“Transferred, Sold” accounts from Chase are a common error on after bankruptcy credit reports.
When a bank sends your credit card account to a debt collector before your bankruptcy is filed, your after bankruptcy credit report often does NOT show the bankruptcy discharge on that “transferred, sold” account.
Instead, they usually show “transferred, sold” account with “charge off.” That means the credit score, future lender, or security clearance officer will look and think the debt is still out there somewhere. (I explain what “charge off” means here.)
That’s most often true if you had that credit card account with Chase. At least that’s what I see, when we look at my clients’ after bankruptcy credit report.
Over the last ten years, the accuracy of after bankruptcy credit reports is much better. These “transferred, sold” accounts with “charge off” are the least improved problem. Chase is the least improved bank. (Equifax is the least improved credit bureau.)
Chase can try to argue that once an account is transferred or sold, it’s not Chase’s responsibility to update to show the bankruptcy. I say that argument is BS.
The law is pretty clear. When Chase gets a dispute from the credit bureau, §611(2)(2), they have to take action. (Under the law, complaining straight to Chase is not the best way to go.)
They have to “conduct an investigation.” Investigation is a powerful word. It means more than just looking in their own computer. The Fourth Circuit–the big judges just below the Supreme Court–say that means a “searching inquiry.”
If the investigation shows the information is “incomplete or inaccurate,” they have to report what they found out to all three credit bureaus.
They claim their “transfer, sold” account with “charge off” is accurate. But there’s no way it’s “complete.”
The bankruptcy is the end of the line for that account. Without saying bankruptcy, the information is not complete. How hard is that?
But there’s more. If the information “cannot be verified” they are required by the law to modify or delete the account. So, if they say, ‘we don’t know what happened in that bankruptcy,’ then they have to delete the account.
There’s only one way Chase can legally keep reporting the charge off, “transferred, sold” account without the bankruptcy. That’s if they know there was no bankruptcy. If their investigation finds the bankrutpcy, they’ve got to do a correction. And if they don’t know how to look for bankruptcy records–look at the credit report for one thing!–they have to delete it.
All that’s in the law.
Recently, the Consumer Finance Protection Bureau has helped out a little more.
The Dodd-Frank financial reform law in 2010, set up the Consumer Finance Protection Bureau and gave them authority to pass regulations under the Fair Credit Reporting Act. They did that with Regulation V. Regulation V, Appendix E, I(b)(4) says that credit card companies should “update the information…as necessary to reflect the current status of the consumers account.” So, what about the “transferred, sold” account with charge off, but no bankruptcy. Maybe, it’s accurate. It’s certainly not complete. And it’s positively not the “current status.”
I’m lining up cases from my bankruptcy clients to go after Chase before the end of the year. I’m sick of Chase verifying “charge off” with no bankruptcy when my clients do a credit report dispute. We’ll try to update their attitude.
Hi, It’s October 2014. I finally have Chase in court on this. Not wanting to make it a big deal, I sued them in Fairfax General District Court. Chase apparently does want to make it a big deal–they were afraid the Virginia judges in Fairfax would not protect their rights, so they removed the case to the United States District Court in Alexandria, VA. The case number there is 14-01326-JCC-IDD. In Fairfax I asked for $1000 under the law for my client; and $1000 for two and a half hours for me. In the US District Court, my hours will be a whole lot more. I’ll let you know where this comes down.
Once they sold the account, Chase says they don’t have to report it any more.
What Chase says is: Chase sold the debt in question before Plaintiff filed his bankruptcy petition,
which terminated any obligation of Chase to engage in any further credit reporting relating to the
Chase is right that they are not required to report anything. But since they DID keep reporting, they were required to be complete. They dodge that argument completely.
December 2014. We were able to resolve our issue with Chase, in that case. That’s all I’m able to say about that.
I’m also happy to report that my friend Charles Juntika is hammering Chase and also GE Capital on this issue in the Southern District of New York. The cases are Haynes v Chase and Belton v GE Capital.
May 2015. The New York Times reports that Chase and Bank of America agreed in these cases in New York to fix this “problem.” The Bankruptcy Judge in New York had made it clear he thought they were doing it on purpose–because some people would end up paying. (GE Capital agreed to settle some months sooner.)
PS Why are after bankruptcy credit reports a lot more accurate than they were ten years ago?
There are three big reasons why after bankruptcy credit reports have gotten better.
First, some of the credit cards that were the biggest offenders are gone. Fleet credit cards seemed to never correctly report debts as discharged in bankruptcy. They were taken over by Bank of America. First USA and Bank One both had the same problem. So did Washington Mutual. They were taken over by Chase.
Second, there are a few dozen lawyers around the country who have been suing credit bureaus on this for the last ten years. Besides me, that includes Jason Krumbein, in Richmond; Kathy Cruz, in Arkansas; James Manchee, in Texas; Charles Juntikka in New York City.
Third, the White Terri class action. Charles Juntikka, a bankruptcy lawyer from New York, brought a national class action against the credit bureaus because their after bankruptcy credit reporting system was not reasonable. They agreed to shape up, some. Juntikka recently brought in David Boies, one of the best known lawyers in the country, to hammer them harder. The credit bureaus are terrified of David Boies.
(Under the original wording of the FCRA in 1971, the credit bureaus were supposed to see that your credit report was complete and accurate. But they only had to change stuff you disputed that was “inaccurate.” “Incomplete” seemed to be ok. So they could argue with a straight face that NOT showing the bankruptcy was “historically accurate.” That was changed back in 1996! Since 1996 they have had to fix information that was “inaccurate or incomplete or cannot be verified.” Public Law 104 – 208 FCRA provisions in Appropriations Bill“)
PPS Just to my clients
If you have not sent us your after bankruptcy credit reports, now would be a good time. This blog explains how to start. https://robertweed.com/2013/08/20/the-credit-report-you-need-is-the-credit-file-disclosure/