Credit Repair — Beware of the Predators!

05 Aug Credit Repair — Beware of the Predators!

After the fresh start in bankruptcy, most consumers want their credit repaired. With so many bankruptcies, it’s a feeding frenzy for scam artists who want to take your money to rebuild your credit. So be warned and be prepared!

Many believe they need help — either after bankruptcy or in lieu of filing bankruptcy — to “clean up” credit reports. That’s where the snake oil salesman come in. Go to any large city’s Craig’s List and check out all the “Credit Repair” ads in the Financial and Legal Services sections. Watch late night TV, listen to the radio, just watch your junk mail! You will hear the sweet sound of easy redemption from credit problems. Get rid of negative accounts, delete judgments and even bankruptcies — whether or not those entries are truthful.

Want to bet how many of them were around 10-years ago? Or how many will be around in another 10-years?

Most of these credit repair organizations offer pie-in-the-sky services but they don’t come cheap. And that’s the rub: Most “credit repair” services fail to comply with the law. As Pam Stewart, a member here and Texas bankruptcy attorney, has pointed out, much of the accurate (but negative) information in a credit report does not have to be removed except under specific circumstances. And, under the Credit Repair Organizations Act (CROA), the providers of these services are not entitled to be paid until after they provide the services.

Our colleague, Jay Fleischman, a New York bankruptcy attorney, has provided important additional details about CROA and credit repair hype on our companion site, the Credit Law Network, which I encourage you to read as well.

And if you genuinely believe something is incorrect on your credit report, you may have the right to have that corrected under the Fair Credit Reporting Act (FCRA). Read more about credit reporting. Visit the FTC’s website about credit repair scams and rebuilding your credit. Talk to the lawyer who handled your bankruptcy, if you have filed. Or contact the attorney in your area to see if they handle this sort of issue – or if they can refer you to someone who does.

But don’t throw money at credit repair “deals” that sound too good to be true. They usually are.

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I have been a bankruptcy attorney since 1989. Our firm represents consumers filing bankruptcy almost exclusively, although I have represented bankruptcy trustees as well as creditors. For 2017-2019 I served on the American Bankruptcy Institute's Commission on Consumer Bankruptcy. Our Report recommended numerous changes to improve bankruptcy law to make it serve everyone in the process more effectively. If you live in Eastern Missouri, visit our website, send an e-mail or give us a call (314) 781-3400. Our website:
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