Filing for bankruptcy, particularly Chapter 7, is supposed to give a person a fresh start to recover from financial challenges and to rebuild credit. Unfortunately for some people in Oregon and across the country, a bankruptcy discharge was not the end of their credit troubles.
Thousands of people are reported to still have credit card debt and other types of debt on their credit reports that should have been erased after a personal bankruptcy. However, some lenders are accused of keeping these old debts on a person’s credit report even after a bankruptcy discharge.
This practice violates federal bankruptcy law. Attorneys with the United States Trustee Program are investigating numerous major banks, including Bank of America, JPMorgan Chase and Citigroup, on reports of these banks failing to correct credit reports after borrowers have successfully declared bankruptcy.
As a result, many people who should have found debt relief feel obligated to continue making payments in order to repair their credit and get approved for loans. For example, a couple in Denver repaid a $2,582 credit card debt after their bankruptcy because they couldn’t get approved for a mortgage otherwise. A New York man was denied an apartment lease after Chase refused to erase his $6,411 credit card debt from his credit report; he refused to repay it, and got the apartment after his bankruptcy attorney explained the situation to the housing agency. One woman was repeatedly denied job opportunities because of the debt that remained on her credit report even after her bankruptcy.
People who find their credit reports marred with outstanding debt after a bankruptcy have the right to dispute these charges. Speaking with a bankruptcy attorney can help.
Source: The New York Times, “Debts Canceled by Bankruptcy Still Mar Consumer Credit Scores,” Jessica Silver-Greenberg, Nov. 12, 2014