At the time a petition for bankruptcy is filed, the petitioner is required to pay a bankruptcy filing fee.  The bankruptcy filing fees required to file a chapter 7 case total $299.00, the bankruptcy filing fees to file a chapter 13 case total $274.00.

Bankruptcy filing fees for cases under all chapters of the Bankruptcy Code are prescribed in section 1930(a) of title 28.  As of August 1, 2009, the filing fees are $245 for a chapter 7 case; $235 for a chapter 13 case.  A person filing a bankruptcy case also must pay a $39 administrative fee.  In addition, chapter 7 debtors must pay a $15 trustee surcharge.  These miscellaneous fees ($39 administrative fee and $15 trustee surcharge) are part of the Bankruptcy Court Miscellaneous Fee Schedule prescribed in accordance with section 1930(b).

These bankruptcy filing fees total $299.00 for chapter 7 bankruptcy cases and $274.00 for chapter 13 bankruptcy cases.

One of the main purposes of bankruptcy law is to give a person, who is burdened with debt, a fresh start by wiping out his or her debts and thus after are made to keep the bankruptcy filing fees reasonable and provide assistance to those who cannot afford the fees.

The district court or the bankruptcy court may waive the filing fee in a case under chapter 7 for an individual, if the court determines that the individual has income less than 150 percent of the income official poverty line for a family the same size as the individual’s family.

Rule 1006 requires that an individual debtor either: (1) pay the bankruptcy filing fee in full when filing the petition, (2) file a completed application to pay the bankruptcy filing fee in installments, or (3) if the debtor files under chapter 7, file an application for waiver of the fee showing that the debtor meets the qualifications for waiver set forth in section 1930(f).  The rule limits the number of installments to four, with the final installment due not later than 120 days after the filing of the petition. 

The court can extend the time for paying any installment, but the debtor must file a motion explaining the reason an extension is needed.  The last installment must be paid not later than 180 days after the filing of the petition.

A request to verify a debt simple means the credit reporting agency requests that the creditor verify their records for accurate information.  A debt validation requires that the collection agency prove the debt is the consumer’s responsibility and that they have the legal right to collect this debt.

Under the FDCPA, consumers have the right to ask for validity of the debt that the collection agency says is owed.  Section 809 of the Fair debt Collection Practices Act gives the consumer the right to ask for debt validation to be sure whether you actually owe the debt to the creditor or not.  To request the proof, a debt validation letter needs to be sent to challenge the validity of the alleged debt. 

The right to request the debt validation applies to collection agencies not the original creditor.  When a collection agency is assigned, or has purchased, the debt, they are not the creditor, they are collection agency and their actions are governed by the FDCPA.

The collection agency needs to present documentation proving the consumer does owe the money.  Documentation from the collection agency should include items such as; proof that the collection agency has been assigned the debt from the original creditor or that the collection agency actually owns the debt and account statements from the original creditor that verify the credit agreement between the consumer and the original creditor as well as a payment history if the amount owed is in dispute.  Generally, a simple list of the services or products sold that resulted in the debt is insufficient evidence to validate a debt.

The collection agency has to stop the process of debt collection until they are able to validate the debt within the first 30 days of notifying someone of the debt.  If the debt collector does not verify the debt within 30 days, it is not allowed to continue collecting the debt.  If the creditor or collection agency is not able to provide debt validation, they have to remove the item from the credit report.

Of course, the key for the consumer is that so many collection accounts and records are sloppy and inaccurate and therefore they cannot be properly verified.  The validation process can definitely help remove collection accounts that are inaccurate and also remove collection accounts that may be valid but cannot be properly supported or validated by the collection agency.

To get the ball rolling, the consumer needs to send a request letter or debt validation letter to the collection agency asking them to validate the debt.  The request for debt validation must be submitted in writing.  If the debt is properly validated, send the credit reporting agencies a copy of the debt validation letter along with the return receipts to get the account removed from the credit report and ultimately improve the credit score.

There are many different options for consumers to deal with their debt and budget problems. Bankruptcy is certainly one such option and generally has the greatest impact on debts and credit.  Filing bankruptcy costs is just one factor to consider in evaluating credit and debt solutions.  The cost of bankruptcy will vary substantially, depending upon the complexity of your case and the type of bankruptcy you file

A recent study of bankruptcy filing costs published in the American Bankruptcy Institute Law Review concluded that the average costs of Chapter 13 bankruptcy cases was 4,077.00 in 2007 and 2008 while the costs of bankruptcy for a Chapter 7 filing costs averaged $1,399.00.

The American Bankruptcy Institute Law Review study considered the costs associated with the process of filing for bankruptcy, including the court filing fees, credit counseling fees, debtor education fees that may be required, attorney fees and expenses as well as trustee fees and expenses.

An estimate of the costs for filing bankruptcy includes:

Filing fee with the court of $299.00 for a Chapter 7 case or a filing fee of $274.00 for a Chapter 13 case.

Hiring a lawyer to prepare the bankruptcy case file and to represent the consumer in court.  This cost can be anywhere from a few hundred dollars to a few thousand dollars.

Before you can declare bankruptcy, the court may require that you get credit counseling from an approved counseling organization.  The cost of these credit counseling programs will vary from region to region.

When evaluating the cost of filing for bankruptcy, all of the costs should be considered, not just the direct expenses on fees.  The other significant costs can be the time involved and the damage to an individual’s credit history and credit score. 

Individuals that may find that they cannot obtain new credit after bankruptcy or that the new credit and credit cards after a bankruptcy will have a higher interest rates and fees.  Employers are more frequently checking credit reports for new hires as will insurance companies and rent management firms.  An individuals credit score will be impacted by a bankruptcy for up to ten years.

Bankruptcy may very well be the best solution for consumer debt trouble, but filing for bankruptcy is a plan of action to help resolve debt issues that should be considered very carefully.

The pay for delete letter name describes exactly what this document is.  A pay for delete letter is sent to the creditor or collector agency asking that they remove the bad payment record from your credit report in return for your settlement or payment of the account.  The pay for delete letter or agreement states that you agree to pay off the debt, either in full or you negotiate a settlement amount less than the total amount owed, with the collection company in return for their promise to remove all information on this account from your credit report.

A reasonable question to ask is why the creditor or collection agency would agree to this.  First, they don’t always agree.  Sometimes the creditor is willing to delete the record in exchange for collecting on the debt, other times they will not.  The reason any company in the business of collecting delinquent debts would agree to these terms is they have not been successful in collecting the debt up to this point and they are in the business to collect money.

The pay for delete letter usually has to be sent to the original creditor or the collection agency to remove the outstanding debt since they will have the authority or ability to remove the listing from an individual’s credit report.

If the creditor agrees to pay for deletion agreement, the negative listing gets removed from your credit report once the debt gets repaid in full

An important note is that any time a consumer is going to request a pay for delete agreement or send the pay for delete letter, they should first request that the debt is in fact a legitimate debt that is their responsibility.  For consumers new to the credit score help process, this seems like a waste of time since they often know the debt is theirs.  The key is that the information is often not accurate.  It may be inaccurate by just a slim margin, but this inaccuracy can be enough to ask that the credit reporting agency remove the debt, period. 

If the creditor is not able to provide you with debt validation, he must remove the item from your credit report.  A debt validation letter can be used to demand that a collection agency or creditor verify that the debt in question is in fact your account and that the amount of money owed or recorded in the credit report is accurate. The debt validation letter will, at a minimum, verify the actual amount someone is required to pay on an outstanding debt.

Once a debt gets validated, the pay for delete letter can be sent to try and remove the account records from your credit report which in turn should boost your credit score as well as get the creditor to possibly accept less money that the total amount owed.

Everything should be in writing.  Not making the creditor verify the debt and not trying to get them to accept a pay for delete letter is simply skipping some of the quickest and easiest methods to clear up a credit report and improve a credit score.  The information obtained won’t always be in your favor but, the process cost next to nothing and has worked for numerous individuals who have had credit problems and need credit score help.

Once a creditor or bill collector has been notified that a consumer has filed for bankruptcy protection, the bill collector or collection agency must stop all efforts to collect the debt.  There are certain and limited exceptions to that rule.

In a bankruptcy filing, the consumer or legal representative has to file a petition to the court and ask to discharge the debts.  After the bankruptcy petition is filed, the court mails a notice to all the creditors listed in the schedule of creditors supplied to the court.  The bankruptcy clerk gives notice of the bankruptcy case to all creditors whose names and addresses are provided by the debtor.  The process may take up to several days.

The stay or postponement of collection efforts arises by operation of law and requires no judicial action. If a creditor or collection agency continues to use collection tactics once informed of the bankruptcy they may be liable for court sanctions and attorney fees for their conduct.  As long as the stay is in effect, creditors generally may not initiate or continue lawsuits, wage garnishments, or even telephone calls demanding payments.

Bankruptcy law is generally established to protect debtors who are in debt beyond their ability to repay the debt are a given an opportunity for a fresh start through the discharge of debts in a bankruptcy proceeding.  Each state has its own bankruptcy laws, so you need to check with your state for details.

There are two basic types of consumer bankruptcy proceedings.  Under a Chapter 7 bankruptcy filing, the petition to the court is a request to discharge all debts while a Chapter 13 bankruptcy filing, the petition is to pay off some of the debts over a period of three to five years.

The information is provided for general information purposes only and is not intended to be a legal opinion nor legal advice nor is it intended to be a complete discussion of all the issues related to the area of consumer bankruptcy.

The letter can be used in a variety of situations were the debtor wants to negotiate a payment in exchange for having the tradeline or account history being removed from their credit history.  Once a delinquent record is removed, an individual’s credit score should improve almost immediately.

The object of the letter is to get the collection agency or creditor to accept payment in return for an agreement in writing that they will no longer report the debt to the credit reporting agencies.

The collection agency or the original creditor of a bad debt doesn’t have to accept or respond to a pay for delete letter but of they don’t, the individual requesting the settlement and deletion is not in any worse of a position.

The key element in charged off accounts is that a paid charge off has the same impact on a credit score as an unpaid one.  Therefore, it behooves someone that has an unpaid delinquent account to try and get the creditor to remove the record in return for payment.  Not all creditors will agree to remove a credit history on a delinquent account, however since the account has most likely not been paid in some time, unless the bank, credit card company or medical service provider agrees to delete, there is no incentive for the debtor to pay the account.

As a general rule, these letters are best used with the original creditor and not the collection company.  Usually, the collection company cannot make the decision on behalf of the original creditor so they cannot delete the accounts from your record.

Only deal with the creditor that is reporting the debt.  If a collection company is calling for debt to another company but isn’t reporting to the credit reporting agencies, ignore them and work with the original creditor instead.

Always be sure to get something in writing that says that the creditor will no longer report the debt to the credit reporting agencies and therefore get a boost in your credit score.

The following is a pay for delete letter as an examples are only that.  The letter can be altered to match your specific situation.

Creditor or Collection Agency
1212 Maple St
City, State Zip

Collection Account for Original Creditor Account #

To Whom It May Concern:

This letter is to inform you that the validity of this debt is disputed.  In order to compromise, I am willing to pay this account in the amount of $_____   if you agree to delete this account from any and all credit reporting agencies (Equifax, Experian and TransUnion).  The purpose of this settlement is merely to have this item removed from my credit files. It is not to be construed as an acknowledgment of liability for this debt in any form.

If you agree to the terms and accept this agreement, certified funds for the settlement amount of $_____  will be sent in exchange for full deletion of all references regarding this account from my credit files and full satisfaction of the debt.  Since I am sending certified funds for payment, there shall be no waiting period regarding the deletion of this account from the credit reporting agencies.

If you agree to the above terms, please prepare a letter on your company letterhead agreeing to the same terms as the above settlement offer.  It will be implied that this letter shall constitute a legally binding contract, enforceable under the laws of my state.

Your response must be postmarked no later than 15 days from your receipt of this settlement offer or this offer will be withdrawn and I will request full validation of this alleged debt, as provided for by the Fair Debt Collection Practices Act.

Please address all correspondence regarding this account to:

Name
123 Any Street
City, State Zip

This letter can be used and tailored in any situation were you want to negotiate a payment for a tradeline in your credit report being removed.  The mention of the term dispute in the letter is protection so as to not willing agree that the terms of the debt are in fact accurate and your full responsibility.  A creditor could turn around and use any admission of the actual debt in court if they decided to take legal action.

There is no standard amount to offer the creditor to remove the debt, but there is no reason to offer the full amount initially and offer 50% of the amount owed instead.

A wide range of credit scores will still be good enough for most consumers to obtain a credit card or obtain a cell phone or avoid problems with an insurance contract but scores are certainly higher now for consumers that want to save money with lower interest rates as well as obtain access to credit when they need it.

Credit scores generally range between the low 300’s and the mid 800’s.  In between these numbers, credit evaluators look for different ranges of credit risk.  Credit scores are going to directly affect how much money an individual can borrow as well as how much it will cost and the low barrier to receive the best rate and terns has risen dramatically.

In 2002 a number of articles were written extolling the value of a credit score that was just above 600.  Businessweek in Nov 25, 2002 wrote “…a credit score under 620, generally the cutoff for a prime-rate loan. “  The prime rate is the interest rate banks offer their most creditworthy customers.  Bankrate.com in Dec. 2002 stated that “As a general rule, those with a score above 650 will receive the lowest interest rate loans.”

Jump ahead to June 2010 and one of the largest bank mortgage lenders in the U.S states in their mortgage marketing material that the mortgage rate will increase for all borrowers that have a credit score below 720.  In fact the costs for the home loan increase for every 20 points the score drops below 720 to the point where a credit score under 620 is considered non-traditional.

A score of 600 is now clearly considered a bad credit score.  A score above 720 is now normally considered a good credit risk, while a score under 660 is considered a high risk.  More and more Americans are experiencing the consequences of low credit scores and bad credit first-hand as the standards for good credit has risen. 

With the value of a good credit score rising it is becoming increasingly imperative that consumers evaluate their credit history and start fixing and improving their credit profile.  For most consumers, working on a good credit score starts with obtaining a copy of their credit report to determine any weak spots in their credit history.

Improving or fixing a credit score often requires consumers to work on any erroneous information or outdated information in their credit report including items such as outstanding judgments, bad credit history items, and any other derogatory remarks in their credit record.  It may also be prudent to work on building a good credit history going forward while fixing previous credit problems.

The medical credit score is intended to be similar to the credit score that lenders review when determining the risk level of a consumer that apples for credit.  The concept of the mortgage lender or credit card company that looks at a credit report to determine a loan or credit card approval is moving to a hospital or other healthcare provider who will review a medical credit score to determine how likely a patient is to repay their medical bill on time. 

From the hospital or medial service provider’s point of view, this is a tool for more efficient hospital billing and collections.  But most patients that hear of this practice are surprised to learn that they’re being subjected to any form of credit or financial analysis.   Even more importantly, some groups and patients are questioning whether this will develop further and patients may be denied care if their credit score is too low.

Another clear concern is the amount of errors in existing credit reports.  Credit scores can be complicated and sometimes hard to fix and the likelihood that these problems will happen with medical credit scores and create more problems in the health care sector is a grave concern. 

Credit scoring models in the health care industry have the potential to be a very large business, with the large rate of unpaid bills.  Medical credit scores or health care score were initially designed for use in post treatment billing.  The medial providers use the information to determine how aggressively or which procedures to employ top collect on a medical bill.  But, again the question of any data being used in unforeseen ways is a big concern for many consumers.

For those consumers that are concerned about whether a hospital should have access to their credit history or credit score or even their financial records, make sure to read all the admission papers carefully that are asked to be signed.  Any organization, including a hospital, needs to have the consumer permission to obtain information about their specific credit history.

Even while credit scores and credit histories have become increasingly important in most consumers day to day lives, it is hard to imagine how the use of credit profile and credit scores use could be employed in such a manner.

In the end, whether the medical credit score concept is accepted or not, this is another reason why it has become so important that consumers check their credit reports and credit score.  By knowing what is in your credit report, consumers are able to see any erroneous data that should be corrected and all claims of debts that have been reported in the credit history including medical claims that were made in a credit report.

The growing use of credit reports and credit scores makes it imperative that consumers track and dispute any items that were reported as unpaid and challenge any claims that can adversely affect their credit rating.

A collection account is a listing in a credit report that represents a consumer account that has been assigned to a company to collect on an unpaid debt obligation.

If a consumer stops making the contractual payments on an account or debt, the lender or creditor may assign the account or sell the account to a collection agency.  This action turns a credit account into a collection account.  The collection account is the account with the collection company that is collecting on an unpaid consumer debt and is generally not the original creditor or original lender. 

The original unpaid obligation or debt may be from a credit card debt that was unpaid, medical bills, utility bills, or any other contractual debt that was left unpaid and then sent to a collection agency by the original creditor.  The collection account is the account with the collection agency as opposed to the delinquent account that exists with the original creditor. 

The original creditor’s delinquent account may also be reflected in the credit report.  For instance, a collection account for an unpaid credit card balance may be reported to the credit reporting agencies as the original delinquent account with the credit card company, usually as a charged off account, as well as the balance now being collected by the collection agency. 

A collection account may also be reflected in the credit report without a corresponding original creditor account.  As an example; cell phone companies and medical bills that are unpaid may be sent to a collection agency to collect the unpaid delinquent debt and these creditors will not report to the credit reporting agencies, yet the collection agency the debt is assigned to will most likely report to the credit bureaus or credit reporting agencies.

A credit score evaluates collection accounts on an individual’s credit report according to when the collection occurred.  Individual credit scores weigh collections on a credit report according to when the collection occurred.  Generally, the more recent the collection, the more it’s going to impact the credit score.

Collection account records, no matter how recently opened, all should expire and be removed from an individual’s credit report seven years after the last 180-day late payment on the original debt.

Note that closing an account doesn’t make the record in the credit report go away.  A closed account will still show up on a credit report, and its status will be considered in the credit score calculation.  Paid collections and unpaid collections are generally scored the same; the impairment to a credit score occurs as a result of the account being delinquent.  . 

Since the collection account is different from the original creditor account, whether it is a credit card or a medical bill, and the collection accounts cannot report a payment history since technically there is no payment record with collection agency only with the original creditor then there will not be a payment history from the collection agency in the credit report and the credit score simply evaluates the date of the account and the amount.

It is always worth the effort to investigate the validity of collection accounts and the amount owed to see if they can be removed from a credit report for inaccuracy, which is common.

The Federal Trade Commission just recently presented a report to the U.S. House Subcommittee on Financial Institutions and Consumer Credit of the Committee on Financial Services regarding actions by the FTC that cover the accuracy of consumers’ credit reports, preventing identity theft, and giving consumers a better understanding of their credit scores and what they mean.  A press release provided by the FTC stated that, “Because credit scores are important to understanding the rates consumers pay for credit cards, mortgages, auto loans, and insurance, Congress wrote into the FACT Act a consumer’s right to purchase a credit score, and a requirement that certain mortgage lenders provide a free score to home loan applicants.”

The prepared testimony covered actions taken by the FTC that included the agency’s completion of rule making to ensure that consumers have access to free annual credit reports and understand that right; a rule making to enhance consumers’ rights to dispute errors in their credit reports by the credit reporting agencies and the furnishers of the data; and a study on the use of credit scores regarding pricing of policies in the automobile insurance industry.

The foundation for the testimony is grounded in The FACT Act which amended the FCRA.  The FACT Act and the FCRA is the federal law that governs the operation of the nation’s consumer reporting system.  The FCRA was instituted to regulate the practices of consumer reporting agencies and the furnishers of the data to the consumer reporting agencies as well as the users of the credit reports prepared by the consumer reporting agencies for activities such as extending credit.  The FTC is the primary government agency responsible for enforcing and monitor activity associated with The Fact Act and FCRA which means the FTC is the primary agency governing credit reports and credit scores.

An interesting note in the testimony covers the FTC’s understanding of the importance of credit utilization figures in calculating credit scores.  For example, the guidelines state that when furnishers report an outstanding balance on a credit account, they should also report the consumer’s credit limit.  This is because the failure to include a credit limit can cause credit evaluators to inaccurately estimate how much available credit a consumer is using, which is an important factor in assessing creditworthiness.

As part of the report The Commission noted that, “with sufficient knowledge about the score and what it means, consumers may use that information as a valuable shopping
tool.”

The conclusion from this report is that the FTC is watching the credit score market to ensure that the market remains fair and competitive and will continue to be a vital part of our lives.