Balance from lease reported as write off?

[Anonymous]

Hello, My wife and I did Chapter 7 back in '05 and got discharged in '06. While reviewing the credit reports, we see that American Honda Financial is reporting a $6K balance on our returned car lease as a Collection/write off. We included this account in our filling, and they came and picked up the car. When we called them, they said that they sold the car, but the $6k was the difference from what we owed and what they sold it for. Can they do that? I thought everything included in BK had to be made 0 balance and reported as "included in chapter 7" like all the rest of the accounts do. Can anyone comment on this? Any similar experiences with car leases? -d

[CreditBob]

Any account that is attached to a chapter 7 bankruptcy should be showing a zero balance after the discharge date. What you can do is send in a dispute letter along with I believe is called schedule F from your bankruptcy packet. There are many times when the system does not automatically change the balance to zero. If the status was in collection/write off status before the bankruptcy filed then that is normal. You can have an account in bankruptcy status and still show the late paymnets as well as the collections.

[credit911]

What happens a lot is once the car is repossessed, the finance company updates the derogatory information, then just leaves it at that. They don't do the work to update it to say included in bankruptcy. Make a copy of your discharge order, make a copy of schedule D (secured loans), forward that with a letter to the credit bureau and ask them to update the it to a $0 balance and report it as included in the BK. That should be all you need to do.

I would then recheck your credit file a month or two down the road. I received a letter from experian saying they updated my file due to my car being repossessed and a balance on a credit card was removed. When I pulled it again two months later, it was still there! So, I am sending them another letter this week.
(edited out my spelling mistakes)

Message Edited by credit911 on 06-24-2008 10:07 AM