Why you should NOT send bankruptcy documentation to the credit bureaus
A client filed a Ch. 13 and he actually paid over $70,000 and every creditor and collector who filed a claim received 100% of what they asked for. In 2005 the payment plan was completed.
A month ago my client sent his Ch. 13 documentation to the CRAs and he requested that they update his reports accordingly. Experian did a pretty good job and immediately processed the disputes and updated the accounts, although quite a bit makes no sense.
TU and Equifax just got done, Equifax sent TWO investigation results, it sure is confusing.
Unfortunately, almost all accounts listed on the filing are reported with a current status referencing the Ch. 13. Nowhere is any indication that he PAID the accounts IN FULL.
What’s even worse, the student loans and mortgage he’s still paying on are ALSO listed as “included.”
While those loans are many years old and the student loans are almost paid off, we have this score factor:
The proportion of loan balances to loan amounts being reported on your installment accounts is too high
Apparently only the 3 months old auto loan is rated for FICO scores and the almost paid off student loans and the 8 year old mortgage are not factored into the scores. Not only does that impact on the installment B/L ratio, but the long account history is most likely also ignored.
Even some of the OLD student loans and an OLD “paid as agreed” Ford Motor loan—paid off BEFORE the bk filing—are listed as “included.”
Apparently the CRA employees just looked at the bk docs and marked accounts by the same creditor as included in the bk - without ever giving a thought to the fact that an account paid prior to the filing or paid AFTER the completion of the plan could not have been discharged.
It’s easy to make some copies of the bk docs and mail them to the CRAs. It’s a LOT more work to go through each report and dispute the accounts you WANT to have reported as included in bk, but definitely worth the effort.
So now we have to dispute all the accounts that were NOT included and we’ll try for a “paid as agreed” for the accounts that were paid 100% and not charged off prior to the filing. We’ll see what happens, we’ll be lucky if Experian doesn’t refuse the disputes as “previously investigated.”
I had to SUE to get Nelnet to report my student loan accurately as “paid as agreed” instead of discharged and it took some efforts to get my mortgage reported correctly too.
Do NOT send your bankruptcy documentation to the CRAs.
It’s a mistake that can’t be undone.
Posted by Christine on 11/25/2006 at 08:40 PM
Credit - Collection - Economic News • (6) Comments • Permalink
You should be aware Christine that there is a case against all 3 CRAs in CA that will force them allways to include all accounts that are post discharge as being included in bankruptcy. What the Len Bennett’s and other plaintiff lawyers want. This will give the CRAs absolute protection and the plaintiffs lawyers $$$$.
I’m not aware of this case, do you have a case # and the PACER login for that court?
I can’t imagine that ANY consumer lawyer would want accounts that are being paid reported as included in the bankruptcy, the lack of good account history destroys the credit scores. I can’t think of ANY argument for that and sure would like to read that complaint.
Case is Acosta et al vs. TransUnion, Equifax.
In Central District of California - US District Court - Southern Division - Judge David Carter.
No. CV06-5060
Thank you, I’ll try to get around to looking that up.
i’ve always understood it as poor credit scores translate into more money for the banks, because poor credit scores mean higher interest rates. so that (to me) would be an overwhelming reason to assisting the consumer into having lower scores over assisting the consumer into having higher scores.
the credit reporting agencies ultimately exist for creditors, not consumers. but what is the counter reason for not destroying credit scores?
None for the capitalists.
Socialists could argue that all people should have the credit rating they deserve—even if it takes away from corporate profits.
