IS YOUR POST-BANKRUPTCY CREDIT REPORT UPDATED & ACCURATE?
Most consumers who have been discharged from a Chapter 7 bankruptcy or are in a Chapter 13 bankruptcy have no idea how their discharged debts should appear on their credit reports. Blankingship &Christiano has seen a large instance of inaccurate credit reporting on consumers post-bankruptcy credit reports that have occurred for a variety of different reasons.
The credit reporting agencies (“CRAs”: Experian, Equifax and TransUnion) have all agreed to enact procedures to protect against inaccurate post-bankruptcy credit reporting, but there are a number of holes or problems in their procedures that can lead to damaging and inaccurate credit reporting.
The biggest source of these problems stems from the way that the CRAs obtain their bankruptcy data. Rather than monitor the actual court filings themselves, they rely on third parties to mine the data and report it back to them. If these outside sources code the data incorrectly or the data changes because of subsequent amendments, then the CRAs do not check back to update the information.
Third party bankruptcy data can be inaccurate
By way of example, we have had cases where the bankruptcy attorney initially filed the petition under the wrong SSN and had to go back and correct the bankruptcy filing a few days later and a client who got divorced after filing and changed her name. Both of these changes were not noted up by the CRAs. Even after the consumer disputed the inaccurate post-bankruptcy credit items, the CRAs allowed the inaccurate derogatory credit report to continue.
Chapter 13 Bankruptcy has unique challenges
Consumers who filed Chapter 13 petitions have their own collection of pitfalls and errors where accounts that were actually discharged reappear on a consumer’s file after the completion of the plan and discharge. Even after completing the bankruptcy plan and re-establishing some credit, the consumer is haunted by an old debt that looks like it is late and must be paid now. Another reoccurring issue we have seen is that even if the creditor (furnisher) reports that an account has been discharged in bankruptcy and updates the balance and past due balance that the CRAs start reporting the old original derogatory balance again despite the bankruptcy discharge.
So, what should your credit file look like post-bankruptcy?
A furnisher of credit data can report the status and payment history of the account up to the month prior to the filing of the petition. This means that if you file in August, they can report that you were late or charged off in July of that year and the payment history of the account prior to that July time period. They are not allowed to update the current payment history thereafter. Once you have been discharged, the debt is no longer collectible, and the balance and past-due balance must be reported as $0. If you see on your credit report a balance or past-due balance post-discharge, it is reporting inaccurately, and you need to act.
Don’t assume your bankruptcy filing corrected your credit report
Don’t assume that the CRAs are just going to publish your data accurately or that it will not change a year or so post-bankruptcy. You should check your credit files regularly and ensure that each of your trade lines is reporting accurately. Inaccurate post-bankruptcy credit reporting can increase the cost of credit, force the denial of credit, and threaten your employment or security clearance.
If you have an error on your credit report and need legal help getting it corrected contact the Virginia Credit report error lawyers at Blankingship & Christiano, P.C. (571) 313-0412 or fill out our contact form to discuss your case.