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Credit after Bankruptcy
The US Supreme Court:
- "One of the primary purposes of the Bankruptcy Act is to give debtors a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt."
If you immediately re-establish credit, you can easily have a 700+ credit score 2 years after discharge and get a mortgage as long as you have a good reason for the bankruptcy (unemployment, medical, business failure, etc.)
However, creditors routinely violate the discharge order and continue to report the discharged accounts as charge-offs with delinquent balances.
Even when reported CORRECTLY, 6 year old discharged accounts STILL lower your Fair Isaac credit scores.
I have done some testing at the Equifax site. The before, during, and after dispute Beacon scores clearly indicated that each discharged account costs you a few points. Whenever I have some spare time, I will add more details. This is an important part of my upcoming law suit against Fair Isaac.
Reporting as charge-off WITH balances will usually lower the credit scores significantly, and in combination with a RECENT date it will destroy your credit.
This is NOT an occasional credit reporting error, but just about all credit reports with bankruptcies contain discharged accounts WITH balances.
Creditors often continue to access your credit file and possibly lower your credit scores - they do NOT have a permissible purpose after the discharge.
You can demand $1,000 for each violation. The creditor no longer has a valid claim after the discharge. If they were NOTIFIED of your discharge, go get your $$$. Many readers have now received those checks.
If you find any incorrectly reported discharged accounts on your credit reports, contact your bankruptcy attorney for assistance.
Unfortunately, many bankruptcy lawyers are dumb as rocks, couldn't help you if they wanted to and wouldn't help you if they could. They just don't give a damn.
But, I recently heard about a lawyer who actually resolved his clients' credit problems.
So, call your lawyer and see if he'll help. It's worth a try.
Subscribe to the credit monitoring services.
The on-line credit reports contain more info, you can monitor the progress of your disputes and you get notified of any re-insertions after deletion. While I HATE to recommend that you give your $$$ to the credit bureaus, NOT subscribing and disputing will most likely cost you much more if you use credit and insurance.
Lower credit scores can result not only in higher interest rates, but also higher insurance rates and even declines.
If you can't pay your bills and you qualify for discharge of your debts, you should probably do so - avoid the credit counseling services like the plague.
Do NOT sign up with any of these "non profit consumer credit destruction services."
Whether it's Genus, MyVesta or any other fake non profit, they all get paid by the creditors. Usually creditors give 10% of your payments back to those agencies, in addition to your "voluntary9quot; contributions.
Joining one of those programs often results in lower credit scores than if you discharge your debts. Not only are you out the cash you give them, but you destroy your credit with late payments and "consumer credit counseling" notations. While those CCC notations are ignored by FICO credit scores, many creditors rate those notations similar to bankruptcy.
Even after complaints about Capital One with the Federal Reserve Bank, the BBB and a Planetfeedback.com complaint to the Capital One CEO, they STILL
- claim that only interest was paid
- demand $1,000 to settle the accounts
- refuse to provide accounting
- destroy the credit by reporting charge-offs with delinquent balances, and upon the latest dispute one account was even re-aged to a CURRENT charge-off.
Just say "NO9quot; to credit counseling - it does NOT pay to pay.
On 2/8/04 I reviewed a Trans Union FICO report. Only 24 months after Ch. 7 filing the FICO scores was 726.
Capital One - Experian credit reporting for an account DISCHARGED in 1996
You can NOT tell from this report that the account was actually discharged in 1996.
The June 2002 dispute with Experian: "Please verify All dates and balances."
NOTHING was corrected. How can this be, while the 1996 Ch.7 discharge is reported on this same credit report?
Disputing incorrectly reported accounts
In the first dispute after the bankruptcy I'm tempted to dispute all derogatory accounts as "not my account." That's because a correctly reported "included9quot; account still lowers the credit scores. I have a policy of not lying and I've struggled with this for a while. Then I noticed that the bureaus blatantly lie in their answers to lawsuits. So I don't lose any sleep over this. Of course you can also use the Reagan approach: "I don't recall . " Experian's online dispute reads "no knowledge of account."
Some judges really frown on "not my account" disputes when the account IS yours, and it can cost you your case. Unless you're absolutely sure that you will not sue, stick with factual disputes.
After the dispute results are in, you can dispute the remaining incorrectly reported accounts through 2nd "specific9quot; dispute. I'm still reluctant to recommend suing after only one dispute, although there really is no reason not to. The FCRA doesn't require two disputes.
You could just point out each incorrectly reported date, balance and notation and tell them what it should be right on the reports. In that case send your "corrected9quot; reports to the bureaus with a "please correct as indicated." It's a lot of work, and don't forget to make a copy for your records.
I have been sending "specific9quot; disputes with lots of questions. I'm still hoping to be able to get answers some day, maybe in court.
Sample dispute for the above account:
"I am hereby disputing the credit reporting of the following accounts:
How did you arrive at the conclusion that this charge-off is reported correctly?
Discharged Through BK Ch 7, 11, or 12 04/30/2001 to 02/28/2002"
I had specifically requested that you verify all dates.
The US Supreme Court:
Of course they never answer.
So now I make the disputes a little shorter, but it is important to dispute all those incorrect notations and dates.
I settled with Providian in 1/04 and the Experian former AZ affiliate CreditData SW (Merchant Information Solutions) filed a Motion for Summary Judgment and provided me with many documents about the disputes. The judge denied the motion and I'm still waiting to get to discovery, probably sometime in 2005.
Legal options -- if the bureaus verify incorrect data
When creditors verify incorrect data after your bureau disputes, they violate the FCRA and they are liable for your damages.
I address the "after bankruptcy" reporting in the federal law suit I filed on 3/19/03 against all CRAs, Fair Isaac and several creditors, collectors, the FTC, FCC and the Federal Reserve Bank of Richmond.
It is despicable that the bureaus have absolutely NO procedures to prevent incorrect credit reporting and creditors routinely ignore the discharge order.
It's even more despicable that the so-called "regulators9quot; fail to enforce consumer protection laws such as the FCRA and FCBA.
I have found that it's difficult to find an attorney to sue over just one violation and one bureau. But it's not unusual at all to have an entire list of violations by the time the 2nd dispute results arrive.
Plaintiff attorney: Bybee -- Cause: FCRA
filed in Phoenix federal district court 1/8/03
I am NOT an attorney. That's why nothing I publish is legal advice.
Some of the best postings at the Bankruptcy Forum:
For more details on "after bankruptcy" disputes and FICO credit scoring, please sign up at CreditFactors.
capital one disputes
Home Articles Burford Capital to fund first UK law firm disputes portfolio
Burford Capital to fund first UK law firm disputes portfolio
The momentum keeps building for Burford Capital as new funded law firm portfolio arrangement is revealed with Shepherd & Wedderburn.
Third-party financier Burford Capital has secured its first United Kingdom-based portfolio-financing arrangement with a law firm – Shepherd Wedderburn.
Just last week, Burford’s half-year results revealed the growth of its portfolio financing business which accounted for 25% of its investment commitments so far this year, compared with just 9% invested into single pieces of litigation and arbitration.
While Burford’s chief executive Chris Bogart has long-contended that the traditional model of third-party funding is moving towards a corporate financing model, where corporates can use portfolio financing to better manage the impact of litigation or arbitration on their balance sheets, actual UK examples of such arrangements have been slow to come to the fore; with just one USD 45 million portfolio arrangement announced with a FTSE company, thought to be BT, in January 2016 and a later GBP 9 million arrangement, in May 2016, with accountants Grant Thornton (GT) to provide a facility for a portfolio of insolvency cases in which GT partners are trustees.
In a statement, Burford’s London managing director Craig Arnott noted the increasingly competitive legal market and said: “Portfolio finance is an essential tool to help UK law firms to be nimble and innovative to attract clients. We are delighted that Shepherd and Wedderburn has taken a leadership position in the UK legal market in using portfolio finance to grow its business.”
The new multi-million-pound arrangement will allow Shepherd Wedderburn to expand its ability in offering clients alternative fee arrangements, while Burford will receive a portion of proceeds of any dispute that succeeds on a cross-collateralised basis.
Speaking to CDR, Guy Harvey, head of commercial and international disputes at Shepherd Wedderburn, says he and the firm have been involved in funding since the early days when his firm acted for Albion Water in the first-ever funded competition damages case heard by the Competition Appeal Tribunal in 2012, in Albion Water v DЕµr Cymru Cyfyngedig (2013) – “a typical David and Goliath case which, frankly, without funding couldn’t have been brought”.
“The BT portfolio deal was interesting development, it was a logical progression from single-case bespoke funding to something more generic,” he says.
One of the reasons why the arrangement is in place, is that it fits very well with the firm’s cases which range from competition follow-on damages claims, insolvency and IP protection claims, to international commercial arbitration and investor-state arbitration, Harvey explains.
“One of the many reasons why firms, us included, have shied away from damages-based agreements (DBAs) is because very few firms are prepared to go out on a limb to the extent necessary to take that risk. This funding portfolio gives us the opportunity to take work on a DBA, which is a fantastic deal for our clients, and for us to make sure that we get our running costs as we go along. Combine that with ATE (after-the-event insurance) and you are providing a complete no-win, no-fee, no-risk solution for the client which is very attractive,” says Harvey.
As to how it is decided which cases are included in the portfolio, Harvey says it is a two-stage process where upon both his firm and Burford will decide, with the firm deciding which cases are brought forward for consideration, via its own investment committee, subject to certain pre-determined criteria.
“We have stringent internal controls on what cases are put forward, while Burford will do its own due diligence. The expectation, based on previous successful agreements, is on both sides that the cases should meet the criteria, and we will quickly find out. Knowing that the funding is there if the criteria are met gives us a much more streamlined approach to funding.”
That said, the agreement does not give Burford exclusivity over Shepherd and Wedderburn’s disputes caseload, Harvey asserts. “We have good relationships with other funders in the market and it is understood by everybody that we will continue to keep those relationships.”
When asked about the reasons for publicly disclosing the arrangement, Harvey says it is good thing for the profession to be aware of, “it is a modern approach to litigation”.
Whether this arrangement will encourage more firms to take on portfolio deals and put to bed some of the myths around the unsuitability of the vehicle for their particular cases, Harvey quips that “the proof of the pudding will be the eating. We have obviously decided that this is the right approach for us.”
There is a group of people, whether they are in funding or on the practitioner side, who are looking in the same direction down the road to travel, he says.
“To me this is just the most obvious step forward in providing proper funding to our clients. I am astonished at how often I go to events in the legal profession, and people still know very little about funding or are hostile to the concept of it. If anything blows that out of the water, it is the BT deal last year. If you are not doing it, then I think you really are working with one hand tied behind your back. This is what this arrangement is about,” Harvey concludes.
Elsewhere, an alternative solution to reduce the risks associated with DBAs was announced in May by TheJudge. Its new DBA-specific insurance cover provides a product where litigators pay a premium for the cover that is contingent upon the case succeeding and the firm going on to recover its contingency fee. If the case is lost, or the contingency fee recovered is too small to reimburse the costs budget, the firm can claim on the policy and has no liability to pay a premium, which they only pay if they win.
While the cost associated with such a product is lower than that of third-party funding, insurance does not deploy capital to assist with the ongoing running of the case, so will only benefit cases where cashflow is not a concern.
Commenting on the new insurance product, Herbert Smith Freehills’ global head of dispute resolution Justin D’Agostino said: “Clients are interested in seeking new ways of paying for their legal fees or of transferring the cost risks associated with bringing a claim… having the ability to share contingency fee risk with large and international insurers gives law firms the confidence to offer a wider choice of pricing models.”