If residents of New York file for bankruptcy, they no longer have to worry that credit reporting services will not update their credit report data to reflect the discharged debts. As recently as 2005, three of the top credit reporting services would still list debts that had been eliminated after someone filed for Chapter 7 bankruptcy. This means that an individual’s credit report could show multiple delinquent accounts that had been eliminated after their filing went through.
Even worse, it was not uncommon for people to contact these credit reporting agencies and have no changes made to their credit reports. By 2008, thanks to legal action, reporting agencies had already begun making changes to the way they handled reporting debts after an individual had filed for bankruptcy.
People may wonder if there is any real reason to ensure that discharged debts are removed from their credit report following a bankruptcy because a bankruptcy is a black mark against their credit. It is very important because individuals can begin rebuilding their credit almost immediately following filing for bankruptcy. Within two years of filing, individuals can make great improvements on their credit rating, and leaving discharged debts on their report will only make that process more difficult.
Bankruptcy can give people a way out of burdensome debt, but it is not always an easily understood process. If someone is considering filing for bankruptcy, it may be a good idea for them to consult an attorney. An attorney could help them understand what the process for filing is and which type of bankruptcy would be most beneficial to them.
Source: The New York Times, “Credit Reports More Accurately Reflect Debts Discharged in Bankruptcy“, ANN CARRNS, April 30, 2013by