Prior to filing bankruptcy, accounts on a credit report usually show the balance and the “status” of the account, among other descriptors. For example, a credit card may show a balance of $2,000 and the “status” as 30 days late. After bankruptcy, (if the account/creditor was listed in the bankruptcy petition and the debt was discharged in the bankruptcy case) the account should show the debt as included in bankruptcy and the balance as $0.00
Unfortunately, it is very common for debts that were listed in a bankruptcy petition and discharged in the bankruptcy proceedings to continue to show on the debtor’s credit reports as still being owed. This is not only due to the creditors negligence, but is also commonly due to the creditors intentional disregard for the bankruptcy process. Creditors may not actively pursue collection after bankruptcy, but they will continue to report the debt as being owed in order to “stick it to” the debtor. Also, if the account continues to show a balance is owed, and the debtor eventually attempts to purchase a home or car, or refinace an existing home loan, the debtor will many time be forced to pay-off the old debt in order to get the loan approved. Thus, the debtor is strong-armed into paying off a debt that was legally discharged in a bankruptcy proceeding. Creditors collect millions of dollars each year with this tactic.
How does the consumer avoid this? First, check your credit report about three months after your bankruptcy case has been discharged. Compare the accounts listed on your credit reports with the accounts listed in your bankruptcy petition. If an account was listed in the bankruptcy petition and the debt was discharged in the bankrutpcy proceedings, the credit report should show that account as being listed in the bankruptcy and the balance as $0.00.
What to do if you find errors on your credit report after bankruptcy? Dispute the errors. Send a letter, via certified mail, to the credit reporting agency (Experian, Equifax or TransUnion) explaining why you are disputing the account. The credit reporting agency must respond to the dispute within 30 days. If the credit reporting agency refuses to correct the error after sending them a dispute, you may need to contact an attorney to discuss your other options.
Filing bankruptcy gives the debtor a “fresh start”. Don’t let old creditors and debt collectors force you into paying for debts discharged in a bankruptcy case. Pull your credit reports. Compare your credit reports with your bankruptcy petition. Send dispute letters to the credit reporting agencies via certified mail. Fight back!