Fight 'foreclosure' on cr rpt?

[poorme]

Sorry, but I need to raise a legal/technical question here, and would appreciate all feedback - concerning the appearance of 'foreclosure' on a bk person's credit reports. It seems pretty standard and expected, but....

It's similar in concept to an automobile repo. However, my attorney convinced me that I could fight the repo appearance on these grounds: If the repo occurred after the discharge, they technically can't repo (or report that) on a loan I was no longer responsible for. True, the repo is a right of the lien holder that allows them to take possession of the property so they can dispose of it, yada yada - but this is sounding just like a foreclosure, right? The bank has to go thru the foreclosure sale process in order to take possession of the property in order to dispose of it....so IF the foreclosure takes place AFTER the discharge then technically I could keep that fact off my credit report.

The cr report should show IIB, $0 balance, and that's it. 'How' the property was disposed of is no one else's business at this point, unless they want to ask. That then, is a point of discussion between the bk'd person and the new bank.

Thoughts? Experiences?

[HHM]

Not that this would have been something you would have asked your attorney, but does he/she have any case law that says that. Also, as a general matter, bankruptcy attorney's are only tacitly aware of credit reporting law, you would need to speak to a consumer advocacy attorney who specializes in credit reporting issues.

However, it is a good argument.

The courts apply two standards when looking at Credit Report Accuracy. (a) Technical Accuracy, and (b) Maximum Accuracy. The Technical Accuracy standard merely asks if the information is true. Maximum Accuracy goes beyond technical accuracy and requires the information to be true AND not misleading. Most courts have adopted the Maximum Accuracy standard, but technical accuracy is still used for some analysis. Also, you need to understand what a "creditor" is actually reporting...the creditor is reporting events relative to a credit account (not necessarily information about the debtor). This is a weird dichotomy, and we can thank the lawyers for all the hair splitting over this issue.

Thus, with that background, a court would probably analyze your situation like this.
Is it technically true that the creditor foreclosed on the property (and on a side note, had the legal right to). If yes, then the report of foreclosure is Technically Accurate. The creditor is reporting a true fact about the "account" in question.
Is the creditor's report of foreclosure in anyway misleading. (Here is where you might get some dispute, but). The creditor had a legal right to foreclose, notwithstanding the BK, foreclosure is what is known as an "In Rem" action (an action against property, not a person), notwithstanding the bankruptcy, the creditor has the right to enforce the security agreement against the property and did so on this particular account. Thus, it is not misleading for the creditor to report the foreclosure.

The other background fact is, most states do not allow deficiency balances in a foreclosure to be collected against the defaulting person. Thus, in that respect, foreclosure is significantly different than Auto Repossessions. So unlike in the auto repossession scenario, in most states, there is no lingering personal liability of a mortgage after foreclosure that a bankruptcy would discharge.

However, a simple CRA dispute would probably not resolve the issue, you would need to litigate the mater in court.