Your Bankruptcy Attorney should be especially vigilant of your credit report. To truly get the fresh financial start that she is promising, you should have both a discharge from your debts or a plan of reorganization and a clean credit report.
Bankruptcy is not a permanent kiss of death to a credit score. The illegal reporting of it, can be.
Bankruptcy is devastating to a credit score, but is not a permanent kiss of death. The effects of bankruptcy on a credit score can linger although they lessen over time. But, if there are inaccurate items reporting on your credit report because of the bankruptcy, then these things can artificially depress your credit score for as long as they are on there. If you have filed for bankruptcy, you must review your credit report for these kinds of inaccuracies in order to give yourself that financial fresh start.
- Mortgage lender reporting a $0 balance due. If you have agreed to retain your home in your bankruptcy, (using a reaffirmation agreement in a Chapter 7 or making it part of the plan in a Chapter 13), you still owe money to your mortgage lender. Still, many large banks will report that you owe $0 and will refuse to report the payments that you make to them. This is false and misleading to any other lender who reads your credit report. If your lender is doing this to you, it is doing you no favors.
- Other creditors failing to update the monthly payment or balance due after confirmation of a plan. In a Chapter 13, many debts and monthly payments become adjusted to a lower payment. For example, a credit card balance of $10,000 with a monthly payment of $500 can be reduced to a balance of $3,000 and a monthly payment of $20. Some creditors will continue to report the $10,000 balance/$500 monthly payment even after the bankruptcy plan has been confirmed. This is illegal. The bankruptcy plan is a new contract between the consumer and the lender. Reporting the old pre-confirmation plan to the credit bureaus is illegal and damaging to the consumer.
- Debt Collectors reporting balances due. After one files for bankruptcy, there is something called an “Automatic Stay.” This is a general court order that directs all creditors to not take any action to enforce their debt outside of the bankruptcy court. Hence, a debt collector refusing to tag its collection item as “included in bankruptcy” or continuing to report it as an active collection account, is a violation of the Automatic Stay. It’s also damaging to your credit score.
- Creditors reporting discharged debts as active collections. We have seen this when second mortgagees have their mortgage loans discharged. They continue to report them as active and collectible loans.
- Reaffirmed Debts reported as charged off. If you reaffirm a debt in a Chapter 7 bankruptcy, you are still liable for it. Still, some lenders will report the debt as a charge off. Charge offs are also very damaging to a credit score. You don’t have to stand for this.
- Discharged Debt Reported as Open. Many times, a lender will continue to report a debt as open and past due when it was discharged in bankruptcy. This is illegal and it happens a lot. This also sometimes happens with debts that are modified in a Chapter 13 bankruptcy plan. Instead of the lender reporting the modified debt, it will report it as charged off.
Get a Free Credit Repair Lawyer to Fix these Mistakes on your Credit Report
At Credit Repair Lawyers of America, we fix errors and mistakes on credit reports for free. Under the law, the Defendants have to pay you damages plus our fees and costs in any successful action. The vast majority of our actions are successful so it never costs you a dime.
Call or email me, Attorney Gary Nitzkin at (855) 956-2089 for a free, no obligation consultation. We will be happy to review your credit report for you, for free. If we find any errors or mistakes, we will be glad to clean those off of your credit report at no charge to you, as well.