Bankruptcy Discharge Important Tips

Preparing for Life after Bankruptcy

Over the past few months, we have had many requests and questions associated with and surrounding the process of bankruptcy discharge.

How long will it take to get credit? Will a lender or service provider still do business with me? How can I rebuild my credit? What happens to my credit bureau?  How will I know I have been discharged?  And the big one that comes more often than it should… I did not get my discharge, now what?

Bankruptcy Discharge as explained in our previous posts, will occur either after 9 months or 21 months.  On the rare occasion a bankruptcy will last longer but for this article we will stick to typical scenarios.

Discharge from 1st time and 2nd time bankruptcy will occur automatically.  This is the release from your obligations and requires no court appearance.

Automatic discharge will only occur if the debtor has met his obligations and there is no opposition to the discharge.   In order to receive your timely discharge be sure that all the obligations have been met on your side.

Basic Debtor Pre-Discharge Checklist:

1. Have you made all your payments to the trustee? This includes any surplus income payments.  Outstanding monies owed will postpone or delay discharge.
2. Did you complete your budgets submissions, supply any and all documents, T4′s or other forms requested by the trustee?
3. Have you attended 2 mandatory financial counseling sessions?
4. Will there be any opposition by creditors to the discharge?  Ask your trustee if he anticipates any creditor making application for opposition.

IF you are not sure that indeed have completed your obligations or want to confirm the date of discharge call your trustee.  Confirm that nothing is outstanding to delay your discharge.

Discharge Day – Celebrate

Ready to get on with your life, follow these important steps

1. After receiving the discharge papers, make several copies and keep secure the original.  It is a very important document and there is a strong possibility that over the next few years, you will be required to provide proof of discharge.
2. Report your discharge directly to Equifax and Transunion. In writing, you will need to send in a copy of your discharge directly to both agencies.  Every trustee is different, you can not depend on them to file your discharge with the credit bureaus.  Recently trustees have been requested by the bureaus to forgo direct reporting of discharge to the credit bureaus.  Leave nothing to chance, do it yourself.
3. Include a copy of the statement of affairs with your discharge documents being sent to each credit bureau.
4. Review your credit bureau for both Transunion and Equifax.  These are available either for a fee online or by requesting by phone or mail.  Check your bureau thoroughly, review that each and every account is accurately reported.  Using the official Statement of Affairs, provided to you by your trustee cross reference credit accounts associated with the bankruptcy.
5. If you find errors or omissions, you need to initiate a dispute to correct the inaccuracies.
6. 2 months after reporting your discharge, review your credit bureaus again. Following up that your discharge was reported properly and all changes and accounts are now current and accurate.

Creditors will often sell off their accounts to collection agencies, prior, during or post bankruptcy. As the ownership changes, reporting to the bureaus can become riddled with errors or omissions. Avoid needlessly falling victim to inaccuracies, stay on top of your credit accounts.

Bankruptcy will stay on the credit bureau for 6 to 7 years after discharge, as will all associated credit accounts. However,  you can start rebuilding credit as soon as you are discharged.

The new you is finally here, financially responsible and taking control of your life.

for more information regarding discharge from bankruptcy.