Post-bankruptcy: Beware of credit repair scams

Credit is one of the main concerns individuals have when they file bankruptcy. They fret over how bankruptcy will impact their credit, credit score, and many future opportunities that involve credit, such as obtaining a mortgage.

After receiving a fresh start through their bankruptcy discharge, people look for ways they can improve their credit so that they can move forward. This is natural and beneficial. However, individuals must be aware of false offers and scams that claim to repair their credit.

What do real credit repair agencies do?

Not all opportunities to repair a credit score are phony. There are legitimate credit repair companies that work with attorneys to review an individual’s credit report in order to:

  • Look for mistakes and expired negative information in the report;
  • Explain to the individual what factors are impacting their credit score; and
  • Determine strategies for the individual to help boost their credit.

New Mexicans must understand that these companies cannot fix someone’s credit automatically. They offer counseling to help individuals boost their credit more effectively and efficiently.

Credit repair usually cannot fix bankruptcy

A bankruptcy filing is seen as negative information on an individual’s credit report. And this information will stay on an individual’s credit report for a while, depending on the chapter of bankruptcy individuals file. For example:

  • A Chapter 7 bankruptcy stays on someone’s credit report for about ten years; and
  • A Chapter 13 bankruptcy stays on a credit report for an average of seven years.

During these periods, the bankruptcy is not yet removed as negative information. Therefore, credit repair companies cannot always repair someone’s credit score immediately after bankruptcy. Although they often can still provide assistance and counsel.

Know the signs of a credit repair scam

Some offers of credit repair come from illegitimate companies. They try to take advantage of individuals and scam them. The Consumer Financial Protection Bureau explains the signs of a credit repair scam that individuals should be aware of, including:

  • Making promises of immediate results and fixes;
  • Requiring payment before services rendered;
  • Not allowing individuals to cancel the services;
  • Not informing individuals of their legal rights; and
  • Advising individuals not to contact other credit companies.

Filing bankruptcy can give individuals a fresh start from their struggles with debt. However, they must take great care to protect their financial future after bankruptcy and avoid dangerous scams that might target them.