How Does This Happen?
Debt collectors fail or sometimes refuse, to report a debt as discharged in bankruptcy. They hope to collect the debt at some point when you go to get credit.
Many creditors just don’t know how to handle a bankruptcy, especially a Chapter 13. Just remember that once your debts have been discharged in bankruptcy, you don’t owe them anymore.
Here are the top ways that a credit report remains damaged after a Bankruptcy Discharge
Debt Collectors reporting item reported as still open. Many debt collectors either refuse or don’t know how to remove their collection item from your credit reports. If you have received a discharge in bankruptcy, then your debts that existed as of that day should also be reported as discharged in bankruptcy. Some debt collectors can be vindictive and simply refuse to update the credit reporting. Open collection accounts are harmful to your credit score. Be sure that if you have any of these, that they are reported as either “included in bankruptcy” or “discharged in bankruptcy.”
Tradeline still reported with late or delinquent payments. After you receive a discharge in either a Chapter 7 or Chapter 13, your debts as of the date that you filed should be reported as “included in bankruptcy” or “discharged in bankruptcy.” There should be no late payments reported after the date that you filed for bankruptcy. Each late payment ratchets your credit score down. You have the right to a clean credit report but its your job to enforce your right.
People who file Chapter 13 Bankruptcies and have a confirmed plan often face these issues
Tradelines that do not reflect payments made to the creditor in a Chapter 13 plan. Strangely some banks and creditors have no idea how to properly report an account that was included in a Chapter 13 bankruptcy. Many creditors simply report the account as closed but that is not correct either. You see, 35% of your credit score is made up of timely made payments. If a creditor reports your account as closed but is still getting payments under the bankruptcy plan, the creditor is not allowing your credit score to go up. This is just not right.
Tradelines that reflect a $0 balance due after the BK has been filed. Another thing that some banks and creditors do is report a $0 balance due after someone files a Chapter 13 bankruptcy. There are few problems with this. First, it is incorrect reporting because chances are under the bankruptcy plan, you still owe something to this creditor. A confirmed bankruptcy plan is like a new contract between you and the creditor. Secondly, if there is a $0 balance reporting, the creditor has no way to report timely made payments (see 1 above) and that prevents your credit score from going up due to the timely made payments.
Bankruptcy reporting in your public records section of your credit report longer than it should. A Chapter 13 bankruptcy may be reported on your credit report for up to 7 years and a Chapter 7 may be reported for up to 10 years.
Without a clean credit report, you are chained to the starting line of your “Fresh Start”
If you have received a discharge in bankruptcy, you are entitled to a fresh financial start. As you can see, if your credit report is not updated properly, then you don’t get that fresh start. Bankruptcy is an agonizing decision. We salute you if you have pulled that trigger and filed. Get what you deserve.
Call or email me, Attorney Gary Nitzkin at (248) 353-2882 for a free credit report and review. My staff and I will be happy to review your credit reports to be sure that you get your fresh start.
I can also be reached at G[email protected]. You can find out more about us at www.crlam.com
