcy. The creditors will want to know if you intend to repay the credit cards or if you are filing for bankruptcy in good faith.

What You Need to Bring to the Meeting

There are certain documents you will need to bring to the meeting. You must bring a photo ID (driver’s license or other government-issued ID) and your Social Security card or other government document containing your Social Security number (W-2’s, military ID). Without these documents, the 341 Meeting will not be conducted and you will have to reschedule the meeting.

Your Chapter 7 trustee may also require that you bring additional documents to the meeting and will notify you about what to bring. Typical documents include:

  • Property deeds

  • Car titles

  • Bank statements

  • Tax returns

  • Pay stubs

What Questions Will Be Asked at the Meeting

Prior to the meeting, the trustee will have reviewed all your bankruptcy paperwork, income, debts, expenses, tax returns, and pay stubs. The Chapter 7 trustee’s main job is to sell nonexempt property to repay your unsecured creditors. The trustee also:

  • Searches for bankruptcy fraud

  • Makes sure your paperwork is accurate

  • Conducts an investigation into your property and finances

Since most of the fact-finding is done at the meeting of creditors, the trustee will ask you questions that help him/her to determine such facts including:

  • Why you filed for bankruptcy

  • Whether you have sold or given away any property in the past few years

  • Whether your monthly expenses are necessary and reasonable

  • Whether your income is accurate in your schedules and on your means test

It is important to keep in mind that you will be sworn in under oath so you must answer all questions truthfully or you may be subject to perjury charges.

What Occurs After the Meeting

The hearing could be continued at a later date for the following reasons:

  • You need to provide more information to the trustee

  • You are missing required documents

  • You must amend your paperwork

You must have also completed a credit counseling briefing prior to filing and the required debtor education course before your debts can be discharged. This should be completed as soon as possible so you can complete your bankruptcy case. As long as your creditors do not object to the discharge of your debts, you will receive your discharge order approximately 60 days after the meeting of creditors.

Paul Benson will help you prepare for the 341 Meeting so you can properly answer all the questions you are asked by the trustee.