I’m one of a handful of lawyers in the country who promises to fight the credit bureaus–sue them if necessary–after your bankruptcy is over.
I want to make sure that all the debts discharged in your bankruptcy are reported by the credit bureaus as “discharged in bankruptcy.” That should be automatic, but it’s not. Let me tell you how I found out.
This young couple drove up from North Carolina, sat in front of me, and pounded on my desk. It was 1999, but I still remember. ”We filed bankruptcy with you in 1996; our credit report still isn’t right. You didn’t finish your job.”
Up ’til that time, I had never looked at an after-bankruptcy credit report. Never talked about it with any other lawyers; never had it come up at any of our meetings or conventions.
But when I thought about it, these folks were right! When a bank, or car dealer or mortgage company wants to know if bankruptcy cleaned up your credit, where do they go? Do they look at the records of the bankruptcy court? No.
They look at your credit report.
If the credit report isn’t right, I had to agree the lawyer (me) hadn’t finished the job.
By 2001, I had seen hundreds of after-bankruptcy credit reports. And I was shocked. Three of the major credit card companies constantly ignored the bankruptcy. They left late status, charge offs, past due balances just parked on people’s credit reports.
A big reason it took people seven years to get back to good credit, is most people NEVER got their credit reports right. The problem wasn’t the bankruptcy. It was those bad debts, charge offs and past dues that were left parked there.
The more I found out, the madder I got. I started suing the creditors and the credit bureaus. I urged other lawyers to sue them, too. I spoke on this twice at the National Convention of the National Association of Consumer Bankruptcy Attorneys (NACBA). And once at the credit report conference of the National Association of Consumer Advocates (NACA).
Today things are a lot better. Two months after bankruptcy, a little more than half of the people now have their credit reports right. That still means a little less than half the people, do not have their credit reports right.
Today, things are better. Within two months after the bankruptcy is over, a little more than half the credit reports I see now are right.
But that still means, a little less than half the credit reports are not right. When your case is over, there’s about a one in three chance that at least one of your debts will be parked on your credit report as a bad debt. It will look like you still owe the money.
A handful of lawyers have been suing on this for the past seven or eight years. A couple of the top credit report lawyers in the country also got involved. My good friend Charles Juntikka, from New York City, brought in David Boies, who is famous for doing billion dollar law cases.
With all that, still three or four people out of ten people coming out of bankruptcy will have at least one creditor who says you still owe the money.
I still work with all our clients, to fix their credit reports when your case is over. If there’s a bad debt showing there, we draft up a letter for you to sign, asking the credit bureaus nicely to fix it. If that doesn’t work, we write up a second letter.
If two letters don’t work, we sue. On average, we sue credit bureaus two or three times a month, to get people’s credit reports right.
Recently, we took a look at the records of all the courts here in Northern Virginia. I wanted to see who else around here sued the credit bureaus. As far as I can tell, we are the only bankruptcy lawyers in Northern Virginia that do.
If you select me to be your lawyer, and get our help to get your credit report right, you can thank those people who drove up from North Carolina and told me I didn’t finish my job.
{ 7 comments… read them below or add one }
Mr Weed,
I really, really wished you are here in CA. There’s not a lot of lawyers out there that cares about their clients, you seemed very passionate and caring… I’ve been reading your blogs, different topics and you makes so much sense, you take time and you explain things very well.
I have sent you my question earlier but I am not getting a confirmation that it went through and I’m in desperate to get your opinion on my case, so I’m sorry if I am re sending this again. I am very scared that I get sued and creditors garnish me, I need guidance… please help.
________
My house in NV was foreclosed 2009, lost job and filed chapter 7 bankruptcy on May 2009 but was dismissed, I had to move to CA and because of severe stress I couldn’t follow through the bankruptcy in NV.
I now leave in CA and have a job, I kind of put my debt problems in the back burner because there’s a lot of things going on with me. My bankruptcy lawyer in NV told me to wait 6-7mos before filing again here in CA but I never did.
I just happened to check my credit record and some of my creditors put “charged off”, “discharged from BK chapter 7″ and some “petitioned for bankruptcy” on status.
I never paid my second loan/mortgage ($75,000) and it says to my credit report status “Petition for Chapter 7 Bankruptcy”. What is that mean and can they forced me to pay? can they sue me? should I file bankruptcy here in CA? My credit loan (all cards plus the 2nd loan) total is around $85,000 (my job now pays $90,000/year with monthly expenses of $4,500).
Please response…I am scared, I’m a single mom and don’t know any trusted lawyer here.
Thank you.
Your credit report is obviously all confused. But the fact is, you owe those debts, since your bankruptcy was dismissed, regardless of how they are hitting your credit. And at some point someone will figure that out and they will start coming after you. And yes they can sue you, garnish you, and force you to pay. Your bankruptcy lawyer in NV was right that you needed to talk to a lawyer there in California. You didn’t say how many children you have, but you have good income and in a lot of places you would find it tough to get a bankruptcy approved. Here in Northern Virginia it can be tough to get approval for say a single mom with one child at home making $90,000. Not saying it can’t be done. But starting now, when no one is chasing you, would allow time to do the planning that might be needed to line up everything and get it approved. Now with six kids, approval would be easy. (It also matters if you are in a high rent part of California–which is most of California, I think. Or if you are in some small town where rents are low.)
Hi Mr Weed,
Mike in Loudoun County here, I really enjoy reading your blog. Quick question: I noticed that 2 years after a Chapter 7 discharge, a mortgage bank (whose loan was discharged and not reaffirmed) was still reporting post-discharge payments to a credit bureau who was listing them on a credit report. The loan shows as discharged in chapter 7 on the report, but the voluntary monthly payment dates and amounts (which keep the owner’s in the house as per the unwritten/unspoken ride through agreement) are still being reported. Is this legal? If not, maybe you can do something about it on behalf of the mortgagees. I look forward to your reply. Keep up the great blog!
As long as the payments are showing current, it’s helping you. So I think the credit reporting is wrong, but if it helps, why mess with it. But if you are thinking of changing your mind and moving out, then you need to get the credit reporting stopped. Not sure where you are going with this.
Thank you Mr. Weed for your response.
How does the statue of limitation apply in my situation? Most of these credit cards/debts are coming to 3 – 4 years since last activity. My second loan ($75,000) last activity (my last payment) was early/mid 2008 and credit cards were late 2008.
When does SOL start? I was told – last activity, meaning my last payment. Is that right?
Mr. Weed,
Glad I came across your website! I have a question. I was discharged from a Chapter 7 about 8 months ago. All of my credit card accounts except one are reporting to the credit bureau zero balances and N/A. This one particular bank is still reporting my credit card limit and my high balance which exceededs my limit. Is this legal? When I apply for credit, the computer doesn’t read “Discharged in Chapter 7 Bankruptcy” it reads numbers. This company is refusing to remove these balances. What recourses do I have if any?
You need to do a Fair Credit Reporting dispute. Write a letter to the Credit Bureaus with a copy to the creditor. Say that they are reporting a balance, but it should show bankruptcy and balance $0 of N/A. If that doesn’t work, send a second letter.
If two letters don’t work, you should sue them under the Fair Credit Reporting Act. Look for a lawyer in your area who does that work at NACA.net. (National Association of Consumer Advocates.)
A handful of bankruptcy lawyers in the country do this. You probably should also ask for bankruptcy lawyer if they do.