What Should My Credit Report Look Like After My Bankruptcy Discharge?

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After you have filed your bankruptcy petition with the Court, the ultimate goal is to get a discharge order from the Court. This is a court order which specifies that all debts which are subject to a discharge have been eliminated – your obligation to pay them has been legally terminated. A bankruptcy discharge order is a powerful thing indeed.

But while the bankruptcy proceeding is normally over and done with after the discharge has been entered, the job of the consumer who has gotten a bankruptcy discharge is just beginning. Everybody should monitor their credit report – bankruptcy or no bankruptcy – every single year.

Why is this important? For one thing, it is a well-documented fact that most credit reports contain some type of error. So you want to make that your debts, and only your debts, are being reported correctly. But for debts that have been discharged in a bankruptcy, the only acceptable way a discharged debt should be reported is “zero balance,” and “discharged in bankruptcy.” So if the trade line continues to show a balance due, or fails to show that the debt was “discharged in bankruptcy,” then the consumer’s right to get their fresh start can be hampered and delayed.

Car Loans

But equally important is how the debts you may continue to be paying on are reported. Let’s say you have a car loan, or lease, that you want to keep paying. Based upon your discussions with your attorney, your car finance company may have forced you into a reaffirmation agreement. For more about reaffirmation agreements, pros and cons, click here. In this case, your trade should report “pays as agreed” assuming you are in fact faithfully paying your monthly installment payment. You want to make these payments every single month without fail, especially if you have signed a reaffirmation agreement.

Otherwise, if you decided to abandon the car in your bankruptcy, the trade line should be “zero balance” and “discharged in bankruptcy.”

Mortgage Payments

If you have a mortgage, there is rarely any good reason to sign a reaffirmation agreement on that debt. I have never signed one in more than two thousand consumer bankruptcy filings. More common is the scenario you have decided that you want to stay in the home and continue to make payments so that you can stay there, without signing a reaffirmation agreement. If so, check your credit report every year to make that you are getting credit for the payments. If the trade line says “included in bankruptcy,” this is not accurate and should be disputed.

You should mail a written dispute, including a copy of your most recent mortgage statement showing that the payment is current, to each agency reporting the error. Don’t waste your time calling, make the dispute in writing, send it certified mail return receipt requested and keep copies of everything in case they don’t correct the error. For more information about how to dispute errors on your credit report, visit the web site of the Federal Trade Commission.

On the other hand, if you have decided to abandon the home, your trade line should state “zero balance,” and discharged in bankruptcy.

Don’t let anyone tell you that signing a reaffirmation agreement is needed to help you restore your credit report. On the other hand, the accuracy of your credit report is your responsibility. Check it every single year, without fail. You don’t need a lawyer to get your credit report, nor do you need one to dispute inaccurate information. Doing this will pay benefits in your peace of mind, and you will know that you are doing everything you can to restore your credit as soon as possible.

Blake Brewer is an consumer attorney who, among other things, sues credit reporting agencies for failing to accurately list information in consumer credit reports after proper noticing from the consumer. Call me at 216-642-8234 to schedule a consultation if you have disputed errors on your credit report and the error is still showing up.

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