This article was originally found on the Bankruptcylawnetwork.com
The Fair Credit Reporting Act requires credit reports to be accurate. What is accurate reporting during a bankruptcy case?
In general, creditors have no duty to report anything at all to credit reporting agencies. Consequently, many will simply stop reporting any debt information once informed of a bankruptcy case.
However, sometimes a credit report will reflect a balance for a debt that was included in a bankruptcy. When should this balance be set to zero? During a bankruptcy, which in the case of a Chapter 13 can last several years, or only after the bankruptcy is concluded and a bankruptcy discharge appears?
The answer is that a debt does not need to be listed as having a zero balance until a discharge makes it so. While a bankruptcy is pending, the debt balance still exists while the debt cannot be legally collected. Having a pre-bankruptcy debt balance stay on a report during a bankruptcy is sometimes harmful to credit during that period.
However, the duration of a Chapter 7 case is brief–three to four months–and one cannot usually obtain new credit during a Chapter 13 bankruptcy. So, even though it lasts longer, credit during a Chapter 13 bankruptcy is usually not necessary. When it is necessary, like in the case of a proposed mortgage refinancing, sometimes it is possible to work with a mortgage broker or lender to do quick disputes and get disputed trade lines off a report to complete the transaction. Often a lender will not re-report the debt under those circumstances for fear of violating the automatic stay.
To speak with a bankruptcy attorney contact Chirnese Liverpool at (818) 714-2200.
If you need assistance with unpaid medical bills, preventing foreclosure , preventing repossession, reducing financial liabilities, stopping wage garnishments, preventing collection calls, debt settlement, reducing or eliminating tax debt, and or rebuilding your credit consider consulting with us for your options. Chirnese L. Liverpool assists clients with filing for bankruptcy in California as well as all of Nevada. Our office represents clients with: bankruptcy court, filing for bankruptcy, chapter 7 bankruptcy, and chapter 13 bankruptcy representation. We can be reached at (818) 714-2200.
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