When you successfully file a chapter 7 bankruptcy, your debts are automatically included
in the bankruptcy. Your debts are essentially placed in one of two categories; statutorily
dischargeable and not dischargeable. If you’ve got debts that are dischargeable and
you don’t reaffirm the obligation then a chapter 7 discharge essentially does away with
the debt and your obligation to pay it. It also prevents the lender from continuing any
sort of collection efforts.
The question that persists at this point is how is the credit reporting impacted? First
off, it is well established that the credit reporting of a debt is an attempt to collect that
debt. That means if the lender continues to report a current balance and a past due
balance then they’re attempting to collect the debt. And, if the debt is no longer owed
the reporting of the debt after the bankruptcy is filed and discharged is inappropriate and
likely an FCRA violation.
If a collection agency attempts to collect a debt either by credit reporting or by contacting
the debtor then they too are violating Federal law including the FCRA and the FDCPA.
So the question is how can you spot a post bankruptcy credit reporting violation? The
following credit reporting scenarios are clear violations of the FCRA:
Tradeline has a date reported that post dates the filing date of the bankruptcy and a
balance (current or past due) is being reported.
Tradeline has been disputed and the furnisher verifies that the debt is still owed after the
date of the bankruptcy filing.
Tradeline contains late payments that post date the bankruptcy filing date and the data
furnisher confirms that they are accurate.
The following credit reporting scenarios are not violations of the FCRA:Tradeline has a balance but a date reported that predates the filing date of the
bankruptcy. You have to give the credit bureau and the furnisher the opportunity
to correct their reporting AFTER the BK filing date.
Tradeline has no balance but has late payments that predate the filing of the bankruptcy.
As long as the late payments are accurate then there is no violation. The late payments
do not have to be removed just because the debt is discharged.
Tradeline has a date reported that post dates the bankruptcy filing date, no balance but
has a narrative that reads something negative such as “charge off.” As long as this is a
true reflection of the account then it’s accurate.
Of course if a debt is reaffirmed then all bets are off. The reporting of the account can
include balances and late payments after the filing date of the bankruptcy.
“The Credit Guru”, Longtime FICO Insider & Credit Industry Authority President Of The Ulzheimer Group, LLC
John Ulzheimer is a nationally recognized expert on credit reporting, credit scoring and identity theft. He is the President of The Ulzheimer Group, the Director of Credit Education at DisputeSuite.com, Credit Expert at CreditSesame.com and the credit blogger for Mint.com. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. He has served as a credit expert witness in more than 150 cases and has been qualified to testify in both Federal and State court on the topic of consumer credit.
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