How Chapter 7 Bankruptcy Works

If you have a high amount of consumer debt and do not own property, Chapter 7 may be a viable solution. This bankruptcy can wipe out consumer debts and provide you with the opportunity to gain control of your financial future.

The process begins with completing a petition to file. The petition requires a list of debts, income and assets. If the bankruptcy court approves your petition, your debts can be discharged.

The discharge of debts means you never have to repay the debts listed on your petition. In addition, your creditors must cease all collection activities on those debts.

The most difficult part of filing is the paperwork. You can file on your own; however, we do not recommend this method. If you visit the Federal courts website, the courts dissuade individuals from filing without an attorney. The process is complex and a misstep can result in your case being dismissed.

If you own significant assets such as a home, we recommend you seek the advice of an attorney to find out the appropriate bankruptcy you may need to file. You do not want to risk losing your home by filing the incorrect bankruptcy.

Life after Chapter 7 Bankruptcy

Once your bankruptcy is discharged, it will remain on your credit history for up to 10 years. This will make it difficult to obtain credit for quite some time. However, most people who file learn to live without credit cards.

A bankruptcy on your record may make it difficult to obtain employment if the employers require a credit check as a condition of employment.

In some instances, it may make it difficult to obtain car insurance and a bank account. Some insurance companies and banks will conduct a credit check. If you have a checking account before you file bankruptcy, you should keep the account open.

If you need a new car or need to borrow money for any reason, you may have to apply for high-risk loans, which carry a high interest rate. You can begin to build credit by obtaining a secured credit card. Once you establish a good payment history, you may be able to obtain a car loan with a lower interest rate.

The clear advantage of filing bankruptcy is the collection calls stop immediately upon filing. While the bankruptcy will remain on your credit history, bad credit is just as detrimental. Most people are able to rebuild their financial life after bankruptcy. However, if you do not file, the debts may haunt you throughout your lifetime.

The relief people feel once they have received their discharge, it tremendous. Most people want to pay their debts but are crushed by late fees and high interest. If you are unable to meet your payment obligations and are getting deeper in debt, we recommend you speak with a bankruptcy attorney to find out if chapter 7 bankruptcy is right for you.

If you are unsure or uneasy about filing bankruptcy, we recommend you get a consultation with an experienced attorney. Most lawyers will offer a free consultation to review your case. A lawyer will explain how bankruptcy can help and what to expect during the process. It is true that you do not need to hire a lawyer; however, once you discover the amount of paperwork involved, you will likely want to reconsider.

We must also mention that according to uscourts.gov, those individuals who file on their own are rarely successful. In some cases, people have lost their right to file due to a procedural error. Hiring a lawyer is the most costly method of filing; however, it is the most effective method. You will know all your paperwork and documents are in order when your attorney files your case.

If you are considering chapter 7 bankruptcy, we strongly recommend you seek the advice of a bankruptcy attorney. This is the best and safest method of filing. In addition, you may have assets that you do not want to lose. Filing the incorrect bankruptcy can cause you to lose those assets. In addition, an attorney will ease your mind about filing. Too many people feel guilty or ashamed that they have to file. The bankruptcy law is designed to give people a second chance. You should not feel guilty or ashamed because you need this second chance.

As a business owner, you may see no other alternative other than bankruptcy for getting out of debt. However, a professional bankruptcy lawyer with years of experience in his field may be able to offer other possible solutions that can save you time, money and the reputation of your company.

Advantages of Filing for Chapter 11 Bankruptcy

Unlike Chapter 7 bankruptcy, Chapter 11 does not simply dissolve your outstanding debts; it merely restructures them for easier payment. You propose a repayment plan to your creditors by which monthly payments are made towards liquidating your debt over a specific time period. Whatever debts are left at the end of the repayment time period are generally discharged. This is where the services of a bankruptcy attorney can be beneficial to your cause. A Chapter 11 bankruptcy lawyer can help devise a financial plan that is manageable for you and meets the needs of your creditors as well.

The advantages of Chapter 11 for your company are many and varied. First, you retain a certain level of respect from your creditors as you enter into an agreement to repay a good portion of your debt. Second, it enables you to retain your assets and maintain a certain amount of control over the business during the repayment period. As long as the business is making money, you can keep it running for the duration of the bankruptcy procedure. Third, if you have any debts remaining by the time your repayment plan comes to a close, these will be discharged in full, clearing your financial record. This enables you to start anew with no outstanding bills or liabilities to your name.

The key to getting accepted for this bankruptcy is to develop a fair and workable repayment plan that is satisfactory to both you and your creditors. If your creditors disagree with your proposed plan, they can try to negotiate a better deal. Once everyone is happy with the plan, it stays in place for the duration of the bankruptcy process. If a settlement cannot be reached, however, you may find yourself forced to liquidate your assets to pay your debts.

Disadvantages of Chapter 11 Bankruptcy

There are also disadvantages to filing for Chapter 11 and you should be aware of these before making any hasty decisions. One of the drawbacks of filing for bankruptcy is that it will be harder for you to borrow money from a financial institution in the future. You may also find it harder to find other companies who will work with you once your bankruptcy has been settled.

Yet another negative repercussion could be that your financial plan is rejected by your creditors, resulting in your having to liquidate everything and lose your business. In addition, the changing of bankruptcy laws could also negatively affect your case, leaving you holding the short end of the bargain. These are factors that you should discuss with your bankruptcy attorney ahead of time to make sure you are making the right decision.

Tips for Those Filing for Bankruptcy

Once you have positively decided that bankruptcy is for you and have confirmed your decision with a competent bankruptcy attorney, then we suggest you not delay in filing. The longer you wait, the more in debt you become, putting greater strain on your already overburdened business. By filing as soon as possible, you can begin to restructure your debts and start repaying your creditors.

Try not to hold onto a label of having “failed” in your business. Regardless of how difficult bankruptcy may seem, you need to keep in mind that it is going to make it possible for you to get out of debt and start anew. Stay positive and objective in your personal attitude toward the future. A positive and constructive outlook will carry you through the difficult times into a more promising and optimistic future.

As Chapter 11 bankruptcy can be a complex and time consuming process, you will greatly benefit from having the assistance of a qualified bankruptcy attorney who is knowledgeable in this type of procedure. Your attorney can handle all the negotiations and exchanges with your creditors. He or she can also file all legal paperwork and monitor the procedure from beginning to end. This frees you to focus on keeping your business running and progressing as best you can until your case has been settled and you can move on to the future.

The three major credit bureaus basically use the same formula to calculate your credit score and this is based upon the original Fair Issac Corporation formula. This said, each bureau uses its own variation of the basic formula and so there will be very slight differences arising purely as a result of the formula used for the calculation. The formula used by each agency has its own names as follows:

Equifax – BEACON Score

Experian – Experian/Fair Issac Risk Model

TransUnion – EMPIRIC

Your credit score is calculated from the information contained in your credit file which is itself compiled from the information which is supplied to the bureaus from various different lenders, collection agencies and the courts. However, not all of these provide the same information to each of the three bureaus. For example, some lenders may only use one or two of the bureaus and so not report information at all to one or more of the reporting agencies.

Credit information is also reported to the bureaus at different times so that when a score is requested it may be calculated on more up-to-date information at one agency than the others.

It is also possible that credit was applied for under different names (for example, William Roberts and Bill Roberts) which can result in your file being fragmented or incomplete. The credit bureaus of course do try to match things up and combine information into a single file, but this does not always happen. It is also possible on occasions for somebody else’s credit information to end up on your file by accident.

Finally, each credit bureau files information in a slightly different manner and this can result in minor score differences.

In order to protect your own interests it is sensible to examine your credit report from time to time to make sure that the information being held is accurate and up-to-date and, if you are looking for credit, you should certainly request a score from each agency because your score can make a very significant difference when it comes not simply to obtaining credit but to doing so at the best possible rate. This is best demonstrated by an example.

Let’s assume that you are looking to buy a car at a cost of $75,000 which you want to finance over 5 years. We will also assume that your credit scores are – Equifax 725, Experian 718 and TransUnion 710.

The first thing that you will find is that lenders will typically offer your a better rate of interest the higher your credit score and that rates are usually applied to credit score bands. For example, people in the highest band of say 720 to 850 might be offered 6.14% while those in the next band down of say 690 to 719 might be offered a rate of 7.73%. For your car purchase therefore a lender who uses your Equifax score (725) will offer you a better rate than a lender using either your Experian score (718) or TransUnion score (710). This difference can often be significant resulting here on a standard mathematical calculation to monthly payments of $1,455 at 6.14% and $1,511 at 7.73%. That’s a total difference over the life of the loan of no less than $3,373.

Against this you will see that it is important to not only know what your credit score is and which credit reporting bureau your lender uses, but also to know how improve your credit score. For further information on this please see our articles “How To Repair Your Credit Report History” and “How Do I Repair My Credit Rating“.

Credit cards were originally designed to provide convenience, reducing the amount of cash which you needed to carry with you and enabling you to make purchases over the telephone and now through the Internet. However, for all too many people they have become a quick and easy way to borrow money so that they can shop today and worry about paying for their purchases tomorrow. As a result people nowadays often have several credit cards which they run up to their limit, suddenly finding themselves in the bad situation of having combined monthly payments which they can no longer meet. So what is the solution?

Many people these days are turning to yet more credit cards. In this case they are using a low interest credit card for debt consolidation and combining their existing credit card debts onto a single card and lowering their monthly payments. But is doing this such a good idea?

For some people it can be helpful but you have to understand just what you are getting yourself into before you decide to consolidate your credit card debt in this manner.

The first thing you need to look at is the rate that you will actually be charged. In general the low advertised rate will only apply to people with a good credit rating and, if you have experienced a problem with debt management and have a record of late or missed payments, then you will almost certainly find that the rate you will be required to pay is higher than that advertised. Unfortunately, there is no way of knowing this in advance and the only way to find out the rate you will have to pay, and indeed whether or not you will be issued with a card at all, is to simply apply.

The second thing you have to understand is that it is very unlikely that simply changing credit cards will do anything to reduce your total credit card debt. If you have maxed out your cards to $10,000 before consolidation, then you will still owe $10,000 after consolidation.

The third thing to consider is just what effect a lower interest will have on your debt. Certainly a lower interest rate will reduce your monthly payments but lower rate cards also typically end up extending the period over which your repayments are made and paying 7% over 5 years will represent a considerably higher total repayment than paying 10% over 2 years.

Interest rates on credit cards are complex because, unlike many loans, interest is calculated monthly and compounded over the life of the loan. Your monthly payments may therefore seem quite reasonable, but when you work out how much you will actually pay in total to clear the debt on your card you might well be shocked at just how high the figure is.

If you simply cannot meet the monthly payments on your existing cards then consolidating that debt onto a lower rate credit card may be one solution but you need to look at the figures very carefully and decide whether or not it is a price worth paying to solve your problem. Remember, this is only one solution to the problem and there are usually other options open to you which may prove to be better in the long run.

You may be surprised to learn that a significant proportion of those people with a debt problem do not have any idea how much they owe or how much they are paying out in interest on their loans every month. As a result, your initial job in sorting out your debt is to find out just how large your problem is.

Write out a list of all the debts you currently have, noting down how much of your original debt is still outstanding and how much you are having to pay each month. You also need to separate out each payment to see how much of the payment is a repayment of the original loan and how much is merely interest.

You could be appalled by what you discover, not just in terms of how much money you actually owe, but in terms of how much of your monthly income is simply being used to meet interest payments. For instance, if you earn $4,000 a month and are paying $400 each month in interest charges this means that you are paying out ten percent of your monthly income without actually reducing the total amount that you owe. If this sounds bad enough, then take it one step further. If $400 is the most that you can afford to pay each month then you can continue paying this for years without your debt going down at all.

With luck the difference between the sum you are paying in interest charges and the sum being used to repay the principle of your loans will be reasonable and it is hard to say exactly what this should be as it will change from one loan to another. For instance, in a normal home loan it is not uncommon to pay 90% interest and 10% principle in the early years of a mortgage, but you most certainly do not want to be paying this on your credit card debt.

Once you have calculated how large the problem is the next thing you should do is to construct a plan to clear your debt as quickly as possible. Here you will need to calculate how much in total you can afford to pay every month and then decide how this amount ought to be applied to your various debts.

One answer is what is sometimes called the ‘snowball’ method and involves clearing your smallest debt first. You will then have a greater sum of money to apply to your other debts and can gradually work your way up towards your largest debt.

A second answer to the problem is to tackle the largest debt first and so save the most money in what is in essence wasted interest payments. This is not an easy method however and progress is slow which makes it it hard to stick to this particular plan.

Whichever course you decide to follow you must not simply ignore one or more of your debts while you clear the others or you will fall foul of your creditors and cause problems with what might already be a damaged credit record. If you find that coming up with at least the minimum required payment on all your debts then you will have to talk to the lenders concerned and see whether they can assist. Almost all lenders will have a debt reduction settlement program and they will frequently agree to help you by accepting reduced payments for a short period of time, or even to waive your payments for two or three months, if you explain your situation to them.

If you have got yourself into a mess and are trying to work out how to deal with your debt then do not make things even worse than they already are by taking further debt. This may seem obvious but you would be surprised how many people in debt try to borrow their way back into credit. This does not work and merely makes an already bad situation even worse.

It is also common knowledge that, if an individual is not dealt with within this time limit, then he has escaped the law and cannot be pursued further (at least not within the criminal system). You may however be surprised to learn that the same system applies to your debts.

Before looking at the details of these limitations and at the statute of limitations on credit card debts in particular though, let us just take a moment to think about the lengths to which a creditor is likely to go to get his money back.

If you default on a loan then your creditor is faced with an often long, complex and costly battle to get his money back and will have to decide whether or not it is worth the effort of taking you to court in order. He also needs to consider carefully whether, even if he is granted judgment against you, you actually have sufficient assets to pay off your debt.

In the vast majority of cases, unless the sum of money concerned is substantial, the creditor will cut his losses and accept this is a simple expense of doing business. He will however not normally simply write the debt off but recover at least a small part of his money by selling your debt on to a debt collection agency.

The debt collection agent is however in a similar position to the original creditor, except for the fact that he has bought your debt for mere pennies on the dollar and so stands to make a reasonable profit if he can recover at least some of the debt. Nevertheless, the debt collection agent is again a businessman who must balance his costs in recovering the debt against the money he is going to recover. Consequently, there will also come a point at which he will say that it is simply not worth the effort and write the debt off.

In other words, if you simply out wait both your original creditor and the debt collector, then you can get away without having to repay your debt.

Now, at this point, it must be stressed that the creditor does have the right to take you to court and to ask the court for an order to seize your assets in order to recover the debt and, from time to time, creditors do indeed do just that. Whether or not they would do so in your particular case depends very much upon the particular creditor and whether or not he believes that such action would result in the recovery, at least in part, of the monies owed.

It should also be stressed that we are not suggesting here that the solution to your debt problems should be to simply outwait your lenders. Indeed, we would suggest that you should in the first instance negotiate repayment with your credit card company and, if the debt has already been sold on, negotiate a settlement with the debt collection agency. To this end we have included two articles on these subjects entitled “Negotiating Settlement On Credit Card Debts” and “How To Deal With Debt Collection Letters” respectively.

Now, whether or not you outwait your original creditor or the debt collection agent, both will have to recover their money within a stipulated period of time or, whether they wish to pursue the debt or not, the Statute of Limitations will come into play and they will lose their right under the law to recover their money.

The time limit placed on the recovery of debt depends up the nature of the original agreement and where you live, since each state has its own set of statutes.

Original agreements are divided into four classes:

• Oral agreements
• Written contracts
• Promissory notes
• Open-ended accounts

As far as we are concerned here it is the fourth of these which applies as this refers to revolving lines of credit with variable balances and includes credit cards.

For this class of agreement there is a set limitation period for each individual state and this varies quite widely so you will need to check it for your own state. As an example however the majority of states impose a limit of 3 years on the recovery of credit card debt while the maximum period imposed by just one state is currently 8 years.

Dealing with creditors can be difficult and finding the best solution to your particular problem may not be easy. Nonetheless, when putting together a plan you should be aware of the Statute of Limitations for your state and, where appropriate, figure this into your calculations.

Many people try to avoid dealing with their credit card company when they run into problems and simply ignore the problem in the hope that it will go away. It doesn’t of course and the longer you leave things the worse the situation will become. Nevertheless, this is one bullet you have to bite and, if you really cannot talk to the credit card company yourself, then get a debt counselor to do so on your behalf. It is certainly better to talk to the credit card company yourself if at all possible though and it is not as difficult as you might think.

So when should you talk to your credit card company? This might seem like a stupid question but the answer is not quite as straightforward as you might think and depends very much on what you wish to achieve.

If you are simply looking for short term assistance to help you over a temporary problem then you should talk to them as soon as possible. If you have some sort of emergency with unexpected bills to pay and want them to allow you to make reduced payments for two or three months them you should explain this to them and get their agreement as soon as you can.

If, however, your problem is far greater and you want to effectively close out your account and pay off as little as you can get away with then you need to wait a while and do not want to approach them until they are reaching the point at which they will pass your account off to a collection agency. In most cases this will be once your account falls about 120 days in arrears, although with some companies such as American Express this is normally only 90 days.

To understand why you need to wait you have to understand a bit about how a credit card company works. In most cases the company will make an effort to recover outstanding payments from you but, at the end of the day, if you default on your card agreement the company will need to pursue you through the courts to get its money back and this is a very time-consuming and costly exercise. As a result, after a certain period of time (generally 120 to 150 days) they will simply sell your debt on and put their loss down as a cost of doing business. When they do sell the debt on however they will do so for mere pennies on the dollar and it is not uncommon for a credit card company to sell your debt to a debt collector for as little as 6 or 7 cents to the dollar. In other words, if you owe $2,000 they will sell your account and recover only $120 to $140.

Against this background there is little point in talking to the company until they are approaching the point at which they are about to sell your debt on because, until that point they will not wish to discuss any option with you other than the full settlement of your account. Once they are about to sell your debt on though you are in a strong position to negotiate with them and they will be far more likely to accept a reasonable settlement rather than the very low sum which they will receive from a debt collection agency.

So what would be a reasonable offer for settlement?

Well, it might seem that offering anything over what the credit card company could expect to receive from a debt collection agency should be the answer but we have simplified things slightly here and, although we have painted a fair picture of how things work, it is a little bit more complicated behind the scenes.

For a number of years it has common practice for credit card companies to accept between 60% and 80% of the outstanding balance on settlement but this has begun to change within the past couple of years and a number of companies, including the Bank of America and Discover, have started to accept offers of as low as 50%. Whatever the final settlement in your own case you should start by offering a low but realistic figure such as about one third of the debt and be prepared to settle at about one half to two thirds of the debt.

One final thing to remember is that your credit report, which will already reflect the fact that your account is in arrears, will be annotated once the account is closed out. If the balance is settled in full then it will normally be marked as “Paid as Agreed” while, if a lower figure is accepted then this effective loss to the company will be reflected by marking your credit report entry as “Settled”. We look in more detail at credit reports elsewhere and also discuss the subject of credit report annotations in our article entitled “How To Deal With Debt Collection Letters“. However, in the vast majority of cases, credit card companies are nor open to negation when it comes to changing the annotation to your credit report for a less-than-full settlement of your balance.

So, is credit really that necessity these days?

Bear in mind that credit cards have not always been with us and that it was not until the 1970s that they started to be used widely. What does it really mean if you do not have a credit card? In simple terms it means that you do not a ready source of credit in your pocket and can only buy those things that you can afford.

We all want to have the latest flat screen television and a new outfit for each season, as well as a holiday in the sun with the kids in the summer and another skiing holiday in the winter. But do you really need these things or are they simply things that you want. More importantly, is it really worth putting yourself into debt by borrowing the money you need to buy them?

What would you do if credit simply was not available? Would you go without or find another way to buy what you want?

The problem with credit is that it is too easy to see it as free money whereas, in reality, it is going to have to be repaid at some point with interest. Credit allows you to have what you want today, but locks you into paying for whatever you buy for months, and normally, years to come.

So, what is the answer?

The first thing you need to do is to stop using credit in form at all, with the exception of a mortgage to buy a family property and possibly hire purchase to buy a car, if the later is really a necessity.

Next, review your finances and, if you need money in the short term, consider selling off some of your possessions, working longer hours or getting a second job. At the same time review your current buying habits and, if necessary, think about doing more of your shopping in thrift shops, consignment stores and other discount shops.

Then, get into the habit of saving. Even a small amount put aside each month can quickly add up to a substantial bank balance.

Finally, think carefully about everything you buy and decide whether or not you really it and, more importantly, whether you can afford it.

The strange things is that once you get into the habit of living without credit you will find that you actually have more money to spend since you are no longer having to make interest payments and your overall standard of living will rise.

It may take a little while to get into the habit, but it will be well worth it in the long run.

Just before we look at this however there is one other point we should make about your credit history. Items which appear on your credit report are time limited and will be removed from your report 7 years after the last entry is made for a particular item. If you have an outstanding debt which has been on your record for 5 years therefore since it was last amended it will disappear in 2 years time. However, if you pay off this debt then you will start the clock running again and the entry will remain for a further 7 years. This needs to be taken into account when you are considering whether or not to clear a particular debt.

One other thing which you need to know about your credit report is that any creditor who is permitted to add information to your report is also permitted to change that information and indeed to delete it.

Against this background let us look at a very important but much overlooked aspect of repairing your credit score – the matter of repairing your credit report history.

Let us assume that you have a debt which has been passed to a debt collection agency for recovery and you are in the process of negotiation clearance of this debt with the debt collector. We cover exactly how to go about this in our article entitled “How To Deal With Debt Collection Letters” so we will not cover that again here but will consider one aspect of the settlement of this debt which many people should, but do not, negotiate.

The debt collector’s principle aim is to recover your debt and he is not terribly interested in your credit record. He is however conscious of the negative effect that clearing your debt can have on your record and so will often to open to removing a negative entry from your record as part of the settlement.

If at all possible you should therefore include this requirement in your negotiation and get him to agree to removing the entire negative debt listing from your file before making any settlement payoff. Now there are both advantages and disadvantages to doing this of course. On the one hand it will certainly be in your interest to have the entry removed but the mere fact that you are asking for it to be removed, and thus indicating that your credit record is important to you, may also lead to the debt collector requiring a higher settlement figure.

One way around this is not to make this a condition until after a settlement figure has been agreed. At this point you can then make your payment to the debt collector but enclose what is known as a “conditional endorsement” statement with your settlement check. This statement should normally be drafted by an attorney and simply informs the debt collector that you require him to delete your negative entry as a condition of acceptance of your settlement check. This will often work because, having received your check, the debt collector is happy with the outcome of your case and so will remove the entry without a second thought. The danger however is that he could also simply reject your terms and return your check. He could also simply deposit your check and not alter your listing, leaving you to try and fight on to get him to remove the listing.

As a general rule most creditors can be persuaded to delete a negative entry but it can be a matter of finding the right person to speak to and this can take a very long time. Where you cannot get a creditor to delete an entry however all is not lost and there are still a number of alternatives.

While getting an entry deleted is your best option, the next best alternative is to have your entry simply marked as “Paid”. Your account will often be marked to show not merely that an account has been paid but also to indicate the circumstances under which it was paid and this can add to the negativity of your record. It could for example be marked as “Paid charge-off” or as “Paid late negotiations”. If the creditor will not agree to delete the entry entirely then try to get him to simply mark it as “Paid” and to remove any other negative notations.

If this does not work then the next line of attack is to have your account listed as “Settled”. Although this is not the best listing in the world and is negative in nature, it is certainly better than something like “Paid charge-off”.

If all else fails you may have to accept a listing of “Paid charge-off”, “Paid collection” or “Paid late” which is not ideal but is still better than having your listing marked as “Unpaid”.

One final note, if you do dispute the listing then you will often find that, once an account has been paid, the mere fact that you are disputing the listing will result in it being deleted since this is an easy way to resolve the matter and the creditor, having got his money, now has no real reason not to delete the listing.

You may of course request copies of your report more than once in any 12 month period if you wish to do so but only your initial report will be free of charge and you will need to pay for additional reports. It should also be noted that the procedure for obtaining additional reports is not the same as that to followed to obtain your free annual copy.

To obtain your free annual report you should NOT contact the credit reporting companies directly but should either:

Visit annualcreditreport.com which is a website set up by the three companies specifically to handle requests for free annual credit reports.

Call 1-877-322-8228

Complete an Annual Credit Report Request Form and mail it in to:

Annual Credit Report Request Service
P.O.Box 105281
Atlanta
GA 30348-5281

WARNING: Only the website listed above is authorized to process requests for free annual copies of your credit report and you should not attempt to obtain your report from any other website. You will find that there are many websites offering ‘free credit reports’ or ‘free credit scores’ but such websites are not only not authorized to provide this information but many are scam operations which offer a seemingly free service but which are in fact setup to persuade you to purchase or trick you into purchasing other services.

In submitting your request you will need to provide your name, address, date of birth and social security number. In addition, if you have moved within the past two years you will need to provide details of your previous address. In addition, each credit reporting company may ask you for information which only you should know as an added security measure. This information will be something that is recorded on your credit file such as your current monthly mortgage payment or car loan payment.

When making your request you can order copies of your credit reports from all three agencies at the same time or may choose to receive a report from just one agency or reports from two of the three agencies. If you wish to compare the three reports then it is a good idea to obtain them all at the same time. However, bearing in mind that you can only request a report from each agency once a year, you may decide that a better option is to spread your requests out so that you can track your credit file effectively every four months. The choice is of course entirely yours to make.

If you make your request online then you will normally receive a copy of your credit report instantly, unless the credit bureaus require additional security information, in which case there may be a delay while this information is obtained and processed.

If your request is made by telephone or by mail you should normally expect to receive your report by mail in about 15 days. At times when the credit agencies are receiving an unusually high number of requests there may be a delay beyond 15 days and you will normally be informed of any possible delay.

Should you wish to buy copies of your report in addition to your free annual copy of the report from each credit reporting company then you should contact the company directly as follows:

Equifax – Tel:1-800-685-1111 Website: equifax.com

Experian – Tel:1-888-397-3742 Website: experian.com

TransUnion – Tel:1-800-916-8800 Website: transunion.com

It should be noted that your credit report does not include details of your credit score and, should you require your credit score this will need to be purchased from the three credit reporting companies individually. This can again be done by contacting the companies on the telephone numbers listed above or by purchasing your credit score online through their individual websites.