The Fair Credit Reporting Act (FCRA) is a federal law that governs the actions of credit reporting agencies (CRAs) such as Experian, Equifax and TransUnion, and the individuals and businesses that supply the information used to compile your credit report. It also dictates the following:
- What the CRAs, creditors, and other authorized parties can (and cannot) do with your information
- What type of information the CRAs can report
- How long certain formation can legally remain on your credit file
The purpose of the FCRA is to ensure that an individual consumerâ€™s credit history is as fair and accurate as possible and prevent misinformation from damaging oneâ€™s chances at getting a mortgage, car loan or apartment.
The FCRA and Bankruptcy
When you file for bankruptcy and are subsequently discharged, information about your filing and former debts can remain on your credit report for a certain period of time. Bankruptcies can be reported for up to 10 years, a prospect that many people find daunting, but a discharge does clear up your credit report in that all included debts can no longer be reported as:
- Past due bills
- Charged off debts
Your creditors should report each discharged obligation as having a zero balance and â€œincluded in bankruptcyâ€ or a similar designation. Doing otherwise is a direct violation of the FCRA, which prohibits the reporting of inaccurate data. If you notice such an error on your report and notify the creditor, they are legally obligated to correct it.
Although uncommon, it is not unheard of for a bank or creditor to deliberately refrain from reporting a debt as discharged. They may also reincarnate it as a new debt, with new account numbers and/or effective date. This is typically done to coerce you to pay the debt. Such a move can be treated as a violation of the bankruptcy discharge injunction, which prevents creditors from trying to collect discharged debts.
To ensure that your post-discharge information is being accurately reported, it is recommended that you obtain an updated credit report from Experian, Equifax and TransUnion within 60 days after your bankruptcy is discharged. Review each file for incorrect data, and bring any errors to the attention of the creditor in question. If they do not remedy their mistake, contact a New York bankruptcy attorney who can deal with them on your behalf and, if necessary, help you bring an action for violation of the FCRA.
The purpose of bankruptcy is to give you a fresh start financially, and an inaccurate credit report can result in you being:
- Denied the credit you need to rebuild
- Forced to actually pay a discharged debt to become eligible for new credit
Fortunately, the FCRA provides you with the protections and resources necessary to safeguard your second chance at financial prosperity.