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Feb 2012After bankruptcy: Keep watching your credit report
Posted by Robert Weed / in Virginia Bankruptcy / 70 comments
Ken and Mary filed bankruptcy with me three and a half years ago. They had built back to a credit score in the high six hundreds.
Until last week. Last week, Bank of America “updated” their credit report, replacing “bankruptcy” in 2008 with foreclosure, January 2012. Ken first noticed this on Experian, but when I had him check, it also showed up on Trans Union and Equifax. That wrecked their good credit.
We’re working with Ken right now to send letters to each of the three credit bureaus (with copies to Bank of America) asking them to fix it.
If asking nicely doesn’t work, we’ll sue. (Under the Fair Credit Reporting Act, you usually have to do a dispute letter, or even two, before you can sue the creditor or credit bureau. In fact, under the law, you really don’t have the right to get a correction on your credit report. You only have a right to a“reinvestigation.” If your disputes don’t get it fixed, you have to sue–not because it’s wrong, but because they didn’t investigate.)
We sue credit bureaus half a dozen times each month or more. We sue to make sure that our clients’ bankruptcies are properly reported. It seems strange to some people that we sue in order to get bankruptcy on people’s credit reports. That’s because some people still think that bankruptcy is the worst thing you can have on your credit report. That’s totally wrong.
As Ken told me, updating bankruptcy to foreclosure “killed my credit score.” It’s a whole lot easier to build back to good credit after bankruptcy than it is to build back after a foreclosure. Why? Because bankruptcy means you don’t still owe the money. Foreclosure means you still do. Nobody wants to lend you money at a fair price on a new car or new house if there’s an old foreclosure out there that can garnish you.
People who lend you money want to know two things–can you pay, and do you. If you have a foreclosure sitting there, it tells potential lenders that you don’t pay (that’s the foreclosure) and you can’t pay–because you are still in danger of getting garnished.
When you file bankruptcy, that “can’t pay” changes to “can pay.” That’s because they know you don’t owe anybody any money. Then if you get some low balance credit cards, charge a little every month, and pay them every month, now you have “can pay,” and “does pay.”
That’s why it’s so important after your bankruptcy to make sure all those charge offs, lates and foreclosures are all updated to show bankruptcy. Only a handful of lawyers in the country do that. I’m one.
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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.
Jewels Murphey
Pouring through the net and the Fair Credit Reporting Act and I am running into roadblocks. Have spoken to creditors as well as the FTC. The FTC and the creditors say that posting the code CO, which means charge off or collection is perfectly fine when a debt is discharged. I think that is wrong based on the fact that a person who didn’t pay a debt and was irresponsible vs a person who filed bankruptcy should not suffer the same ding in their credit times each creditor that was put in the bankruptcy. Furthermore, some of the creditors with small balances, I wanted to reaffirm, but they refused and now show me as a chargeoff. I cannot find anything specific in the consumer protection laws that says exactly how the discharge should show on the report as far as coding. Just that it must say “included in bankruptcy”, which no one sees that unless they pull the detailed report. HELP! Where can I find this specific wording to get this fixed? The wording is too vague…and without some sort of government protection act to quote, I am screwed.
Thanks!
Robert Weed
Jewels: I’m not sure what report you are looking at. Are you saying that the credit report for some of the creditors is showing BOTH “charge off” and also “included in bankruptcy.” As long as the bankruptcy is there, I think that’s ok. I’m not sure what you are referring to about “detailed report.”
If you want to email me a report showing what you are talking about, it would help me understand better. I don’t know whether this is something I fight for my clients or not, because I need to see it, I think.
Stephanie
I am running into similar problems with Chase and HSBC. I included both credit cards in my bankruptcy and they are currently listed as charged off, even though my bankruptcy has been discharged. I called Chase and they say that they are not allowed to change the status because they are no longer the owner of the account so it will be listed as charged off. The account was sold in 2010. The company that they sold my account to has never been listed on my credit report. so what are my options?
J B
I’m having the same problem with Chase showing charged off on my credit report. Apparently in 2008 Chase bought Washington Mutual and I was never informed. Still, I filed a “no asset” chapter 7 case and according to my attorney all debt up to my file date is included.
In fact, WaMu filed a suit against me (around 10/09) in my hometown approximately 7 months after Chase claims they sold my account (3/09). I sought the help of an attorney who recommended bankruptcy and filed shortly thereafter.
Now that I’m trying to correct my credit report, I’m hitting a brick wall with Chase who claims they can’t help me and the Credit Reporting Agency who claims I need to handle this with Chase.
All I want is for my report to be updated and show that the debt was discharged in the bankruptcy so that it doesn’t appear to creditors as if I owe this any longer.
Robert Weed
JB
I’m with you.
Have you kept copies of your dispute letters and their replies? Then it’s time to find a lawyer in your state who does Fair Credit Reporting law. See if your bankruptcy lawyer knows one, or check with the National Association of Consumer Advocates at naca.net.
(PS> I’m suing Chase on this problem in Alexandria Virginia, right now.)
Milagros
I filed for bankruptcy in 2010 and was discharged. I recently checked my credit score and I realized that one of the Home Equity loan on the house was not included on the application and now appears as a CLOSE account on my record. Unlike the other accounts, they had remark, “chapter 7 bankruptcy”. What does this mean? How is this going to affect my credit score? What can I do? Please help me. Thank you!
Robert Weed
Milagros:
I’m not sure what you are telling me here. Why do you say one of the home equity loans on the house “was not included.”
Did you got back and look at your bankruptcy–and see that you forgot it. Or are you just saying it’s not showing bankruptcy on your credit report?
Having a debt that does NOT show “bankruptcy” on your credit report does usually drag down your credit score. That’s why I tell people to be sure to check.
Josh
Mr. Weed,
I have the same problem with Bank of America right now. I filed bankruptcy in 2007 and since rebuilt my credit to almost 700. I recently tried to refinance my house and was almost able, but due to Bank of America (which is my second) reporting it as a foreclosure, I was not able to. There reason was that it reflects the first, but the first shows in good standing so they are a bunch of liars. I am debating filing a law suit my self.
Robert Weed
Josh:
I hope you can get them. Usually your rights under the Fair Credit Reporting act only start after you have done a dispute. But under the Teri White decision, the credit bureaus agreed to come and update to show bankruptcy, even if the creditors don’t. That MIGHT be something a lawyer in your area would try to work with.
Otherwise, you have to dispute and see if loan rates are still low when you get it fixed.
Good luck.
David
I just got my credit report again since last Fall when it was doing ok post my 7 in Fall 2008. I grabbed a copy mainly because I was turned down for a CC the other day and I am basically good with everyone since my 7 and my flow is quite good and I own my own business also doing well.
So now on my report is my original mortgage (which I still pay but remains 90 days in arrears since 2006). Long story on the 90 just have not had the 7,000 chunk to come current and they absolutely will not negotiate on it despite dozens of attempts.
I have a couple cc and other stuff discharged in the 7 on my report and nothing else negative but the 7 from back then all my current bills show current.
So logically the regular reporting of my mortgage as 90 days in arrears for past 6 years seems to be the root of my getting credit problem. It’s also an issue since I am finally making enough to just get a 7k 12 month note and come clean.
So my question is my house is worth about 150k more than my note. That they don’t negotiate tells me they want to have the ability to foreclose. I did not reaffirm. If I complain about the negative filing they might fc on me. On other hand if I complain and it’s switched I can likely come clean in a few months after my credit rebounds and I can get a new note for that debt.
And my lawyer just told me they are under no legal obligation to report the debt as discharged in PA which is where I am?
Maritza
I filed bankruptcy recently and my second home mortgage was discharged. When I pulled my three credit reports two of them reflected the account balance at zero, but one of them shows a balance of $157,000 and the comments indicated the account had been charged off?
I have disputed this information with them but the inofrmation has not been changed. My question is if a home loan has been discharged in a bankruptcy, do all the credit reporting agencies have to note it as a discharge or can they indicate a charge off? If a home loan has been discharged in a bankruptcy, do all credit reporting agencies have to note the balance as as a zero balance?
Robert Weed
Maritza:
You are right to dispute the account that shows charge off balance $157,000. One of the reasons to file bankruptcy is to get a new start so you can get back to good credit. You can’t get back to good credit with a $157,000 charge off showing. In order to be “complete and accurate” the way the law requires, the credit report needs to show the bankruptcy and show the balance now as zero.
Did you dispute it with the credit bureau? Nearly all your rights under Fair Credit Reporting run against the credit bureaus, very little against the creditors. You should probably do a second dispute–be clear about what’s wrong and include a copy of your bankruptcy discharge. If that doesn’t fix it, you need to talk to a lawyer in your area who does Fair Credit Reporting law. One place to look is naca.net.
Cindy
I’m being told by my mortgage broker not to dispute anything on my credit report as mortgage companies (FHA) are refusing to even consider resolved disputes! I am in a total Catch-22 situation where the information being reported by creditors included in my Chapter 13 is not correct and the only right I have is to dispute the information on my credit report which leads to just being denied any consideration for an FHA backed mortgage. I’m trying to take advantage of the housing market in Florida but I currently live in Colorado and would like to have the closing completed by the end of the year. Now what??? The crooks will still find ways to stiff mortgage companies and the honest people like me paying back their debt are still getting screwed over.
Robert Weed
Cindy:
Wow! That’s horrible. A new one on me….
Cindy
Thanks Robert. I’m going to go ahead and use your credit reporting guide and make the disputes. I don’t have anything to lose and I am hoping there’s a time limit on how long the dispute shows as resolved. At least the correct information will be on there. I would try making the credits fix it, but was already told by one yesterday that they are reporting correctly; the credit bureaus need to fix it. Meanwhile doing some surfing last night I came across this – http://www.dispatch.com/content/stories/local/2012/09/09/feds-to-run-checks-on-credit-bureaus.html
The Consumer Financial Protection Bureau will begin on Sept. 30 its supervision of Experian, Equifax and TransUnion, the agencies that maintain credit information on more than 200 million Americans.
We’ll see what happens when they find out how we are really not being treated the right way. Just wondering if the mortgage companies are doing this to avoid having record low interest rates on mortgage years from now and only investors with CASH money are able to buy the homes.
Brian Pataky
I had a first and a second with WAMU, which migrated to CHASE. I started modification in Dec 2008, and it completed 18 months later. We also did chapt 7 which completed Feb 09. At that point, they started a modification for the second, again under CHASE. Despite terms changing the modified amount ended up being the same as the original, but all the terms changed. Some 6 months later, they found escrow to be miscalculated so they wanted another 6k to pay escrow, which they factored into another loan over a 5 year period. At that point we decided to walk away, as we were over 300k in losses due to the market. At that point in March of 2011 we stopped paying the HELO and they started calling, and sending late notices, etc. Mind you, we did not affirm first or second mortgages. We then attempted to go down the deed in lieu path, but were rejected after 90 days, so then we began the shortsale process which completed this year in Jan. The issue is, from the time we stopped making payments in March 2011, they started reporting LATE payments, 30 days, then 90, then 120, then 120, then Chargeoff in August 2011, which killed my scores. I have spoken to everyone there I can think of, and disputed the reporting with equifax, trans union and experion. Each time, they come back with a note saying it was verified and I ask them how it was verified if I already had this loan discharged in feb 2009. I even sent in my discharge package with one dispute. In April 2012 I started calling CHASE executive group, who essentially gave me a run around, and a letter saying it would be fixed, but never was. Here were are in Oct 2012, 3.5 years after bankruptcy, and my credit report shows a charge off in Aug 2011. Aside from the fact they illegally attempted collections AFTER bankruptcy, where do i stand legally in regards to this being reported as still owed, ie charge-off. Two more points, charge off occurred over a year after modification, and loan was settled via short sale in Jan 2012. We were told, loan would be marked as settled at that point at a minimum, however in our case since the loan was legally discharged in 09, we assumed CHASE would not be able to do that, that it would just show as “included in bankruptcy” Feb 2009.
Robert Weed
Brian:
I’m with you. Chase should report discharged in bankruptcy 2009 and nothing after that. Nothing if you pay; nothing if you don’t pay. Nothing if you do a short-sale. Nothing if you do a deed in lieu, nothing if the deed in lieu is turned down.
Since you’ve done disputes and it’s not fixed, it’s time to talk to a lawyer in your state who does Fair Credit Reporting Law. You can ask around, or look here. http://naca.net/find-attorney.
AZMitch
I have had the same experience with Chase. Ch 7 BK 11-2009. Paid regularly until 2-2011 when our neg am loan came due & we realized we would never climb out of that debt.
House was included in the BK and we didn’t reaffirm. We were able to do a short sale 2-2012. Chase first reported the late payments in 2011/2012, which I disputed because was included in BK. THEN, they changed it to reflect foreclosure in the comments section only. I also disputed that again, because that is reporting activity after the BK. They finally removed that after two disputes.
Now I checked credit again a few months ago (7-2013) and noticed they have now added a charge off in 9-2009 when BK was filed (not discharged) AND the loan was current at that time. We paid the mortgage on time until 2011. The file also notes discharged in bankruptcy. So the charge off shows even when the loan was current.
This is a blatant disregard to the FCRA. Each time I have disputed, they have moved to a different spot, even when it isn’t accurate.
When is someone going to file a class action lawsuit against Chase? They clearly know they are violating FCRA and thumbing their nose to it. And they get away with it!
Robert Weed
Mitch:
Yeah, Chase is on the top of my list. I’m trying to go after them on the credit card issue, here. https://robertweed.com/2013/09/19/transferred-sold-accounts-on-your-after-bankruptcy-credit-report/.
Maybe you can find an fcra lawyer in your area to go after them on the “charge off” when you were current. One place to look would be here. http://naca.net/find-attorney.
Marla
I am not from Virginia and just happened to come onto your site. I am from a non-judicial state. My bankruptcy was final before the foreclosure was complete. I noticed recently that the foreclosing trustee added 5 additional months of late fees to the balance due. These 5 additional months of late fees were the months after the Bk was discharged. How could they add those 5 months of late fees when the debt was discharged? Noticed I was still being reported as past due after the BK discharge even though the credit report stated the correct bankruptcy date and the debt was included in the bankruptcy.
Robert Weed
Marla:
Not sure what you mean by “the foreclosing trustee added 5 additional months of late fees to the balance due.” Are you talking about the letter they send warning that you are behind. Well, that’s right. If you want to catch up (I think you don’t) you have to catch up both before the bankruptcy and after.
Your other question is about your credit report. I agree with you, they should not report as past due after the bankruptcy discharge date. (I don’t think they are allowed to do any more past due reporting after the bankruptcy filing date–but it’s possible to argue that both ways.)
You should dispute that–and if the disputes don’t work, find a lawyer and sue them.
Jurgen
Mr. Weed,
I filed for Chapter 7 in March, discharged in June. In the Chapter 7 we excluded our mortgage loan and our car loan.
I signed the affirmation with the car loan and they are reporting OK with the credit agencies.
The Mortgage however shows
account status: closed.
Payment Status: included in chapter 7
Balance:$0.00
What can I do to have the Mortgage show the correct information and balance and the history to reflect that payments are being made.
BOA is stating that I need to dispute this with the C. Agencies because they have followed the law..
Thanks
Robert Weed
Jurgen:
Sorry, I agree with them.
When you file bankruptcy, you can’t “exclude” anything. Most people talk about it that way, but that’s not how it works. There are things that bankruptcy doesn’t help with–like student loans. And things you want to keep paying–like your car loan if you want to keep the car. But you file bankruptcy “on” all of it.
That means they way they are reporting your credit on your house payment is right. Keeping up the payments means they won’t foreclose you, but it doesn’t help your credit report.
Dre
I filed for Ch. 13 Bk in October 20, 2010. My mortgage company just submitted an update to the 3 credit agencies with an incorrect file date of Oct 7, 2012. This has caused a hit to my credit score and now comes up as a NEW delinquency. Can I dispute this with the credit agencies to get it corrected since the BK was filed 2 years ago and it’s not a new delinquency? Thanks.
Robert Weed
Dre:
Yes, you can. You need to dispute that with the credit agencies right away.
Chuck
We filed bankruptcy in Feb 2011 and was discharged in Aug 2011 as Chapter 7. Our issue is the mortgage company reported to Credit Bureau that the mortgage account was included in bankruptcy. We never included the mortgage and have never been late and are still current, it was just the credit cards. The mortgage company BSI, says by law they need to report it that way. We never know if they are telling the truth or not.
Robert Weed
Chuck:
I agree with them. Here’s where I explain why….https://robertweed.com/blog/virginia-bankruptcy/after-bankruptcy-my-house-payments-dont-show-on-my-credit-report/
Rich
Mr. Weed,
Very informative blog! I’m hoping you can point me in the right direction with this one:
Can a creditor charge off or report an account as late AFTER a bankruptcy is filed but BEFORE the case is decided?
My understanding was that the filing of BK should freeze everything until it is dismissed or discharged.
Unfortunately, our credit union did not follow that….
Here’s our timeline:
Apr 2011 – filed chapter 13 and 11 (nasty business divorce)
– credit union (listed as creditor in filing) reported us 30-60-90-120 days late then charged off acct, for May-Aug 2011
Aug 2011 – we voluntarily dismissed chapts 13 and 11 (settled litigation)
Sept 2011 – balance paid in full to credit union
I don’t think it’s right we were reported as charged off, since we have paid in full. Also, we legally couldn’t make any payments while they were reporting as late because the BK hadn’t been decided….
The person I talked with at NFCU BK Dept insisted their reporting is correct – that the charge-off shows 0 balance so it’s OK… she invited me to dispute it with the Bureaus but it’s clear to me that nothing would change (at least if she does the investigation). My current bank had suggested working with NFCU to straighten this out prior to applying to refinance an equity line….
It seems to me if I could reference a section of BK code then they might pay more attention…. Just a hope really.
Appreciate your thoughts on this, Rich
Robert Weed
Rich:
I can’t offer you a lot of encouragement on this…
Credit reporting while a chapter 13 is pretty much unexplored. I’ve fought in front of two judges arguing along the lines of what you say. Lost both places. I explain that here…https://robertweed.com/blog/chapter-13-bankruptcy/chapter-13-bankruptcy-and-your-credit-report/.
I think that as long as you are paying according to your Chapter 13, you are current…but I’ve made no headway on that.
Dre
Mr. Weed,
I contacted you on Nov 7 about the incorrect BK date being filed on my credit report by my mortgage company. I disputed the date and it was removed however I just checked my report this month and my mortgage company has updated my file again for this month and changed the date to say that I filed Ch 13 BK on November 14, 2012. I have contacted my atty but have yet to receive any assistance. How can I stop the mortgage company from putting new BK dates each month? It’s causing a negative hit to my credit score and makes it look like a new delinquency/BK filing each month. Thanks.
Rich
Is there a legal or technical difference between a dismissed chapter 13, vs withdrawn?
After we filed a chapter 13, we were able to resolve issues that brought us to that in the first place, so we voluntarily withdrew / dismissed about 4 months after the filing, which request was granted. Currently the Credit bureaus report the Ch 13 as filed / dismissed, but I wonder if our scores will be any different if we appeal and they change to “withdrawn”.
Thank you for your thoughts, Rich
tom
My question is my wife and myself filed bankruptcy in july of 2010 and we also had to relocate to another state had to walk away from our home the same time we filed bk, our bk was discharged oct 2012, but our credit report is only showing bk, will it show at some point a mortgage forclosure
Robert Weed
Tom:
No, your credit report SHOULD not show a foreclosure. The bankruptcy is 2010 is the last thing that should be reported–whether you pay or don’t pay, stay or move. (There still will be BE a foreclosure–and your eligibility to buy again under current regulations is three years from when that foreclosure happens. But your credit report is not supposed to show it–so you are now building back to a good credit score for things like buying a car.)
Sean
Mr. Weed
This is an amazing website and blog you have. I have filed for bankruptcy in Feb 2011 and is discharged in May 2011. My credit score has improved dramatically. I got a new job and got back on my feet. I am living in the same house that I stopped making mortgage payments before bankruptcy. My question is when would I be eligible to buy a new house, either 2-3 years from discharge or 2-3 years from whenever the house is foreclosed ?
Thanks,
Sean
Robert Weed
Sean:
There are two waiting periods that affect you when it comes to buying a house after a bankruptcy.
Two years after the bankruptcy. But THREE YEARS after the house you give up forecloses. Since you’ve stopped making mortgage payments but it hasn’t foreclosed, that three year waiting period hasn’t started to run yet. Living there for free makes that a little less painful.
Bedford
The issue for many, myself included is cash flow. I have tried for the last year to get my 6.75 rate reduced from citi and no go. I have now lost one of my jobs and need breathing room to rebuild. Am I a 13 or a 76 ? I have a lot of valuable and personal family items as well as a $25k annuity… I really don’t want to lose. Three late pays from the first and the HELOC have brought my score to blow 600! Oh.. And to cap it off, I am securities license! Help, before I find a bottle and start cleaning my guns!
Robert Weed
Bedford:
Definitely sounds like you need to talk to a good lawyer in your area. You’re worried about assets, worried about exemptions, and worried about making ends meet. You are also worried (this one makes less sense, about your credit score!?) You need a good lawyer.
hellorrrrrr
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Robert Weed
Crocetti:
Thanks!
Lisa
Robert – I have an issue, and I’m hoping you might be able to point me in the right direction. I filed for and was granted bankruptcy (Chapter 7) in early 2010. At that time, I decided that I wanted/needed to keep my car and continued to make all of the remaining payments on time until it was paid of this March (2012). I’ve since received a letter from Toyota Financial Services, thanking me for my business, as well as the title to the vehicle. HOWEVER, my credit report still reflects “account included in bankruptcy” with a $0 balance. I’ve tried contacting all three credit agencies to get this information updated. I’ve also called Toyota Financial Services, all to no avail. Is there ANYTHING I can do to get it correctly reflected on my credit report that this car was paid on time, in full?
Thank you!
Robert Weed
Lisa:
Sorry, on this one I agree with them. The credit report should show bankruptcy and nothing else, whether you paid or didn’t pay.
I explain here https://robertweed.com/blog/virginia-bankruptcy/after-bankruptcy-my-house-payments-dont-show-on-my-credit-report/ why I think that’s right.
conception web et design
Excellent write-up. I certainly appreciate this website. Keep it up!
Tanya
My bk discharged 4 yrs ago, but I still have a bunch of my debt amounts & type still showing, while several just show a dash & do not indicate what type was discharged. How do I remedy… I am trying to close a house loan & my escrow guy said that even though they all say balance zero, it would be better if you couldn’t tell some of the discharged debt was a mortgage. I could write to the agencies but I think it would take too long? Is that best I can do? Also it says my student loans were discharged… I don’t think that’s true. The student loan folks say it is not true. How can I know for sure? Appreciate so much… Tanya
Robert Weed
Tanya:
Sorry, I do not think they SHOULD change your credit report to NOT show that the mortgage in your bankruptcy was a mortgage. Your credit report is supposed to be “complete and accurate.” I fight for my clients to get the credit report right, but I don’t fight to take out stuff that is TRUE.
Now, the student loans are obviously wrong. So you should write to the credit bureaus and ask that those be shown as “current.” Assuming they are current. Or in deferment or whatever is true.
That will take longer than you want–that’s why it’s better if you check a few months after the bankruptcy is over.
Tanya
Thanks so much for your input. I am not trying to mid characterize anything .. Just do not understand why some discharged debt shows no financial amount & a bunch continue to show “high” amounts. Question is whether or not the hi amounts should continue to show. Only a couple of the debts actually indicate what kind of debt it was. Thanks again
Stan
Mr. Weed,
Like the others, I want to thank you for this informative blog. Just to clarify, I filed chapter 7 in August 2009 but I have recent credit updates that showed up on my credit report. These creditors were listed in the bankruptcy and it does state “included in bankruptcy”, I’m trying to purchase a home but because the ‘date reported’ is after the discharge date (May 2011) it’s raising a flag with the underwriters. My attempts at contacting the creditors have been unsuccessful. Are they allowed to do any updates that affect my credit? I am attempting to have them correct my credit report to change the reporting date to my discharge date. Am I barking up the wrong tree?
Robert Weed
Stan:
Driving into work this morning I was going over in my mind the more than ten years I’ve battled these credit reporting issues with less than I’d like to show for it.
You are obviously right that the date should be the date of the discharge. Your right to dispute, however, runs with the CREDIT BUREAUS, not the creditors. Sp you are barking up the wrong tree to that extent. You need to write the credit bureaus and tell them what you want to have changed. Then they can either contact the creditors or just fix it.
Good luck.
WILL JORDAN
Mr. Weed,
Thank you for the informative blog. We filed for bankruptcy and received a discharge in August 2011. We stated in the petition that we intended to retain the home, but we never reaffirmed the debt. We were subsequently borderline current until health issues caused us to become delinquent since Jan. 1, 2013.
We talked to Chase (they took over the mortgage 3/1/13) and they want me to apply for a short sale on our V.A. home loan. We are underwater and because we are retired and in poor health so we see no possible way we can earn enough money to become current.
The bankruptcy shows our mortgage as zero balance and Met Life, our old mortgage holder, never reported our payment history after discharge. Do we really want to Short Sale? Are there more severe consequences versus foreclosure? We have rebuilt our credit with no lates since discharge with a Auto loan and several credit cards. If we just let Chase foreclose will that be worse than a Short Sale?
What if they refuse the Short Sale, did we open up a can of worms by updating all of our finances to them? Coincidently, several similar or better homes in our area are renting for several hundred less dollars than our monthly mortgae payments.
Robert Weed
Will:
Thanks for your kind words.
If you want to buy again in the next couple years, than a shortsale is better for you. Otherwise the credit impact is no different.
The advantage of a shortsale is sometimes they will give you a cash incentive–maybe up to $5000–for your cooperation. (Now sometimes, depending on who buys, you can get something similar, cash for keys, after a foreclosure.)
I don’t know what state you are in–in some states foreclosure takes a really long time. In one of those states you might want to go with foreclsoure just because it takes long. That gives you more time to live for free.
WILL JORDAN
Thank you for such a prompt response. We live in Nevada and the time from notice filing to actual eviction can be as little as 120 or so days. That time is about perfect for us, the real problem is if they took forever to actually foreclose. The tax ramifications might be different after 2013 too. Chase wants us to make a payment during the Short Sale application and listing period, but I think it is not in our best interest. The V.A. only has about $750-1000 incentive to short sale and that is no guarantee. A short sale Realtor is coming over this afternoon to talk about that possibility. I will be lucky to be alive in 3 years, let alone buy another house.
My inclination is to let them take the house and all of the related costs for repairs and updates. Is this honorable? I can’t answer with a yes, but i will say that we will at the least care for the property as long as we live here. Wife worries about neighbors.
Mark
Hello Mr Weed,
Great blog, My chapter 7 Bk was discharged in 03/07 and looking over my credit reports I see the Bk itself reports as 0 liabilities and 0 assets. Is this the way it should read? Thx
Robert Weed
Mark:
To tell you the truth, I’ve never thought that mattered, so I don’t know the answer to your question.
Tammy Khatib
I have a question and maybe you can help. My bankruptcy was discharged four days ago and I went on to check my report and see where I stand and I see things on there that I filed against but show charge off instead of bankruptcy. Can they come after me and garnish my wages if it says charge off. It was for a car and they held the account open for years. I filed in dec 2012 and they reported a repo on jan 9th. If the account info is part of the discharge can they come after me just because they reported repo after I filed ? I am scared . I did this to start over . What do I do ?
Robert Weed
Tammy:
First, don’t be scared.
The credit bureaus want you to think they are the gods of this world, and to some extent they are right. But, the legal effect of your bankruptcy is what the bankruptcy court says, not what the credit report says. So, No, they cannot come after you for a car loan that was discharged in the bankruptcy–whether or not the credit report shows the discharge.
But the credit report will drag down your credit if you don’t get it fixed. So wait the two months that they are allowed to take to get it right, and check again.
Jason
I see this is a bit of an older thread, but I thought I would give it a try.
My CH 7 was discharged 3 years ago in August 2013. I have rebuilt my credit to almost 700 starting with secrued loans, credit cards and finally a car loan.
I had two homes that were included in the BK and were NOT reaffirmed. I tried to apply for a loan to buy a home (FHA) but I am being told that the homes are still showing in my name.
After doing some investigation, one home has just now gone through the court in FL and is set for auction in September and the one in GA is still being “serviced” by the 4th different investor.
My quesiton is, once these loans have been foreclosed on and sold, since they were included and discharged in my BK, can they report that on my credit report as a Foreclosure?
The mortgage company I am working with states that it has to be 3 years from the FORECLOSURE date since they are still in my name. This doesn’t seem right. I waited the 3 years, cleaned up my credit and just becuase the banks didn’t do their job quick enough I am going to have to wait ANOTHER 3 years?
Anything I can do?
Thank you
Jason
Robert Weed
Jason:
Sadly, I’m agreeing with the new mortgage company. Not that I like the policy, but that they are telling you what the rule is. Can’t get approved on a loan until three years after the foreclosure and the foreclosure hasn’t happened yet. I explain that here. https://robertweed.com/2013/08/30/how-soon-after-bankruptcy-can-i-buy-a-house-again/. (There was also just announced a very small exception that might only be one year. That’s at the same place.)
That’s why I tell people, don’t move out and if you do move out, at least rent it! https://robertweed.com/2011/05/18/file-bankruptcy-stop-paying-dont-leave-that-house/
David Baptist
Hi, I have a similar situation. I have filed for bankruptcy and included my mortgage there. Are you saying that if I let the bank foreclose, they won’t be able to report the foreclosure due to bankruptcy? Mine would be a judicial foreclosure so it would go in the public records. I would really appreciate your response.
Thank you
David
Robert Weed
David:
Don’t know about judicial foreclosure states enough to be sure–sorry.
Sandra
My question is I filed a BK7 in 12/08 and it was dismissed in 3/09 after I failed to pay the last court fee ……all three credit reporting agencies have been reporting discharged. I figured it was completed and they had waived the fee due a waiver request. I checked my credit report and a creditor was showing “charge off”. I called the creditor and they said they contacted the courts and discovered that my case was not discharged. I reopened the case recently and it was discharged 6/14 that is nearly 6 years later. The discharge covers all my original creditors listed in my BK7 filing and the case number remained the same, credit report shows filed: 12/08. paid: 3/09 and updated: 6/14. So what does this mean as far as qualifying for an FHA home loan does the clock start as of 6/14 or is the 2 year waiting period over because it’s seen 6 years (retroactive?)
Robert Weed
Sandra:
Wow!
That would be a great lawschool exam question. I have NO IDEA what the right answer is.
Racheal
I filed Chapter 7, everything was discharged except for my private student loan with Sallie Mae and I thought my private student loan through Chase. Long story short, I was on a payment plan for my Chase student loan through a collections agency but they stopped withdrawing my payments during my bankruptcy case and told me to contact them once my case was closed. I called once the case was closed and was informed that Chase had taken the account back and was now in there in house collections National Recovery group I contacted them and tried to set up monthly payments but they rejected that. I was told I could settle or put a lot of money down and make 6 payments over 6 months and pay the rest at the end, that I couldn’t afford. I had my chapter 7 lawyer contact them and there wasn’t anything she could do and that was that. I talked it over with my lawyer and was told I could file chapter 13 to force them into a payment plan and pay it off in 5 years, however when we pulled my credit report it shows my Chase account was a personal loan and that the balance owed is zero and that the account is closed, so my lawyer told me to wait and see if Chase contacts me, they have yet to. I was always the one contacting them trying to set up a payment plan. So my question is, was my loan discharged in my chapter 7, or did Chase just close the account and stopped trying to come after me?
Robert Weed
Racheal:
I don’t know the details but my advice might be the same as your lawyer’s, who knows a lot about you.
I can say three things.
1. No the Chase student loan is NOT discharged.
2. Being in chapter 13 to pay your student loans is a terrible thing. For some people it’s the best they can do, but it’s always terrible. I explain more here. https://robertweed.com/2010/02/18/can-bankruptcy-help-with-my-student-loans/
3. MAYBE Chase has messed up their records and think they are discharged. Maybe your records are just lost.
So doing nothing until they do something could be your best bet.
Jennifer
I would like to know if it’s legal for a creditor to wait over 5 years post bankruptcy to start reporting the account and then to start reporting it every year after. I had a Target credit card which was included in bankruptcy back in 2009. According to my credit report it was reported as being included in bankruptcy a year ago. Recently I had built my credit score back up to over 700 and over the past 4-5 months it’s continually started to decline again with no reasoning being given. I have a couple of small credit cards, one for emergency auto related services and the other for Home Depot. This past month I paid off my balance on the Home Depot since the other account was already paid off. I expected my score to jump and it actually did for the fake FICO that Equifax puts out, but the real Equifax FICO by Fair Isaacs reflected a 26 point drop. This has occurred after around another 80 point drop just a couple months ago, again after I made a large payment. One would think that the cause is due to making a payment instead of the opposite. I proceeded to pull my credit report because FICO won’t tell me why they have my score as 620 supposedly based on Equifax yet they have it 684. That is a huge discrepancy. Anyways the only thing I could find was that Target just reported the middle of August that their card was included in the bankruptcy. It’s showing the 2009 BK date but showing 08/14/2014 as reporting it. That’s the only thing I could think of that could be pulling my score down. Every other account reported between 2009-2010 but this one decides to wait over 5 years to report. My question is can they do this and is this the reason my score once again is taking a dive. The explanation from the credit reporting keeps coming back to the negative accounts on the bankruptcy but that’s been over 5 years ago and shouldn’t be hurting my score further now. Once I built it back up how can it then start declining due to an event that happened years prior to the rebuilding of credit. What can I do to fix this and get it to stop causing my credit to drop.
Robert Weed
Jennifer:
Yeah, I’m mad too. Like you, I think it’s the 2014 reporting of the 2009 BK by Target that’s pulling down your score.
I don’t know what you can do about it, though.
You can go to the National Association of Consumer Advocates, here. http://www.naca.net/find-attorney. See what lawyers near you do Fair Credit Reporting law–and if any of those also do much bankruptcy. Then see if someone wants to talk to you about taking this case.
If you were around here, I’d look to see if we have a re-insertion. If Target had been deleted at some point after you did a dispute–and then it came back–then you’d have a claim under the law. somebody who is mainly a credit report lawyer–I’m a bankruptcy guy–might have some other ideas.
Eric Weiner
Hi Robert,
In know this thread is a bit old but I came to it based upon your response elsewhere to an issue similar to mine. I discharged a C7 in 2011. Everything is off my credit report except the Public Bankruptcy record.
I did not reaffirm anything. I have been paying my primary mortgage but not the second since I believed they could do nothing without the consent of the first. I have come to understand that is not true which has made me think about my present situation.
The home value has recovered enough that I could sell and cover the first mortgage. But it would not cover the second mortgage especially if they have been accumulating penalties etc.
I dont think I can do a Deed in Lieu because of the second. A short sale could be blocked by the second because they might prefer to wait.
I could let the house go to foreclosure but I am concerned that the public foreclosure record will again destroy my credit and send me back to square one (10 more years of credit hell).
Someone said I could go into a limited chapter 13 to remove the second but I have to imagine this would also ding my credit.
You have indicated elsewhere that the foreclosure cannot be reported to my credit report, but others have said that is not true.
I am just trying to assess my options so that when the time comes I do the right thing without crashing my credit.
Thanks
Robert Weed
Eric:
Good questions; please check your credit reports now. They should be showing BK for the mortgage in 2011 and no record of any mortgage payments since then. both the first which you are paying, and the second, which you are not, should be reporting the same thing.
Assuming I’m right about that (I know I’m right about what they should be doing; I’m assuming they are doing what they should be doing; then obviously if you stop paying the first, the way you stopped paying the second, it will still show 2011 BK and nothing since then.
Eric Weiner
All of the references from all creditors discharged by my C7 in 2011 are no longer on my credit reports.
Only the bankruptcy public record remains. I am trying to understand my options for getting ride of the second mortgage’s security interest, or the impact to my credit report if I simply let it go to foreclosure. Thanks
Robert Weed
Eric:
There should be NO impact on your credit report if you let the house go to foreclosure.
Other than that, you MIGHT be able to get rid of the second mortgage by seeing if they would take a low ball offer. I explain that here. https://robertweed.com/2010/03/25/after-bankruptcy-what-if-i-dont-pay-my-second-mortgage/ That worked a lot better when values were low than it does now, but I don’t have any info on what values are like in your area.
It MIGHT be that if they leave you alone for some period of time, maybe ten years, the second would fall off by operation of law. You would need to talk to a real estate lawyer in your area who would know the answer to that in your state.
Eric Weiner
Thanks for the response. I just want to clarify, if the home goes to foreclosure wont the state put a public record on my credit report?
That would effectively drop it again. Also, can the second mtg be removed post a chapter 7? I read where a chapter 13 can do it.
Thanks
Robert Weed
Eric:
I’m in a state where the lender just forecloses, without any court action. So there’s nothing for the state to put on your credit report. If the state where you are is different, I don’t know. Sorry.