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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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Nov 2010

After bankruptcy success: Rangers in World Series

Posted by / in After Bankruptcy / No comments yet

Hall of Fame pitcher Nolan Ryan

Hall of Fame Pitcher Nolan Ryan buys Rangers in bankruptcy sale

This would have been a better after bankruptcy success story if they had won.   Instead, the Texas Rangers, who filed a Chapter 11 bankruptcy this summer, were American League champions, but lost the World Series four games to one.

Still, for people who worry that bankruptcy is the end of everything, look at the example of the Texas Rangers.   They were the second best team in baseball the same year they filed bankruptcy.

This is a reminder:  The purpose of bankruptcy is to help you.  Help you get a “new opportunity in life and the clear field for future effort.”   (That’s what the Supreme Court said.)

Your World Series ring may still be ahead.

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Oct 2010

After bankruptcy: They won't send bill and won't talk to me

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Here are two forms that you might need after your bankruptcy.     One to ask your bank to keep billing you for your car loan and one for your mortgage company, to talk to you if you are applying for a loan mod.

Why do you need these forms?

After bankruptcy, the people you used to owe money to are not allowed to try to collect.  They can’t call, can’t sue or garnish, and they are not supposed to bill you, either.  That rule applies to all the debts (except for things like taxes or child support.)  That includes your car or your mortgage–people you might want keep paying (if you want to keep the house or car.)

Usually (not always) your bank will start billing again on the car loan if you send them my form letter.  And nearly always, the mortgage company will keep discussing a loan mod with you if you send them my form letter.

That’s what these two forms are for.  I’ve already signed them–just type in your information and print them out.  They should help.

PS  Sometimes when you talk to them after bankruptcy, the bank or mortgage company will ask if you want to “reaffirm” the debt.   Reaffirming means you can’t change your mind later and include the debt in the bankruptcy.  “No” is nearly always the right answer to that question.     (Unless you have your car with Ford Credit, Chrysler, or SunTrust.)

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