Discharged, but the creditor is reporting me delinquent...HELP!

[bkdone]

Hi Everyone,
I have a question... I see that Tin reported something similar, but here is my situation. Long story short...

The credit union turned my credit card account over to an attorney for collection. I filed Chapter 13 and the credit union filed a claim; the attorney was also noticed. Chapter 13 proceeded...payments made...discharged September 2006.

From then on, the credit union has been reporting my credit card account as over the limit, delinquent, and with a $1700 balance.

I wrote to the credit union and the attorney. I included a copy of the claim that was included in the BK, and what was paid to them. I also sent a copy of the discharge. The attorney sent me a letter today that says although the account was discharged, they can still 'report the balance, but they will not attempt to collect it.' The attorney wrote that 'obviously you (meaning me) dont understand what discharged means.'

I have been searching the U.S. Bankruptcy laws but I need something factual put into my reply back to him. I have disputed this topic with another one of my creditors, Target, and they sent me a very nice letter that they would delete the delinquent months showing, as well as the balance shown.

It seems this guy is just being difficult. Can anyone please comment.

Thanks!!!

[FilingOnMyOwn]

If you've completed the plan and been discharged, the account should show as having a zer0 balance/paid in full. It may appear as a charge off, but there should be no balance. You need to continue disputing until it gets corrected. Your attorney is full of isht, people don't file bankruptcy so that your credit reports will still show that you owe money. Think about it.

[poorme]

I had a similar situation occur last week. Was discharged in 3/06 and a Household card account that was reporting IIB w/ zero bal suddenly generated an alert on TC - well, it's reporting a 'delinquency'. I disputed, and got a letter from Household verifying the account is mine - DUH! that's NOT what I was disputing, crap-head! So I wrote back explaining the nature of my dispute and asking for correction - wtg on their reply.

[lrprn]

FOMO is right and this lawyer is wrong. According to Cathy Moran, a well-respected California bk lawyer, "After a bankruptcy discharge, the amount outstanding for each discharged account should be shown as zero." (See http://www.moranlaw.net/creditreports.htm )

If this lawyer and your credit union continue to refuse to correct your credit report so the account shows as zero owed or IIB, talk to your bk lawyer because you have a strong case to sue them for violating the Fair Credit Reporting Act.

Our member CPO has hooked up with a lawyer who specializes in this area of law - CPO, any advice to give here?

[HHM]

Before you do anything else, you need to dispute the entry through the proper channels. You say in your post you wrote the CU and the attorney...your FIRST step is to dispute the entry with the Credit Reporting Agencies. You don't have any case under FCRA or any other law until you do that first.

Go to the websites of TransUnion, Experian and Equifax to learn about how to dispute inaccurate reporting of credit information.

[CATCHMEIFYOUCAN]

Curious, WHO is responsible for correcting the balance, reporting it correctly, the 3 credit reports OR the creditor ?

Thanks, CMIYC

[HHM]

Curious, WHO is responsible for correcting the balance, reporting it correctly, the 3 credit reports OR the creditor ?

Thanks, CMIYC

I wish that was an easy answer...the law provides for two tier responsibility. Ultimately, the reporting creditor has the responsibility to provide accurate information to the CRA's. However, the CRA's have a responsibility to have mechanisms in place to insure the information they receive is accurate. Under FCRA, the first step in disputing inaccurate information is to dispute through the CRA's, which triggers there verification mechanism (i.e. they inform the reporting creditor of the dispute and request the creditor to verify the data, etc).

[bkdone]

It was the lawyer for the Credit Union that told me that...not my lawyer. I disputed the balance thru the credit bureaus first. The items were not corrected because the bureaus only verified the information witht the credtior. Hence, my next step which was to write to the CU and their lawyer.

In the letter, their lawyer wrote: 'I am wondering if you understand what the term "Dishcarged" means? It simply means that the debt is un-collectable; not that you now have a $0 balance.'

I know that this is crap... I researched the definition on the US Bankruptcy court's website. Discharged not only means that the debt cannot be collected on, but I am no longer personally liable for the debt.

Since I have tried to dispute with the bureau, and now with this guy...what else can I do? Should I write the bureau again and include the pages from the online definition of discharged?

[FilingOnMyOwn]

And because the debt is uncollectable, that is why there is no balance owed. Do whatever you have to do to get it fixed. Most of us have been through this, just takes a little work and it will happen.

[CPO]

Well, I apologize.

Irprn suggested I chime in here and I totally missed the post.

I have hooked up with an attorney out of Chicago that specializes in sueing third party collectors for harassment...he's only licensed if Federal Court.

I've emailed him, but I don't think this is one of his specialties.

I have spent a few hours on this and I have yet to find a legal reference that one's discharged debt must be reported as a "0" balance.

I know the Moran site actually quotes this, but there is no legal reference included.

The debt becomes un-collectable...but I don't see how that translates to a zero balance unless a credit score uses the dollar value of the discharged debt to calculate another score of some type to measure credit worthiness.

If the debt is discharged, then no scoring can be used on the actual balance of the account. If it was, you would never be able to improve your credit score until the BK drops off your report...10 years away.

If it is used, then surely a decent lawyer can argue in court that such a process would defeat at least the spirit of the bankruptcy code.

In other words, bankruptcy would only mean you are no longer required to honor the debt, but "a fresh start" would be out of the question.

As an aside, a discharged debt cannot be "over the limit" nor "delinquent."

THAT is surely illegal, as it balks at the pure definition of a discharged debt.

Maybe "discharged in Bankruptcy, $1700.00" would be more correct?

I might suggest you contact your attorney with your documents and have a consult. Maybe with alittle info you could go along way.

Sorry I have found nothing more concrete at the moment.

I will post further info here if I find any. This is an important subject because this directly affects one's ability to correct erroneous data on a credit report and possibly hints at a way in which the Bankruptcy Code could be abused by creditors who wish to negate the 'codes usefullness to debtors.

Not good.

Regards,

CPO

[CPO]

Check this link out:

http://abiworld.net/crackingthecode/index.php?p=41

See, this is all I get in my research....even the creditors don't know exactly how to report BK's to the reporting agencies.

I have read the FCRA like 5 times, and there is NO actual wording that states that BK's are to be reported as "zero" balance.....

But alot of site's claim that it does......read it yourself......

It does not say anything even close to that.

Still looking....

CPO

[CPO]

Well, getting close to "rack time...." Gotta get up early and go running....

So, about all I can come up with is this:

It is incorrect for a creditor to list a debt as "included in Bankruptcy" AND list an "outstanding balance" on a credit report. That is a contradiction in terms.....

The reporting agencies apparently will let this ride, because there is no accepted standard for reporting BK's other than the time limits from the FCRA.

Seems many creditors have their own reporting data and simply provide that data to the CRA's. There are major conflicts in the system.

It appears that this has been a problem for some time, as I have read many stories and a lot of 'net exercises and no one has come up with a solid reporting scheme, and debtors are screaming about it.

My best advice is to sue, in the BK court you filed in, and force the creditor to explain how one can have an overlimit, delinquent, outstanding balance account that is discharged in bankruptcy.

It's not possible, and I have a hunch that it would never get that far.

This lawyer will get it changed promply.

He will probably only respond to a summons, so be prepared to go all the way when you serve him....

Best Regards,

CPO

P.S. Perhaps you will set the standard for the industry!

[bkdone]

Here is what the credit report shows...cut & pasted

Date Opened:
12/1997
Type:
Revolving
Credit Limit:
$1,800

Date of Status:
08/2006
Terms:
NA
High Balance:
$2,668

Reported Since:
09/1999
Monthly Payment:
$0
Recent Balance:
$1,736

Last Reported Date:
02/2007

Recent Payment:
$0

Account History:
Charge Off as of Sep 2006 to Feb 2007


Balance History:
01/2007 $1,736
12/2006 $1,736
11/2006 $1,736
10/2006 $1,736
09/2006 $0

Notice that the 9/06 balance is $0, then they reported the $1736 starting in Oct.