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Nov 2010

Your after bankruptcy credit report: HSBC won’t show bankruptcy

Posted by / in After Bankruptcy / 14 comments

The Supreme Court said in 1934 that a person who files bankruptcy gets a “a new opportunity in life and a clear field for future effort.”

You won’t get that clear field for the future if your after bankruptcy credit report isn’t right.  If one of your debts is HSBC, your credit report won’t be right.

(To be fair to HSBC, we see this same problem now and then with other lenders.  But with HSBC, it’s ALWAYS a problem.)

HSBC does not update its credit reporting to show that your debts to them are discharged.  That means future lenders–or security clearance investigators–will wonder why HSBC is not discharged.

After Bankruptcy, HSBC won't update.

After Bankruptcy, HSBC won’t update.

Credit cards should always be discharged in your bankruptcy–unless some kind of false statement or fraud is involved.   So if a credit card still still shows as due and owing, it carries the implication that you did something wrong.   That’s serious.

When they get your discharge notice, HSBC does not update your credit report to show “discharged through bankruptcy.”  Instead they sell your account and they put “transfered, closed” and “purchased by another lender.”

That new lender, whoever it is, is not somebody who shows up on the credit reports I see.  Because that new lender is not on your credit report, you have two problems:  You can’t notify the new lender about the bankruptcy–they can always come back later and say they didn’t know.   And you have no way on your credit report to show that the debt was taken care of.

That’s why I get all my clients to sign dispute letters to the three credit bureaus.   We mail those dispute letters about four months after your trustee hearing–about two months after your discharge.   (The Judge in the class action case White v Experian gave the credit bureaus two months after your discharge to get your credit report right.)

Those dispute letters include the list of companies that got the discharge notice of your case from the court.  We ask the credit bureaus to make sure all those debts are showing as discharged in your credit report.

Those letters work sometimes, but often they don’t.  The credit bureaus reply to you and we count on you to send them on to us.

If it’s not fixed, then we sue.  When we sue, we get back a lot of technicalities from the credit bureaus.   They argue that you aren’t hurt, that it doesn’t matter, that HSBC is right.

(When they argue with us, the credit bureaus ignore the fact that the law requires them to be “complete” and “accurate.”  It may be accurate for HSBC to say they sold the debt.  But to be complete, they have to show you discharged it in your bankruptcy.)

Then, usually, we get it fixed–and a small check comes in the mail.   The check from the bureau covers the trouble you had to go through–and the work we had to go through–to get them to get it right.

I spoke on these credit report problems at the May 2005 Convention of NACBA–the National Association of Consumer Bankruptcy Attorneys.  A couple dozen lawyers around the country got involved and fought hard to get the bankruptcy courts involved in this problem.  It seems like they should, since it’s an interference with your new opportunity in life that the Supreme Court said you were supposed to get.

None of us had much luck with that.  That’s why we have to fight this under credit report law.

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Robert Weed has helped fifteen thousand people file bankruptcy in Northern Virginia. Robert Weed is a frequent panelist and speaker at the meetings of the National Association of Consumer Bankruptcy Attorneys. He is one of Northern Virginia’s most experienced personal bankruptcy lawyers. As an expert on changing consumer bankruptcy laws, Robert Weed has been interviewed on local and national TV and quoted in newspapers across the country.

  • Robert Weed

    November 22, 2010, am30 10:05 AM

    My samples in the blog are too small for you to see what I mean. So, click here to see how HSBC failed to update. https://robertweed.com/blog/wp-content/uploads/2010/11/HSBC-the-worst.pdf

    In this after bankruptcy credit report, the credit card at the top of the pages is showing what it should show–discharged in bankruptcy. The HSBC card at the bottom (and continuing over to the next) doesn’t show that. It looks like there’s a debt for $1484 still out there somewhere.

    That’s why we sue them.

  • Robert Weed

    December 17, 2010, pm31 3:05 PM

    Here’s a letter from the Transportation Safety Administration (TSA). This is the letter they send when they turn you down for a job, because of your credit report. TSA says they won’t hire you if you have $7500 in “bad debt.” https://robertweed.com/blog/wp-content/uploads/2010/12/TSA-credit-report.pdf. One category of bad debt is “debts not dismissed in bankruptcy.”

    That means the HSBC policy–refusing to update to show the bankruptcy–would keep you from getting a job at TSA because of “bad debt.” That’s because HSBC shows the debt with them was “not dismissed” in the bankruptcy. (A bankruptcy lawyer would say “not discharged”.)

    I’ve never seen it in writing before, but I suspect other agencies–and maybe other employers–have the same policy. That’s why fighting HSBC and the credit bureaus on this is so important.

  • Sally

    January 26, 2011, pm31 3:05 PM

    HSBC Bank strikes again – in the process of disputing items on my credit report following a 2008 Chapter 7 discharge, HSBC is showing the account discharge by Chapter 7 as a chargeoff amount and the account as transfer/sold. Sounds like this will take months to fix if ever based on your comments.

    • Robert Weed

      January 28, 2011, pm31 12:40 PM

      Sally, I’m afraid you are right. We have about a dozen cases pending where we are suing the credit bureaus over this.

  • Janet Robertson

    March 25, 2011, am31 11:02 AM

    Well, the bottom line is that we lost yesterday suing Experian on these violations.

    The reason we lost is the judge just wasn’t happy with only the one letter to the CRAs, he felt it would have been fixed with more than one letter.

    Allison Haedt, Experian’s lawyer, asserted that we were launching a collateral attack on Experian Information Solutions, Inc. and said they were protected under the White class action because “transferred” accounts were excluded from the class action lawsuit. The judge really didn’t buy that.

    The judge was very concerned about the “transferred” status in the credit reports. They showed they changed it to say Discharged in Bankruptcy, but not because the “transfer” was wrong, they lied and said it was a courtesy that they did that once they knew what the specific problem was, but there was nothing wrong with reporting it as Transferred/closed.

    The judge said it bothered him because it implied that the debt was still out there and they didn’t report who it was sold to. They said that’s because the original creditor didn’t supply that information. That’s really our position on the transferred/closed and transfer/solds.

    The judge apparently did eventually accept their “courtesy” lie because he feels once they know specifically what the problem is, they’ll fix it.

    Our clients were very pleased with the presentation of their cases, and the effort that the Law Office of Robert Weed goes to to protect and defend their clients when they become victims to the cavalier reporting of the CRAs. They said that they were pleased to be “stepping stones” so that we can help other clients navigate the tricky turns and twists (lies about not doing their job and ignoring the discharge order) with the credit reporting agencies.

    Janet Robertson
    Litigation Paralegal
    Credit Report Specialist
    Law Offfice of Robert Weed

  • Reggie

    September 22, 2011, pm30 8:07 PM


    I have the same problem with HSBC. I am currently discharged from a chapter 7. I have sent 2 online disputes to all 3 CRA’s and was told each time that the item is reported correctly. I called HSBC and was told that they’re under no obligation to report this as included in bankruptcy. They said that because the debt was charged off before I filed, they had the right to report it as sold and charged off. Any help with what to do next would be appreciated.

    Thank you

    • Robert Weed

      September 23, 2011, am30 6:33 AM

      That’s definitely the stand they take. If you are in Virginia, I sue them on those. If you are somewhere else, contact a credit report lawyer in your state. Look at the National Association of Consumer Advocates. http://www.naca.net/.

  • Danielle

    October 26, 2011, pm31 1:38 PM

    I am also having a heck of a time, like jumping through hoops into a brick wall. Dischared bankruptcy 9/2010. I thought that cr reports had to state 0 balance and condition closed or paid. I have been fighting with CA and collection agency and nothing is working. My account shows zero balance. included in bankruptcy. But condition states derogatory and not closed. And assest acceptance keeps updating every month. The operators @ transunion keep telling me they can access your report. But my question is if the account is closed and showing 0 balance “why should they have access and keep updating included in bankruptcy. I spoke with a gentlemen from truecredit that worked for transunion for for 10 years in that dept. He said and looked @ my credit report.” it is only logical that if the balance is zero and closed the creditor has no reason to update every month except to drive your credit score down or the “IIB game” ” He informed me that as long as condition says deragotory and they keep updating a closed account it does drive the FICO down” and it sure has. New car loan credit card balance that i keep well below 25% of limit and my credit score keeps going a couple of ponts backwards every month. I thought bankruptcy is there for a fresh start to improve credit score? But i am getting no where with the CA i have disputed a few times to get condition changed to closed but they just won’t do it. And Assest has been called and they said they can report for up to 7 years. But what the heck are they reporting a closed 0 balance account. my belief is that if they keep updating that is showing a new derogatory every 30 days, or why else would they bother?

    • Robert Weed

      October 26, 2011, pm31 8:01 PM

      You need to locate a good credit report lawyer in your state. Look at naca.net.

  • Danielle

    October 26, 2011, pm31 1:45 PM

    Oops, sorry i keep rambling but this is so very frustrating. All my other accounts are showing closed. But the operator for the 2nd or third time told me that it is derogatory if it is chapter seven, i understand that, but i don’t think they understand that collection agency keeps updating that derogatory every month and what it is doing. I understand it is deragatory but all my other accounts on credit report condition states ” closed” except this one and the ca operator told me as long as account states zero balance and included in bankruptcy, they can keep accessing my file? I don’t agree please help?

  • Anne O’Neal

    November 3, 2011, am30 1:50 AM

    We had the opposite problem with HSBC and the Credit reporting agencies. Somehow Someone reported that we had filed bankrupcy on HSBC, it showed up on the HSBC account and went to the credit reporting agencies. We had to have the credit agency research it and they did remove the statement of bankruptcy, and HSBC wouldn’t TAKE a payment from us during that time, and now we are still waiting for a response from them to take a payment, and in the meantime they flagged our account as delinquent. If they have it on record that we filed bankruptcy, why are they saying we are delinquent? This is a three month mess! and it carried on to another credit card somehow.

    • Robert Weed

      November 3, 2011, am30 7:11 AM

      Yeah, I hate HSBC.

  • Monica

    November 9, 2015, am30 12:22 AM

    Mine is HSBC, I filed in bankruptcy 2008, and didn’t realize they had not updated our credit reports. We can’t get a mortgage. So far I have sent HSBC the proof and asked them to update. I have also written to my Atty General and filed a letter of complaint. I also located an attorney online that I thought maybe filing a class action. However, I have been at this for days. I am waiting back for more information about this.
    Have I done all I can do? Or do I start after credit bureaus?

    • Robert Weed

      November 12, 2015, pm30 8:43 PM


      Your rights under the Fair Credit Reporting Act start (and mostly end) with the credit bureaus, not the creditor. (Your right to do a dispute with the creditors was added in the FACTA law, passed by Congress and signed by President Bush in 2003. But it’s a dead end right. If they don’t do what they are supposed to do, there’s nothing YOU can do about it.)

      So you need to contact the credit bureaus and send proof to them.

      I have more info on that, here. https://robertweed.com/credit-report-dispute-line/.

      That might work. If it doesn’t, you need to talk to a Fair Credit Reporting Act lawyer near you. A good place to look, is here. http://www.consumeradvocates.org/find-attorney

      If they don’t fix it, I hope you can paste them!

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