Bankruptcy is supposed to give consumers a fresh start. In a Chapter 7 bankruptcy, the Court may discharge some or all of a consumer's debts. Consequently, the way creditors report the account to the credit reporting agencies must change as well.
When the Bankruptcy Court Judge issues his or her final order discharging a consumer's debts, discharged accounts will have the notation "Included in Bankruptcy." However, the account balance becomes zero, improving a consumer's debt-to-income ratio. Also, the account should not show other derogatory remarks resulting from non-payment after the discharge order is entered. Deleting high balances and derogatory remarks can improve a consumer's credit score.
If this type of information is showing on your credit report (also known as a consumer report), you can send a written dispute to the credit reporting agencies. If a creditor continues reporting amounts owing or that the account is past due, consumers may be able to bring a suit for damages under the Fair Credit Reporting Act. Below is a short description of the process for disputing false information on your credit report.
1. Get a copy of your consumer report. While it is possible to access your credit report online, some credit reporting companies require consumers to give up important rights in order to access their consumer report through their website. Also, it can be confusing navigating the many links to purchase services that you do not necessarily need. A better way is to request it by mail.
Consumers can request their free annual credit report by writing to Annual Credit Report Request Service, PO Box 105281, Atlanta, GA 30348-5281. The request form is available at the annualcreditreport.com website.
2. Send a written dispute letter to the credit reporting agencies. Tell them that you filed for bankruptcy, and give them the bankruptcy court case number. List the specific accounts and account numbers which were discharged.
Send your letter via certified mail, with a return receipt requested. Keep a copy of your signed, dated letter, along with copies of enclosures.
3. Review the response. If the credit bureaus request additional information, provide it to them. If you are unable to get the credit reports corrected, consider contacting a consumer protection attorney.