NY Times:Debts Canceled by Bankruptcy Still Mar Consumer Credit Scores

[LiberalElite]

http://dealbook.nytimes.com/2014/11/12/debts-canceled-by-bankruptcy-still-mar-consumer-credit-scores/?_r=0

"In the netherworld of consumer debt, there are zombies: bills that cannot be killed even by declaring personal bankruptcy.

Tens of thousands of Americans who went through bankruptcy are still haunted by debts long after — sometimes as long as a decade after — federal judges have extinguished the bills in court.

The problem, state and federal officials suspect, is that some of the nation’s biggest banks ignore bankruptcy court discharges, which render the debts void. Paying no heed to the courts, the banks keep the debts alive on credit reports, essentially forcing borrowers to make payments on bills that they do not legally owe."

[badtoworse]

1. So the fact that you declared bankruptcy isn't relevant to a credit score?

What kind of bullshit is that? I can't think of anything that is more relevant.

[Lars39]

2. You need to read the article...the banks are selling discharged debt

and not updating discharged debt on credit reports. People are having to repay debt that has already been discharged in bankruptcy in order to fix their credit.

[badtoworse]

4. That's different. I'll read it when I get to my desk

[badtoworse]

7. It's a complicated situation, but it seems there is a high likelihood of fraud or conspiracy

The first question is whether it's legal to sell a debt that has been discharged through bankruptcy, at all. In my opinion, it should not be. If the bank sells the debt and doesn't inform the buyer that it's been discharged in bankruptcy, that is fraud in my opinion. If the bank does inform the buyer that the debt's been discharged, arranges to transfer any payments received to the buyer and then fails to update credit records, that smacks of conspiracy and extortion to me. I hope cases like that do get referred to the Justice Department.

At the same time, however, the fact that you went bankrupt does belong on a credit report. A potential lender is entitled to know all of the pertinent facts about a potential borrower's credit history in making a decision about a loan. It seems to me that the person who pay's off a discharged loan to keep it off his credit report is misrepresenting his credit history and is also guilty of fraud. Unless you are trying to commit such fraud, it seems to me that you would be better served by making the credit agencies aware of the discharge order so that the fact that you no longer owe the money is reflected in your credit history. You'll still have a bad report, but at least you'll be in a position to rebuild your credit. The bankruptcy order should be given to the credit agencies independently of what the creditors do.

The whole situation stinks in my book.

[SoCalDem]

3. and, isn't the length of time on a record now 10 years?

Basically, banks do not want to lend money to ordinary folks anymore. They only want us for the fees-paying process.. They don't pay us interest that amounts to much..they want OD fees, monthly service fees...and they want us to take out their bank credit cards..

Anything that can drive up those costs are a plus for them (like damaged credit)..

[alcibiades_mystery]

5. Mafia capital

They would do away with bankruptcy altogether if they could, or make it near impossible, as they did for student loans. The only thing that's going to stop these people is consumer boycotts and direct action protests. Our government is bought and paid for by the banks, and will bend over backwards to do whatever is most profitable for the banks. The courts are a joke.

[Hoppy]

6. Those people should not pay the debt. Rather, report the collection attempts to the federal agency

responsible for compliance with credit collection. I don't recall the name of the agency.