Ask the Dollar Diva By Dorothy Rosen • Bankrate.com

Credit repair after bankruptcy

Dear Dollar Diva,
I recently came across a law firm on the Web that is offering a service to help erase bad things from my credit reports. My wife and I were both laid off at the same time 3 years ago, and we tried to stay afloat with credit cards. It didn't work, and we ended up filing bankruptcy.

We are now doing well with a combined income of more than $90,000, but we still can't get credit. Is it worth paying this law firm $35 a month to help erase information from our reports? Could this be a scam? Is there some way to do it ourselves?

The Diva is happy you are back on your feet and urges you to set up a savings plan, so you will never have to go through the nightmare of bankruptcy again. You need to chisel some promises in stone:

• I will pay my bills early.

• I will set up a cash account to pay for my lifestyle for at least six months, so a future layoff will not land me back in bankruptcy court.

• I will set up an account, so I can pay cash for those unexpected expenses that pop up regularly, like home and car repairs, kid's braces, and surgery for the cat when it shows up with a ripped ear.

As far as paying $35 a month to erase information from your credit reports: If it sounds too good to be true, it probably is. Credit repair is a slow, tedious process that takes time, energy and commitment. So put the $35 a month in the bank, and read on.

When you're denied credit

If you're denied credit, find out why. Read Bankrate.com's "Question lenders in loan denial" for more on this. Is it possible that you're being denied credit because your credit reports are missing good information, like a record of your current timely payments, rather than because they contain black marks? Get copies of your credit reports and scrutinize them.

If there are no errors, disputes or omissions on your credit reports

No one can make the credit reporting agencies remove the bankruptcy from your credit report before 10 years is up. Not for $35 a month or $350 a month. If a nasty credit report has no errors, disputes or omissions on it, only time and future timely payments will make it better.

If there are errors, disputes or omissions on your credit report

If your credit reports need to be corrected, roll up your sleeves and get to work. The Diva directs you to the following stories and Web sites to help you mop-up those reports:

• The Federal Trade Commission's "A summary of your rights under the Fair Credit Reporting Act" will tell you what your rights are. For example, if the credit-reporting agency cannot verify the information you say is wrong within 30 days, it has to remove the item from your credit report. That's the law.

• Bankrate.com's "Credit repair reality check" describes credit repair scams, how to repair mistakes on your credit report and how to live with a bad credit report.

• Bankrate.com's "Credit reports part 2 -- cracking the code" will help you decipher the reports.

The Diva thinks the following books will also help as you work on rebuilding your credit:

• Paula Langguth Ryan's, Bounce Back From Bankruptcy
• National Consumer Law Center's Surviving Debt: A Guide for Consumers

DOROTHY ROSEN has a master's degree in finance, with a specialization in accounting, from the Kellogg Graduate School at Northwestern University in Evanston, Ill. Rosen has more than 15 years of experience in the financial arena, serving in Illinois and Florida as a certified public accountant, financial consultant, expert witness and educator. She is owner of Dorothy Rosen, CPA, a public accounting firm that serves individuals and small businesses.

-- Posted: May 2, 2000