topic Re: Why are the banks reporting on good standing accounts? in Bankruptcy

Why are the banks reporting on good standing accounts?

Anonymous — Sun, 16 May 2021 19:34:52 GMT

As I look through my report, I am finding several accounts that were paid in full and not included in my bankruptcy have "chapter 7 bankruptcy" listed in the remarks. Why would they report in those accounts when they were paid in full and not included?

I also wonder...do all of my accounts disappear after the bankruptcy is discharged tomorrow? Even the ones I've paid in full prior to bankruptcy? I am trying to prepare for what is going to happen.

Thanks so much for your help.

Re: Why are the banks reporting on good standing accounts?

Jnbmom — Sun, 16 May 2021 22:40:25 GMT

@Anonymous

Your accounts don't simply disappear the debt does but these will stay on your reports for 10 years in a chapter 7.

Did you have any attorney , they should have explained this to you.

Most attorneys will list all your accounts. They all should be reported as IIB and zero balance .

Re: Why are the banks reporting on good standing accounts?

Caliboy97 — Sun, 16 May 2021 22:47:23 GMT

All accounts on my report showed IIB regardless if opened or close. Once you get the discharge best thing to do is try to clean up report with anything that is incorrectly listed and start applying for credit cards that are either no pull or a soft pull to prequalify to start rebuilding credit. I probably did too many hard inquires but in 8 months most of my scores are around 650-680 so doing alright hoping to hit 700 which I haven't had in years.

Re: Why are the banks reporting on good standing accounts?

Horseshoez — Sun, 16 May 2021 23:10:25 GMT

@Caliboy97 wrote:
All accounts on my report showed IIB regardless if opened or close. Once you get the discharge best thing to do is try to clean up report with anything that is incorrectly listed and start applying for credit cards that are either no pull or a soft pull to prequalify to start rebuilding credit. I probably did too many hard inquires but in 8 months most of my scores are around 650-680 so doing alright hoping to hit 700 which I haven't had in years.

Hmmm, all of my accounts which I closed before I filed Chapter 13 do not report IIB, not a single one.

Re: Why are the banks reporting on good standing accounts?

Caliboy97 — Sun, 16 May 2021 23:58:40 GMT

I just checked my report most of them did a couple didn't in my Chapter 7. Maybe they showed on my credit report and my attorney added them that's why idk 🤷

Re: Why are the banks reporting on good standing accounts?

sarge12 — Mon, 17 May 2021 00:03:40 GMT

@Jnbmom wrote:
@Anonymous

Your accounts don't simply disappear the debt does but these will stay on your reports for 10 years in a chapter 7.

Did you have any attorney , they should have explained this to you.

Most attorneys will list all your accounts. They all should be reported as IIB and zero balance .

Actually, the debt does not disappear either, the lender just can't take collection actions and the notation included in bankruptcy is added. The person who filed can however still pay the debt voluntarily after discharge if he or she chose to. It would not help their score in the slightest if they did though. It might however get someone back in with a creditor they burned sooner than never paying it. I would not advise doing that unless it was a very tiny amount, as debt included in bankruptcy can never be persued for collection by the lender again. There have been rare cases where the filer has payed debts discharged in bankruptcy, and the lender can accept the payment, but may not. They legally can, as long as they do not initiate the payment effort. It is so rare, and potentially risky that some might send back the payment due to concern that the courts might question who initiated the payment.

Re: Why are the banks reporting on good standing accounts?

Jnbmom — Mon, 17 May 2021 01:39:14 GMT

@sarge12 wrote:
@Jnbmom wrote:
@Anonymous

Your accounts don't simply disappear the debt does but these will stay on your reports for 10 years in a chapter 7.

Did you have any attorney , they should have explained this to you.

Most attorneys will list all your accounts. They all should be reported as IIB and zero balance .
Actually, the debt does not disappear either, the lender just can't take collection actions and the notation included in bankruptcy is added. The person who filed can however still pay the debt voluntarily after discharge if he or she chose to. It would not help their score in the slightest if they did though. It might however get someone back in with a creditor they burned sooner than never paying it. I would not advise doing that unless it was a very tiny amount, as debt included in bankruptcy can never be persued for collection by the lender again. There have been rare cases where the filer has payed debts discharged in bankruptcy, and the lender can accept the payment, but may not. They legally can, as long as they do not initiate the payment effort. It is so rare, and potentially risky that some might send back the payment due to concern that the courts might question who initiated the payment.

Yes I meant your obligation disappears and yes the "debt" esstentially disappears from legally being able to collect it.

Re: Why are the banks reporting on good standing accounts?

sarge12 — Mon, 17 May 2021 00:20:30 GMT

@Horseshoez wrote:
@Caliboy97 wrote:
All accounts on my report showed IIB regardless if opened or close. Once you get the discharge best thing to do is try to clean up report with anything that is incorrectly listed and start applying for credit cards that are either no pull or a soft pull to prequalify to start rebuilding credit. I probably did too many hard inquires but in 8 months most of my scores are around 650-680 so doing alright hoping to hit 700 which I haven't had in years.
Hmmm, all of my accounts which I closed before I filed Chapter 13 do not report IIB, not a single one.

A chapter 13 only includes debts that were included in the chapter 13 repayment plan or were discharged after the payment plan concludes. Debts that were paid in full before filing would not show IIB. Chapter 7 usually shows IIB on all accounts on the report. Chapter 13 and chapter 7 differ in that respect. Some secured debts can be paid outside of the bankruptcy in a chapter 13 by continuing to make payments. Chapter 13 is a reorganization of debt, whereas Chapter 7 is legally liquidating all non-exempt assets. Sometimes paid off debt can show the IIB on the credit report if the lawyer was unsure the debt was fully paid and included it just in case the unpaid balance was just left off the credit report. That was true when I filed anyway.

Re: Why are the banks reporting on good standing accounts?

Horseshoez — Mon, 17 May 2021 01:04:31 GMT

@sarge12 wrote:
@Horseshoez wrote:
@Caliboy97 wrote:
All accounts on my report showed IIB regardless if opened or close. Once you get the discharge best thing to do is try to clean up report with anything that is incorrectly listed and start applying for credit cards that are either no pull or a soft pull to prequalify to start rebuilding credit. I probably did too many hard inquires but in 8 months most of my scores are around 650-680 so doing alright hoping to hit 700 which I haven't had in years.
Hmmm, all of my accounts which I closed before I filed Chapter 13 do not report IIB, not a single one.
A chapter 13 only includes debts that were included in the chapter 13 repayment plan or were discharged after the payment plan concludes. Debts that were paid in full before filing would not show IIB. Chapter 7 usually shows IIB on all accounts on the report. Chapter 13 and chapter 7 differ in that respect. Some secured debts can be paid outside of the bankruptcy in a chapter 13 by continuing to make payments. Chapter 13 is a reorganization of debt, whereas Chapter 7 is legally liquidating all non-exempt assets. Sometimes paid off debt can show the IIB on the credit report if the lawyer was unsure the debt was fully paid and included it just in case the unpaid balance was just left off the credit report. That was true when I filed anyway.

While I am generally aware of the differences between Chapter 7 and Chapter 13, I was totally unaware of this difference. If I understand what you're saying correctly, say a debtor paid off and closed a credit card and a car loan a year before they ultimately filed for a Chapter 7, is it true that credit card and car loan can still be listed as IIB?

Re: Why are the banks reporting on good standing accounts?

sarge12 — Mon, 17 May 2021 05:16:01 GMT

@Horseshoez wrote:
@sarge12 wrote:
@Horseshoez wrote:
@Caliboy97 wrote:
All accounts on my report showed IIB regardless if opened or close. Once you get the discharge best thing to do is try to clean up report with anything that is incorrectly listed and start applying for credit cards that are either no pull or a soft pull to prequalify to start rebuilding credit. I probably did too many hard inquires but in 8 months most of my scores are around 650-680 so doing alright hoping to hit 700 which I haven't had in years.
Hmmm, all of my accounts which I closed before I filed Chapter 13 do not report IIB, not a single one.
A chapter 13 only includes debts that were included in the chapter 13 repayment plan or were discharged after the payment plan concludes. Debts that were paid in full before filing would not show IIB. Chapter 7 usually shows IIB on all accounts on the report. Chapter 13 and chapter 7 differ in that respect. Some secured debts can be paid outside of the bankruptcy in a chapter 13 by continuing to make payments. Chapter 13 is a reorganization of debt, whereas Chapter 7 is legally liquidating all non-exempt assets. Sometimes paid off debt can show the IIB on the credit report if the lawyer was unsure the debt was fully paid and included it just in case the unpaid balance was just left off the credit report. That was true when I filed anyway.
While I am generally aware of the differences between Chapter 7 and Chapter 13, I was totally unaware of this difference. If I understand what you're saying correctly, say a debtor paid off and closed a credit card and a car loan a year before they ultimately filed for a Chapter 7, is it true that credit card and car loan can still be listed as IIB?

Yes, it can. In a chapter 7, at least from my experience, everything on the report can be marked as IIB. If they do that, there is less chance of anything being overlooked. In a total liquidation chapter 7, it does no harm to mark them all as IIB as far as the damage to a score. It is the difference in the cost of stamps and a form letter being sent, which is generally cheaper than investing the time to be certain there is not an overlooked balance. If it should not be marked as IIB, the creditor does not have reason to attend the meeting of the creditors, and will file the notice in the circular file basket. If they are included, there is no chance of them popping up later saying they recieved no notice. It is just usually easier and safer to send it to every name and address on the report.

Re: Why are the banks reporting on good standing accounts?

Anonymous — Sat, 22 May 2021 15:02:09 GMT

Respectfully I have to disagree on this point. Not sure who advised you but my understanding is you must list all DEBTS. NOT ALL CREDITORS YOU EVER HAD A RELATIONSHIP WITH. In other words if it had a zero balance when you went BK, it's not relevant because you don't have a debt to them.

Re: Why are the banks reporting on good standing accounts?

pizza1 — Sat, 22 May 2021 17:35:37 GMT

In a BK7.....any and everything prior to filing date is IIB. Closed or not, listed on your reports or not, owed or not...doesnt matter.

Re: Why are the banks reporting on good standing accounts?

Anonymous — Sat, 22 May 2021 19:50:32 GMT

So... my mortgage that I paid on time every payment for severable years then paid off when I sold the property years before bankruptcy is "included in bankruptcy" and so are my car loans and student loans from aeons ago also many years before BK? Not sure that's true. They all show as "exceptional payment history" with no derogatory information or notes in my reports.

Edit: I just did some quick research. I think we are not allowed to post links but just Google "are accounts in good standing with zero balance included in bankruptcy" and one of the top results is a discussion on this subject on avvo. In that post, several actual attorneys respond and over and over again they clearly state that accounts with zero balances do not get listed in your chapter 7 filing.

So frankly I do not know why this advice about listing every creditor under the sun and expecting creditors you do not owe a debt to, to be considered "included in bankruptcy" gets repeated so often on here but I would strongly advise you to take your advice only from a lawyer who specializes in bankruptcy in your state.

Re: Why are the banks reporting on good standing accounts?

sarge12 — Fri, 04 Jun 2021 05:51:25 GMT

@Anonymous wrote:
So... my mortgage that I paid on time every payment for severable years then paid off when I sold the property years before bankruptcy is "included in bankruptcy" and so are my car loans and student loans from aeons ago also many years before BK? Not sure that's true. They all show as "exceptional payment history" with no derogatory information or notes in my reports.

Edit: I just did some quick research. I think we are not allowed to post links but just Google "are accounts in good standing with zero balance included in bankruptcy" and one of the top results is a discussion on this subject on avvo. In that post, several actual attorneys respond and over and over again they clearly state that accounts with zero balances do not get listed in your chapter 7 filing.

So frankly I do not know why this advice about listing every creditor under the sun and expecting creditors you do not owe a debt to, to be considered "included in bankruptcy" gets repeated so often on here but I would strongly advise you to take your advice only from a lawyer who specializes in bankruptcy in your state.

The problem with that is not all creditors actually report the balance at all. Once in default it still accrues interest and perhaps even late fees if it does indeed have anything other than a zero balance. Most lawyers find it easier, cheaper, and safer, to just send every creditor on the report a letter concerning the meeting of the creditors. Whether the notation of IIB is on the report or not, will make no difference to a credit score. I can only speak to my personal experience, but I had many creditors that were long before filing paid in full with a zero balance. They all showed as IIB a year later...every single one of them. While I agree that an account that is paid off does not have to be IIB, in most cases I know of they are so noted, because the lawyer sent them the letter to cover our bases. It is just easier than possibly having to re-open the case later because a creditor was not notified.

Re: Why are the banks reporting on good standing accounts?

jmw1 — Fri, 04 Jun 2021 20:20:11 GMT

You have a zero balance and don't list the account on your schedules, which is fine because you don't owe anything.

But most of the banks are proactively notified if you file bankruptcy and will automatically close your account even with a zero balance as IIB. Too bad if that happens. If your card survives (rare), congratulations. The survivor card will help make your rebuild a lot easier. Don't poke the bear by asking for a CLI or increase utilization which triggers a credit report check. Just keep it alive once a year with a small charge and pay it off immediately.