Bank of America and JPMorgan Chase announced an agreement to remove bills that appear on credit reports when the bills have been legally eliminated in bankruptcy.
SALT LAKE CITY, UT, May 12, 2015 — Two of the largest banks in the United States recently announced they have agreed to ensure that credit accounts forgiven through bankruptcy will not be misreported within consumer credit reports.
According to a recent article published in the New York Times, this agreement could benefit more than one million Americans.
“Cleaning up credit reporting for included-in-bankruptcy items is great news for consumers. For too long, some creditors have been fairly sloppy about how they report those kinds of accounts to the three credit bureaus,” said Randy Padawer, a consumer education specialist for Lexington Law, the nation’s leading credit repair service provider. “Often, these accounts have been incorrectly labeled as still overdue, even though they were previously excused by a successful bankruptcy filing.”
Many consumers have found that some accounts, which were supposed to have been forgiven due to the bankruptcy discharge, have been sold to third-party debt collectors. Unfortunately, some consumers have paid the collection agencies just to escape harassment and further damage to their credit scores. In other cases, the damaged credit reports have likely prevented affected consumers from employment and financial recovery altogether.
The new rules require creditors to take extra preventative steps to ensure that included-in-bankruptcy trade lines are correctly designated.
“Keep in mind that bankruptcy items will still negatively affect credit scores and reports,” Padawer added. “The new rules are designed to eliminate many abuses, but they obviously won’t completely clean up an affected consumer’s credit report.”
According to Lexington Law, bankruptcy filings will continue to be reported to the credit bureaus for up to ten years, making it difficult for consumers to qualify for new credit.
About Lexington Law
Lexington Law is a consumer advocacy law firm with decades of experience helping hundreds of thousands of Americans work to improve their credit. The firm comprises the largest network of credit repair professionals in the U.S., employing attorneys and paralegals/agents across 18 states. By leveraging consumer rights to resolve issues with creditors, data furnishers, and credit bureaus, Lexington Law works to ensure that client credit reports are fair, accurate, and substantiated. For details about Lexington Law’s services or attorneys, please visit www.LexingtonLaw.com.