Bankruptcy

Once the debt is paid, here's how to regain your financial footing

After her husband's death, Louise Tripplett found herself alone with four children, while bills poured in faster than she could pay them. "The bills amounted to more money than I had com­ing in," she explains. Tripplett decided filing for bankruptcy was the best option.

She's not alone. According to the Administrative Office of the U.S. Courts, nearly 1.5 million Americans filed for bankruptcy in the 12 months preceding June 2006. Cynthia L.Gibson, an attor­ney in California, says the decision is a serious one. "Once you file for bankruptcy, it stays on your credit record for 10 years."

You can, however, start on the road to financial recovery today. Start monitoring your credit record regularly. You are entitled to order a free copy of your credit report every year from the three major reporting agencies: Experian, Equifax, and TransUnion. Go to www.annualcreditreport.com.

Howard Dvorkin, founder of Consolidated Credit Counseling Services Inc. in Florida (www.consolidatedcredit.org), recom­mends writing a letter to each credit bureau if you find inaccuracies. Include your full legal name, address, birth date, and Social Security number, and make photocopies of any documentation. "If the credit bureau can't confirm within 30 days whether or not the information is accurate, it must be removed," he says.

Within five days of making a correction the credit-reporting agency must send you:

• 1. Your corrected credit report
  
  
• 2. Written explanation of its investigation process and the contacted creditor
  
  
• 3. A notice of your right to have the credit bureau send your corrected credit report to employers reviewing it in the past two years and anyone else reviewing it in the past six months.
  
  

If after 10 years a bankruptcy doesn't drop off your record, likely because of administrative error, write a letter. Be pe­rsistent. If you don't get resolution within 30 days, write again and follow up by phone.

Our experts say that your most important financial tool now is discipline. Tamara Haskins, a financial adviser for Merrill Lynch in Edison, New Jersey, says, "Consider meeting with a good financial planner to help you set goals and create a road map to reach them. Keeping a monthly budget and comparing your actual spending will also help keep you on track."

Tripplett agrees, "You don't want to become a person who files bankruptcy every 10 years just because you can. Be stable and stay within your limits. Reestablish your credit by paying on time a. in full every month."

WANT TO REBUILD YOUR CREDIT AFTER BANKRUPTCY? TRY SECURED CARDS.

Filing for bankruptcy can affect your ability to get credit cards, buy a home, and find employment. Secured credit cards are an excellent way to begin rebuilding your credit.

Secured credit cards require you to maintain a savings account as security for a credit line. Deposits can start as low as $100. Credit lines, which can increase after establishing a good payment record, are typically 50% to 100% of your deposit. Keep these facts in mind.

• * Miss payments on your account and your deposit funds will be used to cover what you owe.
  
  
• * Annual fees and higher interest rates than unsecured cards are common as are application and processing fees.
  
  

The Federal Trade Commission (www.ftc.gov) says to avoid surprises by asking about a card's total fees before you apply and verifying whether they will be refunded if your application is denied- Confirm that the card issuer reports to major credit bureaus; otherwise-having the card can't help you rebuild your credit.

Find information on secured credit cards at Websites such as www.creditcards.com.

Consistently pay on time and stay within your c limit and on average, after about a year, you'll b increasing your credit score and eventually qualify for an unsecured card.
some portion of debt in a proposed repayment plan of three to five years.