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Credit Reporting Issue

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RealEstateOne
Member

Credit Reporting Issue

How can a debt that was discharged during a bankruptcy, chapter 7 almost six years show up now on the credit report as derogatory? Co-signer is now in chapter 13 with that same debt. Is that derogatory reporting for the chapter 7 report correct?

Message 2 of 7
6 REPLIES 6
RealEstateOne
Member

How should the new note & mortgage servicer report the loan on the credit report ?

History...

 

Default on a modification to original note and mortgage with same lender/service provider that was made (the modification) after Chapter 7 bankruptcy discharge and never reaffirmed, no further monetary liability to signer on the note.

 

After the modification default the loan is transferred to a new loan servicer.

 

The trade lines continue to report CH7 status from the original loan service provider, closed account, 0 balance, etc. from the original servicer of the loan, nothing from the new servicer.

 

A second modification is attempted via the new loan servicer and denied,

 

After the modification denial, co-signer files CH 7.

 

The signer on the note and mortgage quitclaims the property to co-signer. 

 

Then the foreclosure process starts with the new loan servicer and the new loan servicer places a new trade line on the signer's credit report showing foreclosure status, account open, late, account balance shown, etc.

 

During the foreclosure process with the new loan servicer  the co-signer files a CH 13, which is approved by the courts and the case is now closed.

 

Regarding the signer of the note and mortgage, (not the co-signer), I thought the new loan servicer would have to report the loan on the credit report just as the prior original servicer did,  CH7 status, closed account, 0 balance, etc.

 

I’m trying to make sense of how this is supposed to be reporting from the new loan servicer for the signer of the note and mortgage who quitclaimed the property.

 

Thanks

Message 1 of 7
RobertEG
Legendary Contributor

Re: Credit Reporting Issue

The creditor would have been required, when the debt was discharged, to report that fact to the CRA, and update the debt balance to $0.

It's current status would then show discharge of the debt, but the derogs that accured on the account prior to the discharge of the debt will still remain, subject to the normal crredit report excludion periods of section 605(a).

 

More specifically, reported monthly delinquencies will become excluded no later than 7 years from their individual dates of occurence, and a reported charge-off would become excluded no later than 7 years plus 180 days from the DOFD on the OC account.

Message 3 of 7
RealEstateOne
Member

Re: Credit Reporting Issue

OK... and btw a new credit servicer took over the account. The old / prior servicer has it reporting correctly and just as you have stated above.

 

The new servicer has it reporting; open account, late, balance due, etc.

 

So the new servicer should have the trade line account item reporting the same as the old / prior servicer; closed acount, 0 balance, account discharged in bk, etc.

 

Thats the question?

 

Thanks... 

Message 4 of 7
gdale6
Moderator Emeritus

Re: Credit Reporting Issue


@RealEstateOne wrote:

OK... and btw a new credit servicer took over the account. The old / prior servicer has it reporting correctly and just as you have stated above.

 

The new servicer has it reporting; open account, late, balance due, etc.

 

So the new servicer should have the trade line account item reporting the same as the old / prior servicer; closed acount, 0 balance, account discharged in bk, etc.

 

Thats the question?

 

Thanks... 


Yes, the new servicer should be sent a copy of the CH7 discharge of the debt.

Message 5 of 7
RealEstateOne
Member

Re: Credit Reporting Issue

Thank you both very much for your input!

Message 6 of 7
gdale6
Moderator Emeritus

Re: Credit Reporting Issue

I have moved your other thread that you posted on this here. Please refrain from posting multi threads on the same issue in the future it leads to confusion. If you need to move the thread to the top of the list after you dont get a response within a day or so just reply to your original post with the word bump and it will que it back up. I thank you for your understanding.,

Message 7 of 7
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