Personal bankruptcy cases should be accurate in credit reports

When filing for bankruptcy in Florida, people facing financial challenges hope that they’ll be able to start over rebuilding their credit. But that won’t be able to happen if the major credit reporting bureaus haven’t accurately updated credit reports to reflect a bankruptcy debt dismissal.

SmartCredit.com’s president of consumer education says the three main credit reporting bureaus haven’t always been good in the past at changing credit reports to reflect a bankruptcy. A class-action lawsuit against the major credit bureaus–Experian, Equifax, and TransUnion–has inspired a settlement agreement that’s changing how these groups report bankruptcy discharges. This can mean a great deal to people seeking debt relief, who might not have considered filing for personal bankruptcy over fears of their credit reports being permanently damaged.

Multiple lawsuits filed against the bureaus in 2005 and 2006 stated that people’s credit reports often listed people as delinquent on their bankruptcy debts, even after successfully completing bankruptcy. The agencies had also been accused of not investigating credit reporting errors after being informed of inaccuracies. The bureaus have agreed to utilize procedures to accurately report bankruptcy discharges.

Filing for Chapter 7 or Chapter 13 bankruptcy will stay on a person’s credit for up to ten years, but if a bankruptcy is accurately recorded on a credit report, a person can begin repairing his or her credit soon after bankruptcy. However, if the discharged debs haven’t been correctly recorded and are shown as due and payable, it will further damage credit. It’s important for anyone going through a bankruptcy to order copies of credit reports to be sure everything is current and correct.

Source: The New York Times, “Credit Reports More Accurately Reflect Debts Discharged in Bankruptcy,” Ann Carrns, April 30, 2013