Credit reports and ratings are used by financial institutions and employers to determine whether New York consumers are creditworthy. Consumers invest a lot of energy in making sure credit scores are high to avoid credit, loan and job rejections. A credit report may contain mistakes including personal debt discharged during bankruptcy.
Creditors are expected to contact the three primary credit reporting agencies – Trans Union, Experian and Equifax — when customers’ debts are discharged during bankruptcy. However, some creditors delay letting the agencies know. Debt may be sold off to a collection agency and ignored or forgotten by the creditor.
A Senate bill, introduced in the summer of 2015, aims to cut down the time it takes to remove debt from consumer’s credit reports. The proposal compels creditors to act quickly after a bankruptcy court discharges debt.
The sponsor of the Senate measure indicated some creditors deliberately delay informing credit reporting agencies about debt discharges. The advantage for creditors is obvious. The proposed legislation gives consumers, who’ve been harmed by delays in reporting discharges to credit agencies, the right to seek legal remedies for damages.
Credit report mistakes affect one in five consumers and, according to the Federal Trade Commission, errors on 5 percent of credit reports adversely affect consumer interest rates. Consumers may dispute the accuracy of a credit report but that can take valuable time. Consumers don’t have the power creditors do to effect immediate changes to a credit rating.
New York consumers can reduce chances for credit reporting mistakes by checking credit scores regularly. Credit reports may be obtained annually free of charge from each of the major reporting agencies. You may want to check credit reports more frequently to ensure debt discharged in bankruptcy is accurately reflected by the agencies.
A bankruptcy attorney can advise you if creditors fail to report discharges in a timely manner.
Source: Credit.com, “Your Credit Report a Mess Post-Bankruptcy? A New Bill Could Help,” Gene Melchionne, Aug. 03, 2015