When a bankruptcy is completed, a consumer’s credit report should be updated to show that the person is no longer responsible for paying debts that were discharged. For a long time, the major credit bureaus were not as careful about updating reports as they should have been. However, the bureaus have recently been more consistent about updating credit reports, which means that this may be a good time for Wisconsin residents struggling with debt to seek the relief that bankruptcy can afford.
The recent shift is attributed to a class-action lawsuit filed against the bureaus. Plaintiffs alleged that the credit bureaus showed consumers as delinquent in payments on debts that had been discharged. There were some allegations that the bureaus did not investigate even after these problems were reported. Improvement procedures were included as a partial settlement reached in 2008.
A Chapter 7 bankruptcy affects a person’s credit report for 10 years. The bulk of the negative impact occurs in the first couple of years, but if a report shows late payments in addition to the bankruptcy, the credit score may be lower than it should be. Therefore, it is important to have discharged debts updated to show no outstanding balance.
Because a person’s credit score affects loan approvals and interest rates, it is imperative that this information be accurate. Mistakes in credit reporting could cost consumers hundreds of dollars in increased interest payments. People in Wisconsin who find mistakes on their credit reports may benefit from speaking with bankruptcy attorneys who might be able to contest the entries and help establish a plan for repairing damaged credit.
Source: The New York Times, “Credit Reports More Accurately Reflect Debts Discharged in Bankruptcy“, ANN CARRNS, April 30, 2013
