Legal Question in Credit and Debt Law in New York

Re: Clearing Credit

You should start by going to your local public library and taking out some books on the subject of credit and budgeting so you can get an understanding of how credit reporting and credit scoring works. There are some good ones and it is free. If you are in NYC, the the Science, Industry, and Business Library (SIBL) has a good collection of books about this. It is at 188 Madison Avenue in Manhattan (tel 2125927000).

If there are outstanding default judgments against you may want to take steps to re-open those judgments. Postings on this website and NY Civil Court website explain the process and procedure.

Credit counseling doesn't deal with credit reports, but is a way to deal with credit problems and try to work out your debts over time through budgeting. It is good for people who are not on top of how much they owe and what type of monthly payments are needed to take out their debts. You can get a list of credit counseling agencies that have been approved by U.S. Trustee's Office, a branch of the U.S. Dept. of Justice, by checking the website of your local U.S. Bankruptcy Court. Pre-bankruptcy credit counseling is mandatory for consumer debtors who file bankruptcy which is why they have that list.

Debt settlement/debt consolidation/debt negotiation is an unregulated industry that should be avoided. It generally will make your credit worse because they advise you to stop paying all your creditor and pay them instead (the debt settlement company). They then make a proposal to all of your creditors to take a big reduction. It is an entirely voluntary process that creditors can ignore. Many of them do ignore and will move forward with collections activity and lawsuits against you even though you think you have taken care of the problem. The result is that you may end up with a number of judgments against you. Many people have had bad experiences with it so you should be very cautious. Check the Federal Trade Commission (www.ftc.gov) website for more info.

If you are in too deep a debt hole to get out of you may want to consider a personal bankruptcy filing. Surprisingly many people�s credit scores actually improve after a bankruptcy filing -- sometimes by 100 points or more. However, there are other negative ramifications that you should also consider. You should consult with a bankruptcy attorney.

For further information regarding these topics please visit the Frequently Asked Questions (FAQs) and Blog on our website at www.starrandstarr.com

Good luck,