Credit Infocenter

Is Your Discharged Bankruptcy Debt Reflected In Credit Reports?

May 16th, 2013 · No Comments · Bankruptcy

by Kristy Welsh

(Last Updated On: February 26, 2018)

When you file for bankruptcy, you expect discharged debts to be reflected as such in your credit reports. Historically, though, that’s not always the case; not for any exception to the rule, but for a mistake on the part of credit reporting bureaus. However, thanks to a recent crackdown on the system, discharged debts are evidently more accurately reflected in credit reports these days.

As reported by The New York Times, the credit bureaus agreed in 2008 to put into place a more effective system for ensuring accurate reporting of discharged debts on credit reports. This action came as a result of multiple lawsuits in 2005 and 2006 stating that “the major credit bureaus – Experian, Equifax and TransUnion – issued credit reports stating that consumers were delinquent in making payments on debts that had been eliminated in bankruptcy.”

While a $45 million settlement has since been overturned, the system improvements are evidently still in place, with fewer filers finding discharged debts sticking around to haunt them. While they don’t actually owe the debt, having unpaid debts on a credit report lowers credit scores. Although a bankruptcy filing itself means a big hit to the score, consumers can start to rebuild credit within a couple of years, but not so much if discharged debts are dragging them down.

On the flipside, Lifehacker reports that an FTC study in December 2012 found that 25 percent of a sample 3,000 reports had at least one error. Five percent had “serious” errors — the kind that can dramatically impact a borrower’s ability to secure a loan or, at the very least, good loan terms.

The takeaway? Whatever your credit situation, keep a watchful eye on your credit reports. While most mistakes may be minimal, it only takes one serious mistake to drastically lower your credit score, the last thing anyone needs no matter their current credit standing.

Tags: ·····

No Comments so far ↓

There are no comments yet...Kick things off by filling out the form below.

Leave a Comment