Avoid Credit Repair Scams After Bankruptcy

After a bankruptcy, debtors are finally “caught up” on their financial obligations, but are left with temporarily damaged credit.  With a little bit of consistent work and effort, such as making timely monthly payments on a secured credit card, that credit can be restored to health. But some debtors try to fast-track this process by taking an easy shortcut: they resort to using a credit repair company.  While some are legitimate, many of these companies make outrageous promises that sound too good to be true — and that’s because they are. Avoid the temptation to give in, or you could become the victim of a credit repair scam.  Here are the red flags to watch out for.

Restore Good Credit with Timely Payments

Rebuilding healthy credit after Chapter 7 or Chapter 13 is a completely possible and realistic goal.  Bankruptcy is not a financial death sentence, and many people with filings in their pasts are able to make major purchases like cars and real estate in the future.  If you are diligent and consistently pay off your bills in full and on time, you can start to see improvements in as little as about six months.

However, some debtors lack the faith or patience to restore credit in this way.  They want improved credit now, and in their frustration, they turn to a credit repair agency hoping for a drastic spike in their score.

They can hardly be blamed: these companies’ claims certainly sound very enticing.  Common promises include “a new credit identity” and “removal of bankruptcy from your record,” all of which conveniently comes with a “100% guarantee.”  If you take a credit repair agency at its word, it sounds like an excellent deal…

Common Signs of a Credit Repair Scam

Unfortunately, this is simply a case of slick advertising — often for fraudulent companies.  Here are some common red flags that you might be dealing with a scam:

• Gimmicky language.  When you’re working with financial professionals, you shouldn’t feel like someone is trying to sell you a used car.  Be wary if an agency uses flashy, pressuring terms like “guarantee,” “promise,” “limited time offer,” and “for absolutely FREE!!!”
• Lack of information.  Any legitimate company can support itself with facts, figures, and references, laid out clearly in plain sight for the consumer.  You shouldn’t be surprised with any hidden fees or cancellation policies which hold you hostage to ongoing payments.  You should be able to easily find names, addresses, contact information, and detailed descriptions of the services being offered.  You should also be informed of your right to cancel services, for free, within three days.
• Lack of paperwork.  You should be presented with a hard copy of your contract with the company, as well as a copy of “Consumer Credit File Rights Under State and Federal Law.”
• Unethical business practices.  No valid credit repair agency will tell customers to dispute numbers they know are correct, promise to erase accurate financial information, or otherwise encourage fraudulent acts.

If you or someone you love is considering filing for Chapter 7 or Chapter 13 bankruptcy in Pennsylvania or New Jersey, or if you have questions about getting started, call a bankruptcy lawyer at the law offices of Young, Marr, Mallis & Associates at (609) 755-3115 in New Jersey or (215) 701-6519 in Pennsylvania.  You can also contact us online.  Our attorneys offer a free initial consultation, so call right away.