2004 Credit Suit

10% of Households subjected to incorrect credit reporting after bankruptcy

One in 73 US households declared bankruptcy in '03

"WASHINGTON, March 12 (Reuters) - One out of every 73 U.S. households filed for bankruptcy last year, a record high, despite historically low interest rates, the American Bankruptcy Institute said on Friday.

The institute said Utah faced the highest per-household bankruptcy rate -- one out of every 47 -- followed closely by Tennessee, Georgia and Nevada. Alaska had the lowest rate last year, just one filing for every 189 households.

"Despite enjoying the sustained benefit of low interest rates, growing numbers of U.S. consumers are facing difficulty in meeting their monthly obligations," ABI Executive Director Samuel Gerdano said.

..."

Just about ALL filers are subjected to INCORRECT credit reporting. Few creditors bother to comply with the FCRA requirement to UPDATE their reporting after the discharge.

Unscrupulous creditors such as First USA/Bank One refuse to correct their reporting even when consumers dispute.

My estimate of 10% is probably low, as I averaged over 7 years, but often accounts are re-aged, resulting in discharged accounts staying on the credit reports even longer.

A typical example is the First USA reaged account The bankruptcy was filed in 1998, but First USA changed the Date of Last Activity for Equifax to 3/2003. Bank One (First USA) also deliberately reports delinquent balances for discharged accounts.

Not only will the derogatory account be reported until 2010, 12 years after the discharge, but it severely lowers the FICO credit scores because the account is rated as a NEW defaulted account.

Additionally, many people get divorced during/after bankruptcy and they are likely to remarry someone who has (not yet) filed for bankruptcy. Because rates are usually based on the lowest credit scores, one divorced/remarried couple often turns into 2 households negatively affected by the "after bankruptcy" incorrect credit reporting.