There are certain guidelines that creditors must follow when a consumer files bankruptcy and it is a violation of the FCRA for creditors to report negative activity that occurred after the bankruptcy was filed. However, any negative activity that occurred before the filing can be reported by creditors and can remain on a consumer’s credit report for up to seven years.
The Seven Year Wait
Late payments remain on a credit report for seven years from the date of delinquency. Filing bankruptcy does not remove this information from the credit report and most circumstances it is not possible to have this information removed early. When these debts are discharged in a bankruptcy, the balance will revert to zero which indicates that the debtor is no longer responsible for repaying the lender, collection agency, or creditor.
The Collection Agency Challenge
Collection agencies are frequent offenders when it comes to updating credit reports and violations of the FCRA. It is not uncommon for them to report past due amounts after an individual has already filed for bankruptcy. However, even if a creditor or collection agency does this, consumers are not liable for debts that were discharged in their bankruptcy. To remove the incorrectly reported late payments from a credit report, consumers can provide documentation to the credit bureaus that establishes the debt was discharged in bankruptcy.
Checking for Accuracy & Preventing Harassment
Consumers who have filed bankruptcy should thoroughly examine their credit reports to ensure that the record is accurate and up-to-date. It is the first step down a long road of recovery that starts the moment a bankruptcy is filed and the debts are discharged.
Moreover, consumers should not feel pressured by creditors who attempt to collect on these debts following bankruptcy. Creditors who attempt to do so can be held liable for their actions which violate the consumer’s rights under the law.
Repaying the Debt and Goodwill Letters
Consumers who file bankruptcy and discharge debts can still repay the debts they owed even though they are not legally obligated to do so. In such cases, the individual can often negotiate with the creditor to remove the late payments from the individual’s credit report. This small step can further help the individual’s credit score recover in the wake of a bankruptcy.