Earlier this month, Bank of America and JPMorgan Chase announced that they would remove debt eliminated by personal bankruptcy filings from credit reports.
According to the Consumerist, the updates align with consumer laws and the banks have agreed to update reports over the next three months. The updates could affect millions of people who have filed for bankruptcy previously.
The news outlet reported that under federal law, when someone discharges a debt through bankruptcy, his or her lenders are required to indicate that the debt is no longer owed on credit reports. Nevertheless, over the past few months, several lawsuits have claimed that lenders are failing to do this, leading to inaccurate marks on credit reports.
The lenders involved in the lawsuits were reportedly selling debts off to collectors, who then refused to correct the information on credit reports unless a borrower paid the debt, which was already cleared in bankruptcy. According to the Consumerist, neither bank is admitting to wrongdoing, even though they are beginning the process of clearing up the information.
The news outlet reported that JPMorgan said all debts discharged in Chapter 7 bankruptcy filing will be correctly recorded on credit reports by August 2015. Bank of America said that it “plans to change the way it reports all extinguished debts that are sold to financial firms.”
How Can a Personal Bankruptcy Help Me Escape Debt?
This is excellent news for people who have had debts erased through bankruptcy. With a Chapter 7 bankruptcy, you can dismiss unsecured debts such as medical bills and credit card debt. This bankruptcy process usually only takes a couple of months to complete, allowing people to escape insurmountable debt. This announcement will have a tremendous impact on people who have done this previously.
If you are overwhelmed by credit card debt, speak to our Lewisville bankruptcy attorneys about your options for eliminating it. We help our clients overcome tremendous financial hurdles. You can reach us by filling out the contact form on the side of this page or by calling the number above.
Julian, Crowder & Shuster, P.C. – Lewisville Bankruptcy Attorneys