topic Re: Difference in post bankruptcy creditor comments in General Credit Topics

Difference in post bankruptcy creditor comments

Anonymous — Sun, 11 Dec 2011 17:50:42 GMT

After my bankruptcy I noticed that some of the creditors posted different comments in my record. For instance one would simply say Bankruptcy amount paid and would not have the words derogatory account in the description.. Others would say Bankruptcy bad debt written off and would be tagged as a derogatory comment.

Why are they different. Which statement is the best for FICO consideration. Can I write the creditor and ask them to change it? Marcos

Re: Difference in post bankruptcy creditor comments

Anonymous — Sun, 11 Dec 2011 19:45:25 GMT

@Anonymous wrote:
After my bankruptcy I noticed that some of the creditors posted different comments in my record. For instance one would simply say Bankruptcy amount paid and would not have the words derogatory account in the description.. Others would say Bankruptcy bad debt written off and would be tagged as a derogatory comment.
Why are they different. Which statement is the best for FICO consideration. Can I write the creditor and ask them to change it? Marcos

The comments do not matter for scoring as they are all included in your BK.

Re: Difference in post bankruptcy creditor comments

AndySoCal — Mon, 12 Dec 2011 00:53:12 GMT

You have trade lines reporting bankruptcy - charged off to a bad debt ? Where these accounts charge off before the Bk ? If no the yshould not be reported that way. Here is why the story ended when then the judge discharged those debt in the BK (chapter 7 I presume). What the creditor does with the account after the BK should not be reported.

DisRe: Difference in post bankruptcy creditor comments

RobertEG — Mon, 12 Dec 2011 01:27:58 GMT

I am not sure I agree.

Once the BK is discharged, then the creditor must update your credit file to show the debt balance to be $0.

However, discharge of the BK did not discharge the loss of the receivable asset that was due the creditor. He still suffered a loss that would now not just be questionably uncollectible, but legally uncollectible.

In my opinion, i see no prohibition against a credtior reporting the former collectible asset as now being an uncollectible bad debt for accounting/tax purposes, and thus doing a charge-off on their books. It is unrelated to the discharge of consumer obligation for the debt. In fact, many financial institututions are required by statute to charge-off bad debt after a period of time so as not to overstate their assets to the public.

In my opinion, reporting ot the charge-off would not be an inaccurate reporting of their business action, as it is not related to the discharge of the debt obligation between themselves and the consumer. Maybe the BK laws prohibit it, but I am not aware of restrictions on the reporting of accurate information to a CRA in the BK statutes.