Good Morning Everyone!

I got up this morning and had a notice in my mailbox from my True Credit monitoring service:

Dear Jenna,

Per recent regulations, credit bureaus are now required to report any account as “included in bankruptcy” if they have a status of discharged in existing public records of a Chapter 7 Bankruptcy. Previously, only creditors were required to report this information.

If you have a credit card, loan or collection account that was never reported as “included in bankruptcy” and was discharged through Chapter 7 Bankruptcy, a credit alert may be sent updating it to “included in bankruptcy.” Due to the age of these records, they may not trigger an alert. However, you should be aware that any possible alert would not indicate recent activity on that account.

You may experience a slight change in your credit score if any of your accounts are updated due to a bankruptcy. The more recent the bankruptcy, the more of an impact it might make on your credit score. Any update would be made by September 1, 2008.

Sincerely,
TrueCredit

So, what does this mean to you? Well, if you have ever declared bankruptcy, then it means a lot.

After my bankruptcy I still had several collection accounts, particularly the ones from GLA (a medical collections company) that continued reporting my debt to all three credit bureaus – even though it had been included in my bankruptcy. My credit score took a huge hit from the bankruptcy, and an even bigger hit when they continued to report the negative collection accounts.

Before this change, it was up to your creditors to adjust their own accounts, and report them to the credit bureaus as being included in your bankruptcy. This would have created a lot of footwork for either you or your lawyer (it did for mine) when you declared bankruptcy because they had to contact everyone you owed, and then hope that they corrected it in their own records.

Now however, you do have a different option. You still need to have your lawyer contact your creditors, but after your bankruptcy goes through you actually have a leg to stand on if these creditors continue to report your accounts as open.

Create free accounts with all three of the credit bureaus (Transunion, Equifax and Experian) and make sure you challenge anything that is still reporting incorrectly. They will update your account (I’m sure it could take up to a month) and it will raise your score.

If you have declared bankruptcy, or are thinking of declaring bankruptcy, then you need to know that just declaring bankruptcy will not always take care of your debt as far as your credit reports are concerned – you have to do that on your own. Yes, it’s trouble, but the upside is that it will raise your score and you will be on your way to recovering from that bankruptcy almost immediately.

Have a question for us? Leave a comment below!

Get our future articles for free! Click here.

Keep Reading:

• Can You Keep Your Credit Cards When You Declare Bankruptcy?
• Should You Use A Credit Monitoring Service?
• How To Tell If You Need A Secured Credit Card

Photo Credit: Dallas Bankruptcy Attorney.org

This entry was posted on Monday, August 25th, 2008 at 15:36 and is filed under Bankruptcy FAQ, Clean Up Your Credit Report, Credit Score Repair FAQ. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.