Once the bankruptcy has been discharged, however, folks really need to give some thought and develop a plan on how to rebuild their credit and credit score.

With a clean slate, concentration and maneuvering to rebuild ones credit is paramount, especially after a bankruptcy. People often believe that after a bankruptcy they will never qualify or become eligible for credit again. This is not true,

however it does take a lot of work and one has to re-build creditability with the lending institutions and with the major credit bureaus.

The first thing you really want to do is learn everything about what a credit score entails. With a better understanding of credit scoring, and how the three major bureaus, Trans Union, Equifax, and Experian operate, you will be able to track your credit worthiness and how monetary behavior effects their scoring.

When a credit score is being compiled there are many things that are taken into consideration. Most naturally of course is your payment history which shows if you have been making your payments as agreed upon, if they have been late, and of course your bankruptcy may be reported? Additionally, the credit bureaus will take into account any outstanding debts, revolving lines of credit, mortgages, judgments, liens, etc., and finally your history (years of credit history).

There are other areas that are considered as the major credit bureaus guard their scoring methods well (it’s a secret), particularly in determining the risk that someone has in respect to their credit rating.

In the end, educating yourself about credit scoring will allow you to remove negative items from your report, locate the best method(s) of increasing your score, place positive items on your report, and rebuild your credit, even after a bankruptcy.

General legal wisdom suggests that you cannot keep such a card unless you have maintained this card at a zero balance for a very long period of time.  However, you may not have to report it along with your list of creditors during filing (really not a creditor unless you owe them money).

If you have recently paid off the balance to said credit card – you may be challenged by other creditors because you CANNOT PREFERENCE one creditor over another (I suspect this is what she did).  A successful challenge by other creditors in the case may result in a dismissal of the bankruptcy case, as this type of behavior is considered illegal and certainly unethical.

In the same way, I doubt she will end up with the card.  Credit Card issuers tend to penalize card holders for filing bankruptcy, even if the bankruptcy does not impact them.  So, more than likely, the credit card will be cancelled shortly after she files for bankruptcy.

They won’t know.., think again, you see, what she doesn’t know, and you NOW know, is that most major creditors subscribe to BANKO®, PACER, or some other service that monitors bankruptcy filings.  For example, this excerpt from Banko®‘s website states, “Banko® helps [creditors] automatically discover, monitor, and manage changes in bankruptcy case information. It searches comprehensive nationwide bankruptcy databases to quickly identify new filings and updates to filings”.  Yeah, they will know…

Those “quick bankruptcies” are seldom wise.  Preparation….. do it.

STOP USING YOUR CREDIT CARDS. Hey, if you have to eat and have no money, that’s one thing – starvation will do that.  However, purchasing a new TV or hitting the Casino in an attempt to “win” your way out of bankruptcy will normally be considered “fraudulent”.  Oh yeah, so will transferring your RV to your mother for payment on that “mysterious loan” – gotta love those 341 meeting confessions.

In other words, creditors cannot take any collection actions against you, such as repossessing a car, starting or continuing a law suit, foreclosing a home, garnishments or even collection phone calls.  The stay remains in effect until the judge lifts the stay,  the property is no longer part of the bankruptcy estate, or the debt is discharged.

An automatic stay WILL NOT STOP Criminal matters or restitution, child support, alimony, litigation for child support, alimony, and tax audits, however collection of taxes are stayed, at least temporarily.

Talking with an attorney, paying an attorney, or thinking about bankruptcy and telling the creditor your ‘bankruptcy thoughts’ DOES NOT create an automatic stay.  YOU HAVE TO FILE THE PETITION WITH THE BANKRUPTCY COURT.

For some reason, and it may be the internet, friend misinformation, or dare I say – attorney advertising, I keep seeing clients that believe once they meet with an attorney that they are protected by the ‘stay’.   Or, I get requests to send out a ‘stay’.  Geez – I wish I had that kind of power.

However, if you are experiencing harassing creditor phone calls and letters, I can normally put a stop to those calls and letters using the Fair Debt Collection Practices Act (FDCPA), its not near as powerful as a bankruptcy stay, but its better than hearing “can you make a payment today” for the millionth time.

Adding to the stress is the battle of warding off creditor phone calls, threats, lawsuits, and insults that making sound intelligent financial decisions suddenly becomes fraught with overwhelming emotion, and a gloomy or angry frustration quickly sets in, after all, enough is enough. Wouldn’t you agree?

Fortunately, there is a provision within the Bankruptcy law, that helps immensely, termed the “Automatic Stay”. In U.S. bankruptcy law, an automatic stay is an automatic injunction that halts the actions of your creditors, with certain exceptions, to collect debts from you. Under section § 362 of the United States Bankruptcy Code, 11 U.S.C. § 362, the automatic stay begins the moment your bankruptcy petition is filed with the Federal Bankruptcy Court.

Upon filing, creditor notices are immediately sent out from the court ordering them to cease any further collection activity, at least until the bankruptcy case has been resolved, or until further order(s) of the court.

In the past, the courts have recognized just how devastating it can be when there are non-stop phone calls, letters and even creditors banging on the doors. Thereby, creating an impossible environment for any debtor to properly and intelligently deal with his or her financial woes.

With few exceptions, an automatic stay will normally stop the following types of actions:

1. Foreclosures
2. Utility disconnections
3. Garnishments
4. Third party collections – collection companies
5. Credit Card collections
6. Divorce proceedings
7. Repossessions
8. Evictions
9. Lawsuits

And / or, any other type of action against the you that could affect your  financial estate adversely.

This protection goes so far as to put a stop to ongoing judgments that are already in effect. For example, if a debtor has been undergoing a wage garnishment then the creditor responsible for this action must stop the garnishment. In short, every financial action against the debtor, no matter what stage it may be at, must come to a halt.

Another great benefit about the “Automatic Stay” is just that…its automatic. This means that an individual who is already under financial stress does not have to specifically petition the courts, creditor by creditor, for any type of ruling to initiate an “Automatic Stay”.   And, there is no need for a judge to authorize the stay or even hold any type of initial hearing.

Notably, a creditor may motion the court for relief from an automatic stay.  In particular, mortgage companies do this quite often during a Chapter 7 proceeding, and when foreclosure proceedings are imminent, and the debtor has indicated that he/she has not intention of trying to keep the real property.

If you are new to Arizona, you must have lived in Arizona for at least two years before Arizona’s exemption statutes apply.  While you can file bankruptcy in Arizona after you have lived here for a little over three months, until you have lived here for two years, you will be required to use the exemptions from your last state of residence, or federal, whichever applies.

Normally this isn’t a big problem, but there are states that have less favorable exemption statutes that protect much less property than Arizona’s laws do.  Before filing a bankruptcy it is important to review applicable exemption statutes in order to evaluate what property you own that may be at risk.

You can review Arizona’s exemptions by downloading or opening this adobe pdf file provided by the District of Arizona Bankruptcy Court.

Arizona Bankruptcy Exemptions pdf