All debts that were included in bankruptcy should be updated to show a zero balance, and should be noted as "included in bankruptcy' or similar verbage. If the tradeline does not report this way, it is disputable.
If you have account history that includes lates and a charge-off that occurred BEFORE you filed for bankrupcy, that history can legally continue to be reported.
Charge-offs. Per opinion of the FTC, if a debt was not in charge-off status BEFORE you filed for bankruptcy, it can NOT be reported as a charge-off AFTER your bankruptcy, While creditors are required to charge-off bankrupted debts for their internal accounting, they are NOT supposed to report that charge-off to the credit bureaus.
The FTC Staff Opinion letter, Brinkerhoff-Lovern, is provided below. I have not researched the case law for legal precedent that adopts this FTC staff opinion, but it can be used as supporing argument. Perhaps someone can provide appellate case law as legal precedent.
:
April 24, 1998
Mr. Michael Lovern, Sr.
President TRIAL MANAGEMENT ASSOCIATES, INC.
8972 Quioccasin Road - Suite 172
Richmond, Virginia 23229
Dear Mr. Lovern:
David Medine asked me to respond to your Fax transmission of December 26, 1997, requesting our views concerning the legality under the Fair Credit Reporting Act (FCRA) of a credit bureau report of an account that has been discharged in bankruptcy as "charged off as bad debt." We acknowledge receipt of your request, pursuant to the Commission procedure set forth in 16 C.F.R. §2.2(a), for an investigation of the credit bureau.
Section 607 of the FCRA requires credit bureaus "to follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates." In our view, it is not a reasonable procedure to label an account that has been discharged in bankruptcy as "charged off as bad debt" if the account was open and not charged off when the consumer filed bankruptcy. Such a designation would be inaccurate or misleading, because it would indicate that the creditor had written off the account at the time of bankruptcy when it had not in fact done so. Thank you for the information and documentation you submitted to us in connection with your request that we investigate this credit bureau's practices. As you may know, it is Commission policy not to comment on the status or existence of any nonpublic investigation.
The opinions set forth in this informal staff letter are not binding on the Commission.
Sincerely yours,
Clarke W. Brinckerhoff
