Chapter 7 Bankruptcy
A Chapter 7 bankruptcy is sometimes referred to as a “liquidation” bankruptcy because, in theory, assets are sold (i.e. liquidated) to pay off debts. In practicality, most people who qualify for Chapter 7 lose little or none of their assets, which are protected by state and federal exemptions.
All debts, not reaffirmed or ineligible, are discharged. This means that the debts do not ever have to be paid.
If debtors don’t qualify for the Chapter 7 bankruptcy, Chapter 13 should be considered. Debts in Chapter 13 are reorganized, sometimes reduced, in a three to five year payment plan. Consult with a qualified bankruptcy attorney to learn more.
Fair Credit Reporting Act
The Fair Credit Reporting Act (FCRA) is a federal law that regulates the collection, dissemination, and use of consumer information, including consumer credit information. Its goal is to make sure consumers are treated fairly by credit reporting agencies (i.e. Experian, TransUnion, and Equifax.)
Consumers are entitled to a free credit report from each agency annually and when denied credit based upon a credit reporting agency’s report. The agencies must verify any information disputed by the consumer; if such negative information is removed, it can’t be re-listed without consumer notification within 5 days.
Negative comments on a consumer’s credit report can’t be listed for more than 7 years from the date of delinquency; bankruptcy, however, is an exception. Bankruptcy stays on your credit report for 10 years. Tax liens are a second exception; they remain on your credit report for 7 years from the time they are paid.
Debt collectors can call neighbors, family, friends, co-workers, and, even, your boss to obtain your “location information,” which refers to your address, telephone number, and place of employment.