Bankruptcy promises a fresh start, but if you’re not careful, your fresh start could be ruined by false information on your credit report. Let’s explore some of the ways creditors report false information and how you can take steps to stop them.
When you fail to repay a debt, some creditors “charge off” the account, and the word “charge off” will appear next to that account on your credit report. However, the creditor may fail to change that “charge off” to “discharged in bankruptcy” after your bankruptcy is closed. Unfortunately, this type of negative reporting can have an adverse impact on your credit score and your ability to get loans after bankruptcy. Below are some other negative (and inaccurate) marks that may show up on your credit report after bankruptcy:
- Active account. Some creditors may inaccurately report an account as active instead of closed or discharged after bankruptcy. This is especially problematic if you haven’t paid the debt because it often shows up as both inactive and delinquent.
- Delinquent account. Any account shown as delinquent can seriously harm your credit score and stop your chances of getting any other lines of credit.
- Balance owed. All accounts discharged in bankruptcy should show a zero balance. Any account that inaccurately shows a balance can raise your debt-to-income ratio and make it difficult to qualify for certain loans.
- New account numbers. This is probably one of the worst violations creditors engage in: renewing accounts by giving them new account numbers. This can make it appear that you took on this new debt after your bankruptcy.
While you can force creditors to report accounts correctly and/or get the credit reporting agencies to remove the inaccurate information, it can take a lot of time and energy. Contact your attorney, if you need help through the process.
Don’t let creditors ruin the fresh start bankruptcy promises.