Why You Can and Should Dispute Items On Your Credit Report
Your credit report contains a substantial amount of important information regarding your credit management practices. Potential lenders, employers, landlords, and other creditors will have access to information about your credit card payments, collection accounts, bankruptcies, credit inquires, judgments, and other data related to your financial wellbeing. This information, along with your overall credit score, plays a key role in lenders’ decisions.
Because the information on your credit report is critical in how lenders view your creditworthiness when you apply for a credit card or personal loan, the information must be accurate. This is especially the case if you successfully completed a Chapter 7 or Chapter 13 bankruptcy to help restore your credit rating. While your bankruptcy filing will appear on your credit report, you want to ensure that all your creditors have properly reported the current status of their accounts.
Our Philadelphia bankruptcy lawyers work hard to ensure our clients receive all the benefits associated with filing for bankruptcy. After receiving a discharge, you want your credit report to accurately reflect your current status. This means you might have to dispute some inaccurate information. To review your credit report and discuss the steps necessary to dispute an item, call Young, Marr & Associates at (215) 701-6519 in PA and (609) 755-3115 in NJ.
When to Dispute Items on Your Credit Report
You want your credit report to accurately reflect your account information. This might require disputing inaccurate information. However, disputing a late payment when your payment was late is a waste of time and energy. If our Pennsylvania bankruptcy lawyers helped you receive a Chapter 7 or Chapter 13 discharge, you want to ensure your credit report reflects the eliminated debt.
It typically takes about six to twelve months for creditors to correctly report the status of their accounts post-discharge. Nonetheless, there are some common errors that creditors make after bankruptcy.
Discharged Accounts Not Listing a $0.00 Balance
Every debt that was eliminated in your bankruptcy should be reported as “discharged in bankruptcy.” Additionally, it should also show a balance of $0.00. If this is not the case after a few months, you need to file a dispute. Your creditors will require some time to report the information accurately, so you should not dispute a credit report that you pull one week after receiving a discharge.
Credit Inquires by Former Creditors
A bankruptcy discharge not only eliminates your debt, it also severs the relationship you had with that particular lender. Therefore, any lender you owed money to has no legal right to pull your credit every month. This practice brings down your credit score.
In most cases, this practice continues because it was an “automatic pull” that was not terminated when your debt was discharged. You want to check your “hard inquires” to determine if any of your old creditors are still pulling your credit score after your discharge.
Debt Reported as a Charge-Off
A “charged off” account is a negative mark on your credit score. There are many circumstances when a creditor will legally report an account as a “charge off.” However, this should not be done when a debt is discharged in bankruptcy. Doing so is an illegal practice and should be disputed.
Debt Still Showing
There are some situations when a discharged creditor will continue to report that you owe a debt. This is common in Chapter 13 cases where a debtor surrender collateral. For example, suppose you file Chapter 13 and surrender your car. The vehicle is only worth $10,000, but you still owe $25,000. The $15,000 balance will either be discharged or paid through your bankruptcy plan. Once your bankruptcy is complete, you no longer owe the $15,000. However, creditors will often continue to report that you do.
A balance sometimes erroneously appears when a second or third mortgage is “stripped” and discharged as unsecured debt. When reviewing your credit report, it is critical to carefully look at the secured debt you owed.
Wrongly Reported Spouse’ Debt or Filing for Bankruptcy
There are times when our experienced Bucks County bankruptcy attorneys will advise only one spouse to file for bankruptcy. There are often advantages to this practice. However, it does open the door for errors on your credit report.
For example, if there are joint debts, it is perfectly legal to list them as “included in bankruptcy” on a non-filing spouse’s credit report. However, it is a problem if your spouse is listed as filing for bankruptcy when they were not included in your filing. When this occurs, a “bankruptcy” will negatively impact your spouse. If only one spouse files for bankruptcy, it is important to review their partner’s credit report.
Reaffirmation Agreements Misreported
There are times when a debtor will “reaffirm” a debt. This means that you reaffirm that you owe the debt, even though it would have been discharged in your bankruptcy. For instance, you might reaffirm the debt you owe your car lender if you file a Chapter 7 bankruptcy. One reason to do this is to improve your credit score by having your payments reported to the various credit bureaus. However, when a reaffirmed account is misreported, it does not help your credit score.
A reaffirmed debt should not be listed as discharged. It should be reported as a current account. All timely payments you make should be accurately reported to the credit bureaus. If this is not the case, you should dispute the account information.
Sample Dispute Letters
To better serve hard-working Americans, we have provided a number of dispute letter templates. You may submit a dispute if your credit report contains inaccurate or incomplete information. Our dispute templates include:
- Experian Reportingdispute letter template
- Equifax Reportingdispute letter template
- TransUnion Reportingdispute letter template
- Information providing company dispute letter template
Our Pennsylvania Bankruptcy Attorneys Work So You Receive All the Benefits of Filing for Bankruptcy
Filing for bankruptcy is never a simple decision. However, once you choose to file for bankruptcy protection, you should receive all the benefits. At Young, Marr & Associates, our Allentown bankruptcy lawyers are committed to serving our clients, including helping ensure they receive the full benefits of a discharge. To discuss our services, call our law offices at (215) 701-6519 in PA and (609) 755-3115 in NJ.