Bankruptcy is an excellent way to get rid of your debt. However, lawyers of Los Angeles based bankruptcy law firm Recovery Law Group say that people are often worried about how this might affect their credit report. The Fair Credit Reporting Act (FCRA) dictates how creditors, credit buyers as well as credit reporting agencies report the credit. This act was drafted and implemented to ensure that the actual representation of credit information was done by creditors. they are expected to inform consumer reporting agencies accurately with respect to the status of the debts of an individual. Additionally, FCRA directs credit reporting agencies which information can be reported and for how long that information will stay on the credit report. moreover, if the creditor does not display the information correctly, the debtor can approach the FCRA for the violations.
How are discharged debts reported on credit reports?
FCRA does not instruct credit reporting agencies on reporting discharged debts as there are no strict laws on such listings. The act, however, does mention that reporting agencies should not misrepresent the information. The creditors are also required to update any inaccurate reporting after they are notified by the debtor. If the creditor refuses to report a discharged debt to the reporting agency in order to get money from the debtor, they are in violation of the discharge injunction of bankruptcy.
Bankruptcy is listed on credit report for 7 years in the case of chapter 13 discharge and for 10 years in case of chapter 7 discharge. Having bankruptcy on your credit report lowers your credit score but at the same time, it also gets rid of your bad debts which were affecting your credit rating. You can slowly and with continuous efforts improve your credit score after bankruptcy. Any debt that is discharged in bankruptcy cannot be reported by the credit reporting agency as:
- Charged off
- Delinquent or late
- Active or currently owed
- Having due balance
- Converted to a new debt (with different account number)
Misrepresentation of discharged debts in this manner can affect the debtor’s credit report. This can result in failure to obtain fresh credit or paying off a debt that was discharged in bankruptcy. Thus, credit reports need to accurately represent the status of the debts.
Make sure your debts are accurately presented on the credit report
Once you get your bankruptcy discharge, get an updated credit report within 60 days of discharge. It is better if you get one from all three major credit-reporting agencies (Equifax, Experian, and TransUnion). You need to carefully go through each for every debt and creditor name for any discrepancy. Any unfamiliar debt or creditor might be for a discharged debt that was bought and sold to a 3rd party. Since the debts were discharged through bankruptcy, they need to be listed so in your credit report. any misrepresentation of facts must be reported to the agency and disputed through the FCRA dispute procedure.
In case you are having a tough time figuring out the details, you can speak with experienced bankruptcy lawyers at 888-297-6023.