What is the importance of reviewing your credit report?

Posted by Lee StringhamJan 23, 20170 Comments

Reviewing your “after bankruptcy credit report” could save you hundreds of dollars, or even thousands, when you are ready to buy a car after bankruptcy.

Things to look for:

First, that a debt discharged in bankruptcy shows a zero balance. (The credit report may include an account that was discharged in bankruptcy – as well as the bankruptcy itself – as long as it reports a zero balance due to reflect the fact that the consumer is no longer liable for the discharged debt.)

Second, that a debt discharged in bankruptcy shows a “discharged in bankruptcy” status. (Similarly, a credit report may includ delinquencies on debts discharged in bankruptcy, but must accurately note the status of the debt as “discharged”)

Third, that the credit bureaus are staying on top of your creditors to make sure they send in the required updates – specifically updating past due accounts that are included in bankruptcy. (A credit reporting agency must employ reasonable procedures to keep its file current on past due accounts – e.g., by requiring its creditors to notify the credit bureau when a previously past due account has been paid or discharged in bankruptcy.)

In spite of the three aforementioned requirements by the Federal Trade Commission, probably half the people who are discharged in a chapter 7 bankruptcy still have errors on their credit report. The big problem in the past was credit agencies were putting “charge offs” meaning you owe the money but aren't paying instead of a “discharge”, meaning you don't owe it any more.

The bankruptcy process is not over until the credit report is right