Don’t Fall Prey to File Segregation Scams

By | Bankruptcy, Credit Repair, Fraud Protection

Filing for bankruptcy is a last resort for those struggling with debt. It is a difficult decision to make, and this choice subsequently drops your credit rating with a resounding crash. There is relief in the fact that creditors are no longer banging at the door, but they are quickly replaced by a different kind of predator. There are several fraudulent credit repair companies peddling scams that will promise a clean slate, taking advantage of those desperate to escape bad credit.

The most important thing on your list right now is repairing your credit, and although quick fixes such as file segregation sound great, they are definitely too good to be true. File segregation is the practice of creating a new consumer credit file by applying for an Employer Identification Number. This number is then used on applications in place of your social security number, essentially falsifying your personal information. The fact that it is illegal puts a damper on things.

These scams often target those who have filed for bankruptcy. They claim that you will not have access to any line of credit, such as credit cards and loans, for the next ten years, and they promise to hide adverse credit information. For a fee, this supposed credit repair company will tuck away your bankruptcy and provide you with new information to use on applications. You might also be asked to use a different mailing address. If there weren’t red flags flying up before, they definitely should be at this point.

As if bankruptcy wasn’t bad enough, falling for this scam could make matters so much worse. If you happen to miss the warning signs, you will have committed a federal crime, and it is possible that you will be prosecuted. However, you also have rights to fight against the company that committed fraud. It is against the law for any credit repair company to provide services without clarification, and they are not within their rights to accept payment beforehand, even if what they were doing was legal.

People responsible for file segregation scams will do everything they can to convince you of your credit inadequacy and their own legality, but both claims are completely false. Yes, your credit is damaged, but you can still recover from bankruptcy. Of course you will not be approved for all credit lines, but you will still have options once you show that you are stable financially. The fast track to credit repair is tempting, but you are better off with a diligent payment plan and frugal spending habits.

Live After Bankruptcy

By | Ask a Credit Expert, Bankruptcy, Credit Repair

You can’t believe it actually happened. Maybe it came about quickly, or maybe it was a long time coming, something you’d avoided facing for as long as possible.

You’ve filed for bankruptcy.

It’s something you used to only read about other people doing, yet here you are. If you’re feeling ashamed and alone, don’t: According to statistics from Epiq Systems, there were over 1.3 million bankruptcy filings last year. You may also be feeling angry, relieved, depressed … and maybe a little bit tired.

But here’s something else you should feel: hopeful. Yes, there is life after bankruptcy. In fact, filing a Chapter 7 or Chapter 13 bankruptcy is actually the first, often necessary, step toward restoring one’s credit. And while the temptation might be to put all of this behind you and never look at another credit report again, taking the opposite tack will bring you more peace of mind — by actively managing your credit and finances now, you’ll be able to mitigate the impact your bankruptcy has on your future.

One powerful way to offset the effects of bankruptcy might seem counter-intuitive: Get, and use, a credit card. The goal here, of course, isn’t to rack up more debt (which can hurt your credit score), but to show you can make timely payments. In order to avoid more debt, pay off the balance each month. And avoid large balances, which can negatively affect credit scores. Most important, though: Make EVERY payment on time. If organization isn’t your forte, or you’re a proud procrastinator, pay your credit card bill when you first receive it or, better yet, sign up for an auto-pay option.

If you can’t qualify for an unsecured credit card right away, a secured card may be your next best option. These cards, which require a collateral deposit (typically the amount of your credit line), are an excellent tool for rebuilding credit. Bear in mind, however, they’re not all created equal: Fees can vary wildly, and some disreputable providers are more akin to subprime mortgage lenders. Look closely at all fee schedules, consider a trusted institution that you know (although not one that was included in your bankruptcy filing), and don’t balk at the higher interest rates — this card is not for carrying a balance, it’s for building good credit. Finally, be sure the card issuer reports your payments to the big three credit bureaus, and double check that the account isn’t flagged as being a secured card.

Ideally, after a few months of timely payments on your secured credit card, you’ll begin to get offers for unsecured cards, and you can switch to something with lower fees and interest rates.

A track record of timely payments, along with strict, careful budgeting to keep debt under control, can restore your creditworthiness way, way ahead of the typical 7-10 years it takes for a bankruptcy to be removed from your credit report. Taking charge now will only get you there sooner.

The Rocky Road to Recovering from Bankruptcy in 4 Easy Steps

By | Bankruptcy, Collections, Credit Repair, Credit Scores, Your Credit

One of our favorite movies of all time is Rocky IV, where he defeats the unbeatable Drago. Rocky gets hit hard, but doesn’t give up, and because of his hard work and training, defeats his opponent. Recovering from a bankruptcy is a lot like Rocky’s journey (minus the cool soundtrack).

When you file for bankruptcy, it’s usually your last resort. You’ve been backed into a corner and the punches keep coming, but bankruptcy lets you get out of that corner and continue the fight. It’s time to put on the gloves and face that seemingly unbeatable foe and get started repairing your credit score.

4 Steps to Repairing Your Credit After Bankrupty

Examine Your Credit Report: The first step is to get a copy of your credit report and go over it with a fine-toothed comb. You need to check to make sure all the accounts were placed on the bankruptcy and that all the information is correct. There may be negative accounts on your credit report that were paid off prior to the bankruptcy which have inaccurate information or shouldn’t even be on it anymore. The bankruptcy will have a big impact on your credit score, so anything you can do to raise it by making sure everything on your report is correct only helps.

Create a Budget: If you declared bankruptcy, then you were in a negative debt situation to begin with. You need to create a realistic budget based on your income. This budget needs to include all bills and necessities as well as an amount dedicated to repairing your credit. You can use this to start a nest egg savings before applying for a new credit or use it to make payments on new credit.

Build Your Credit Score: Declaring bankruptcy doesn’t mean you will not be eligible for any credit at all. There are companies that specialize in providing credit, such as credit cards, to people with bad credit scores and bankruptcy. The company is taking a risk giving you credit, so the interest rates on these cards are high. You can also apply for a secured credit card, where you pay the credit amount first and they keep it on hand in case you default on the card. You have credit and the card will charge interest and report to the credit bureaus.

Note: Do not apply to several credit cards or other credit lines. Bankruptcy is a red flag for most creditors and will be difficult for you to be approved. Each time a creditor looks at your report, it can have an impact on your score. These are called hard inquiries.

Pay On Time: It takes 10 years for a bankruptcy to be taken off your credit score, so it’s important to build your credit the right way. Make sure you pay all of your bills on time because late payments create a negative impact. Do not get too much credit debt and keep your balances to about 10 percent of the total limit.

If you follow these steps, then the bankruptcy can be the inspiration needed to beat that unstoppable foe of debt and get your life back on track. You can give debt a K.O. if you are willing to be disciplined and fight to the finish.

Your Credit Blemishes Are Easier to Overcome Than an Impulsive Tattoo

By | Bankruptcy, Collections, Credit Repair, Credit Scores, Personal Finance

We all make mistakes. We order a regular soda instead of diet, we get a regrettable tattoo, and we miss a car payment. So, choke down some high fructose corn syrup, find the humor in the bright, new Mighty Mouse tattoo, and know that someday that blemish on your credit report will go away.

While credit reporting practices and scoring methods differ depending on the creditor, potential lender, and credit bureau, payment history is always one of the primary factors in a credit score. In FICO (Fair Isaac Corporation) scoring, payment history is weighted at a hefty 35% of a credit score, which is more significant than any other factor. In the VantageScore calculation used by the top three credit bureaus (TransUnion, Equifax, and Experian), the exact formula is a black box, but we know payment history is weighted in the 30% range and is again more important than other factors. Specific industries – like the mortgage industry and the automobile industry – have their own algorithms for credit scoring, but most use either the FICO or VantageScore as a starting point.

There are components of payment history that range from amount past due on an account to frequency and severity of payment tardiness to liens and court judgments. The weight of these factors on the payment history varies, since some creditors report immediately, some report based on a 2-3 rolling period, and some don’t report at all. To further complicate matters, some calculations look at the full seven years of credit history (FICO) and others at shorter periods like two years (VantageScore).

At Ovation, we advise our clients to assume all financial information will affect credit scores for seven years. Thus, all of us would do well to treat our credit score like our reputation or identity and take very good care of it. Tools like automatic bank payments can help to ensure our financial commitments are met on time. If a payment is missed, don’t wait to bring the account into good standing.

Credit scoring is confusing and complicated and sometimes frustrating for consumers. While the weight of a financial blemish is beyond our control, the blemish itself is well within our control – The easiest way to take control of our financial reputation and keep a solid credit score is to live within our means and make our payments on time. If a payment is missed, at least the ramifications are shorter term than impulsive ink!

How Long Can Information Be Reported On Your Credit Reports?

By | Bankruptcy, Collections, Consumer Rights, Credit Cards, Credit Laws, Credit Repair, Credit Reports, Fair Credit Reporting Act, Your Credit

One of the first credit repair steps involves removing information that is outdated.  The problem is that many consumers cannot tell when information is outdated.   On the surface, it seems like a simple exercise – just compare some dates.  While that is correct, the more difficult part involves determining which dates to compare.  The answers are provided in The Fair Credit Reporting Act, section 605.  According to section 605, the following items may not be reported on your credit reports:

  1. Bankruptcy: Cases under title 11 [United States Code] or under the Bankruptcy Act that, from the date of entry of the order for relief or the date of adjudication, as the case may be, antedate the report by more than 10 years.
  2. Civil suits, civil judgments, and records of arrest:  Civil suits, civil judgments, and records of arrest that from date of entry, antedate the report by more than seven years or until the governing statute of limitations has expired, whichever is the longer period.
  3. Paid tax liens: Paid tax liens which, from date of payment, antedate the report by more than seven years.
  4. Collections and Chare Offs: Accounts placed for collection or charged to profit and loss which antedate the report by more than seven years.
  5. Other Adverse Items: Any other adverse item of information, other than records of convictions of crimes which antedates the report by more than seven years.

So What Are The Exceptions?

There are exceptions to these general rules.  Most of the exceptions are based upon the use of the report.  The general rules are not applicable in the case of any consumer credit report to be used in connection with the following:

  1. Credit transactions involving, or which may reasonably be expected to involve, a principal amount of $150,000 or more;
  2. Underwriting of life insurance involving, or which may reasonably be expected to involve, a face amount of $150,000 or more; or
  3. Employment of any individual at an annual salary which equals, or which may reasonably be expected to equal $75,000, or more.

If you have ever wondered why there are so many different credit scoring models, this is one of the primary reasons.  The information that is permitted to be included on the credit report can vary depending on what the credit report is being used for.

So When Does The Time Period Start?

In regards to bankruptcy, the 10 year period starts at the date of entry of the order for relief or the date of adjudication.   In regards to the other items, the 7 year period begins, with respect to any delinquent account that is placed for collection (internally or by referral to a third party, whichever is earlier), charged to profit and loss, or subjected to any similar action, upon the expiration of the 180-day period beginning on the date of the commencement of the delinquency which immediately preceded the collection activity, charge to profit and loss, or similar action.   Clear as mud, right?

So What Does This Mean?

In order to understand if items on your credit report are outdated, you need to understand how the dates are calculated.  Remember, you should review your credit reports frequently for errors and signs of identity theft.  It is not uncommon that dates are incorrect.  In fact, in the case of debt collection, errors in the proper dates are very common.  These errors may result in negative items being reported longer than necessary.  Check the dates on your reports and verify that the information is correct.  If you need help, give us a call – we would be happy to assist you.


If I file Bankruptcy, I will not have to pay back my debt and my credit report will be wiped clean, correct?

By | Ask a Credit Expert, Bankruptcy, Collections, Credit Repair, Credit Reports, Credit Scores, Debt, Personal Finance, Your Credit

This is one of the biggest myths and misunderstandings with credit.  When you file bankruptcy you are telling the court that you do not have enough money to pay your bills.  Since you do not have enough money to pay your bills, you will have to include EVERYTHING in the bankruptcy and in return you can wipe away your debt and stop the collection calls.  If you file a Chapter 7, then you debt is wiped away.  If you file a Chapter 13, then you set up a payment program to pay a percentage of the money back to your creditors over the next 3-5 years.  The debt may be gone or may be lowered dramatically and put in a payment plan and the creditor calls will stop, but remember the Bankruptcy as well as all of the creditors included in the bankruptcy will report on your credit report.  All of your creditors (even positive accounts) will now report as Included in Bankruptcy, which reports in the same category as Charge off or Collection accounts.  So, your debt may have been wiped away but you usually end up with an even lower credit score in its place.

Bankruptcy is not the end of the world.  A bankruptcy does report for 10 years but sometimes it is the only way out.  As a consumer you need to focus on rebuilding your credit after you file bankruptcy.  In the last several years a lot of credit companies have changed their approval process and will approve consumers for credit after a bankruptcy.  That is great news, so you can start rebuilding your credit, but start small.

After filing bankruptcy you want to check your credit reports as well and make sure that all of your creditors are reporting accurately.  It is very common for creditors that are included in the bankruptcy to report the account as charge-off that is inaccurate information that can damage your credit score, so you need to get all information reporting inaccurately fixed. That is what Ovation Credit Services is here!

If you have any of these errors or have any questions about a bankruptcy you filed and how it is reporting, give Ovation Credit Services a call.  Our Case Analysts would be happy to review your credit reports with you and make sure everything is reporting accurately.   Call us at 1-866-639-3426 option 2 for your FREE Credit Consultation. During your free credit consultation we will also help you order your credit reports so we know exactly what is going on with your case.

If you have any questions for our Credit Expert Kristi Thornton, please email me at [email protected].

Can I dispute an account on my credit reports that I know is my account?

By | Ask a Credit Expert, Bankruptcy, Collections, Consumer Rights, Credit Cards, Credit Repair, Payment, Your Credit

Yes, you can dispute accounts on your credit reports that belong to you.  Just because an account is yours, does not mean that it is reporting accurately or that all of the information reporting on the account is correct. Statistics show that 79% of credit reports in the United States contain errors.  If an account has incomplete or inaccurate information then you would want to dispute the account and any information reporting on it that is incorrect.  You can dispute the balance of the account, any incorrect dates reporting with the account, whether the account is open or closed, or any other information that is listed incorrectly. For example, if you have an account that is reporting as being 90 days late and you know it was never late, then you would dispute the late payment to get the late payment updated/removed from your report, not the entire account.  That is exactly why you want to review your report at least once a year.

As a consumer it is in your best interest to go through your credit report once or twice a year and review all of the accounts and the information reporting on each account. That way if you find inaccurate information and/or accounts, you can dispute them right away. Too many consumers wait and then review their credit reports when they are trying to finance a car or a home and then it is too late. If there are negative errors on your credit reports you run the risk of being declined or being approved but with a high interest rate or needing a co-signer. So, check your report and review each account that is reporting to make sure everything is accurate. If something is inaccurate or incomplete at that time then you can dispute the information and get it corrected before you need to use your credit.

If you need help disputing your credit reports, contact the Experts at Ovation Credit Services where you will get First Class Customer Service! Go to for more information, or call 1-866-639-3426!

If You are thinking about Bankruptcy, Be Prepared

By | Bankruptcy, Credit Repair, Debt, Your Credit

Many Americans are thinking about filing bankruptcy but since the laws changed in 2005, you had better be prepared. In most states, you are required to go through Pre-Bankruptcy Counseling before you file your bankruptcy and then evidence that you have completed your debtor education before your bankruptcy can be completed. This counseling must be given by approved educators and a bankruptcy attorney can tell you where to get the approved list.

This counseling session should include a review of your personal financial situation, discussion of other options as an alternative to bankruptcy, and finally either tools to help you setup a budget or setting up a personal budget. The session should last between 60 and 90 minutes and can take place in person, over the phone or even online. If you are not able to pay for the session, the organization is required to give the session free of charge for those who cannot pay. Generally, the fee for this session is about $50.00 but will depend on where you live, the type of service you will receive and other factors.

If you get this session from an approved organization, you will get a certificate as proof. Without that certificate you will not be able to file your bankruptcy because of the new law. These organizations are not allowed to charge an extra fee for the certificate.

Once you have filed your bankruptcy, you will need to complete a debtor education course by an approved provider. This course will help you learn how to develop a budget, then learning how to manage your money. Additionally, you will be given some tools on how to use your credit wisely along with other resources. Normally, this session is about two hours in length. The cost for the session is generally between $50 and $100. This fee can also be waived if you are unable to pay for this session. You will also need to get the approved certificate so that your bankruptcy can be completed and your debts either discharged or organized for repayment.

Talk with a professional about what options are available to you. This will protect you and get you started down the right path. You can also go to and review your rights.

Preparing for Bankruptcy (Part 2)

By | Bankruptcy, Consumer Rights, Fraud Protection

Now if you have spoke with a professional, followed that advice and have begun to prepare for bankruptcy, there are additional things that you should do. By gathering the paperwork and preparing to hand that over to your attorney, you are ready to continue on your path.

You need to begin to save some money so that you can pay for the bankruptcy. They are not free after all and the typical bankruptcy will cost you around $1500. You can save for this money by several methods. Here are a few suggestions.

1. Talk with your Attorney about which debts are likely to be discharged. Since they are going to be discharged you can stop paying those debts that will be erased in bankruptcy. If you are planning on giving up your home or automobile then you can consider those amounts as well. But talk with your attorney first about which debts you can stop paying.

2. Hopefully, you have already tried to correct your financial problems by managing your finances. If you have cut all of your extra expenses and are managing your budget well, then maybe you can have a garage sale. Cleaning out your clutter will help you with more than one problem, especially if you are planning on giving up your home.

3. Get some additional income at least temporarily by getting a second job or your spouse getting a job. It may be difficult if you have children but a little additional income can help you find the funds for the bankruptcy.

4. If you have a tax refund coming, then you can put that towards the bankruptcy.

5. You can ask for a gift from your family or friends. This may be difficult unless you have been completely honest to your friends and family because they may not know of your financial situation.

Be aware that if you have money in a bank that you owe money, you may want to move that to a bank that you don’t owe any money. Some banks will freeze the account and try to cover their losses when you file bankruptcy. 

Stop using your credit cards because you know that this is money you are not going to be paying back, it won’t look like fraud. By making any large purchases or using your credit cards prior to bankruptcy you make be accused of fraud and this could affect your bankruptcy. Again, talk with your attorney if you have any questions prior to doing anything.

Talk with your attorney if you plan to pay off any personal loans or transfer title on any properties that you have. Even if you are trying to do the right thing, you could be accused of committing fraud and then it might cause problems with your bankruptcy.

Finally, you will be required to complete a credit-counseling course. Talk with your attorney and see if you have a specific course outline that must be followed, then complete that course. It will be required before you can complete your bankruptcy so talk with your attorney and get that completed.

Bankruptcy should never be anything but your last option in correcting a financial problem. Although it might solve your current financial situation, you may not have learned your lesson. Learning what caused you to get into this position is the only thing that helps you in the long run. Do not repeat your mistake or you will end up here again. You will have to report if you have ever filed bankruptcy on many application and if lenders see that you have filed more than once, then you are likely to be denied no matter your credit at that point. Lenders can forgive a single bankruptcy because we all make mistakes. But if they see that you keep repeating your habits and have filed more than one bankruptcy then some lenders are likely to deny you based on that information.

Preparing for Bankruptcy (Part 1)

By | Bankruptcy, Consumer Rights

There are many things that you will need to do if you have to file bankruptcy. It is really important that you prepare properly for this complex legal issue. This article will be broken up into a few parts so that you can have information to help you prepare.

The first and probably most important thing that you need to do is to know the process. Educate yourself about the process. Read everything that you can get, contact a professional and speak with them about the process. Once you have a good idea and a beginning understanding of bankruptcy then you can begin to prepare. Remember that the laws changed in 2005 and if you have filed bankruptcy before, then you don’t know what the new laws are and how those changes can affect you.

If you have not searched out alternatives to bankruptcy, then you have started down the wrong path. Bankruptcy should be the last alternative not the first. Try to resolve the financial problem before you decide that bankruptcy is the answer. In speaking with a professional, take the time to explain your situation and then listen to the advice that you are paying for. The bankruptcy attorney will be able to process your information, listen to your personal situation then give you alternatives or solutions to the problem. This may or may not include bankruptcy. Take the time to analyze the situation and listen to the advice you have been given.

If you are deciding to continue further with the bankruptcy procedure. Then you need to begin preparing for the bankruptcy. There are many things that you will need to do. The first thing that you should do is to prepare your paperwork. The paperwork will be necessary for your bankruptcy attorney. Make sure that you have multiple copies of everything that you take to the attorney.

Here is a list of paperwork recommended:

1. 6 months worth of pay stubs. Go back to your employers (or even previous employers) to get any pay stubs that you don’t have. If you don’t do it, then I recommend that you keep at least one year worth of pay stubs. You can then compare your stubs to the W2 that you get when filing your taxes.

2. Tax returns for the last two years. Keeping more than that is recommended but you will need to show the last two years for the bankruptcy.

3. Your current bills and statements. Included in this is any letter or statements that you have received regarding any collection accounts that you have out there. Basically this is bills or statements from ANY money that you owe.

4. Bank account and Savings account statements. You will need at least the last couple of months but providing a few more will help your attorney prepare the documentation for court.

5. If you have any retirement accounts (both IRA and 401(k)s) get the statement information to provide to your bankruptcy attorney.

6. Any legal documentation you have. Even if you think it may not be important, show your attorney any legal documentation you have. Divorce decrements, court orders, judgments, and new lawsuits may be important for you and for your attorney. Your bankruptcy attorney will advise you what documentation is important and what is not important to your bankruptcy.

7. If you are buying and making payments on your home and/or automobiles, you will need to bring the contracts for those loans with you. The attorney will discuss with you about those contracts and determine with you if you want to reaffirm on those loans. Reaffirm means that you do not want to include them in the bankruptcy and want to reaffirm the commitment on those loans.

8. If you own any other real estate, you will need to bring all the documentation pertaining to those properties. Things like the deed, home appraisals, tax assessments are important in a bankruptcy.

9. If you have filed a bankruptcy in the past, then you will need that documentation as well.

10. Finally, you will need to bring proof of your identity. Driver’s License, Social Security Card and a copy of your Birth Certificate will be helpful.

Once you have all of your paperwork gathered up, make multiple copies of that documentation. There are going to be many hands looking at that documentation and it may be passed from person to person. It only takes one mistake for you to be missing an important piece of documentation. Having copies for you is critical to having a successful outcome. No one wants to file bankruptcy but sometimes you are not given any alternatives. Be sure that you hire a professional. Investigate your attorney and talk with them prior to hiring them for bankruptcy. Feeling secure about your attorney will help you to get stabilized before, during and after filing bankruptcy.

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