Wiping the Slate Clean
Bad credit can cost you a loan, insurance, even a job
Steer clear of credit repair services, or so-called credit doctors, which advertise their services on the Web, in newspapers, and in magazines. They typically promise to rid your credit report of all the bad information for a fee of $500 or so, paid upfront. They can't do anything you couldn't do yourself; with them or without them, bad marks will stay on your credit report for seven years. A free booklet published by the Federal Trade Commission, "Getting Back in the Black," explains credit repair. You can get a copy by writing to the FTC's Public Reference Branch, Room 130, Sixth Street and Pennsylvania Avenue, N.W., Washington, DC 20580.
As a last resort, you can do what more than 1.3 million cash-strapped consume have done in the past year--file for bankruptcy. Under Chapter 7, or straight bankruptcy, you fill out a form and file it with a fee of about $160 at U.S. Bankruptcy Court. A judge then decides how to divide your assets among your creditors. But some debts can't be erased by Chapter 7, including most student loans, child-support obligations, and back taxes. While bankruptcy has lost some of its stigma, you'll live with it as a black mark on your credit report for a decade to come.
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