Announcement

Collapse

Forum Rules (Everyone Must Read!!!) (updated: 04/28/2015)

Welcome to the Bankruptcy Forum. Bankruptcy (BK) Forum is known as BKForum.com and will be referred to as BKF hereinafter. In order to ensure a long term success of our vibrant community, we have established certain rules and guidelines to which everyone must adhere to. Please take your time to carefully read our rules, before you start to participate in the community.

Things you agree to do:
BKFORUM.com (BKF) users agree to use the search function before starting a new thread. This prevents duplicate discussions and allows for better organized topics.

All BKF users agree to read the sticky posts which may be available at the top of a forum page. These Sticky posts often contain valuable information. They may also outline more rules and guidelines specific for that particular forum, stickies are put in place by that forums moderator(s) or admin(s).

Things you agree not to do:

All BKF users agree not to call people names or write a post simply to make a personal attack, or get a negative reaction; this behavior is not allowed on our forum. The use of derogatory language aimed at anyone will be severely dealt with. There is no need to agree with each other, or to even like each other. However, by signing onto BKForum.com you agree to treat each member and guest with the respect they deserve. No threats or personal attacks will be allowed.

All BKF users agree not to discuss, engage, or encourage any behavior or activity which violates the law. Discussion of drugs, violence, murder, theft, vandalism, fraud or any other issue which could be used to help individuals break the law is strictly forbidden.

All BKF users agree not to "bump" old threads, unless there is a specific benefit to the community by doing so. But in most cases, please don't post in very old threads, instead start new threads.

All BKF users agree not to attempt/use another members account. It is against BKF rules to use any account other than your own. Impersonating another member will result in an immediate ban. It is also against the rules to open more than one account in your own name without permission from a moderator or administrator. If you have been banned for any reason, it is against the rules to open another account. If you were banned temporarily and you are caught using another account you will be banned permanently. Choosing a moniker which is similar in either sound or spelling as a moderator or administrator is strictly forbidden.

All BKF users agree not to private message any moderator, admin, or other member with questions related to their personal circumstances (Questions about the forum or issues with the forum are ok). This forum only works when members share their experience and insights with everyone.

Things you agree not to post:
All BKF users agree not to post any derogatory/racist/or sexist remarks. This includes attachments, links and all information contained within posts, signatures, and avatars, failure to comply with this rule will result in a permanent ban.

All BKF users agree not to post any copyrighted or trademarked information without the express written permission of the owner(s) / proper citation of source.

All BKF users agree not to post any real names, addresses, telephone numbers, email addresses, social security numbers, or any other personal details (their own or other people's).

All BKF users agree not to post links, pictures, attachments, videos, or the like of pornographic content, objectionable material or extreme violence, whether cartoon or real.

All BKF users agree not to use BKF for advertising purposes without a written contract between yourself/company/agent and the administration of BKF. Blatant advertising will result in a ban.

All BKF users agree not to spam the forums. Spam includes but is not limited to posting erroneous, non-relevant-useless, off-topic, or meaningless posts. Spam may also include posts which contain no text, or large areas of blank space between lines. Simply posting emoticons without text is considered spam. BKF is the largest bankruptcy message board and all the content is intended to help other users. Please help us improve the quality of our forum by making sure that your posts are well-worded, spell checked, grammatically correct and syntaxed.

Regarding actions of moderators and administrators:

The forum is no place to air out your opinion or be judgmental of our staff and its capabilities.

All BKF users agree not to abuse or mistreat moderators or administrators. It is against BKF rules to post any information regarding bans or any other action taken by a member of the moderating or administrative team. If you wish to discuss bans or warnings please do so via PM. To place a complaint against a moderator, send a PM to a super moderator. All Moderators are equal, any decision made by a moderator must be adhered to. If a moderator tells you something you do not like, do not go to another moderator looking for a different answer. If you are caught doing this you will be banned. The moderators work as a team and respect the decisions made by their peers and will help enforce them unless an administrator tells them differently.
If you have an issue with how the forum is run, then notify one of our administrator and we will look into the situation. We have in the past and still do appreciate any input that you offer this forum. But critical input and/or judgmental postings towards the staff will result in you getting banned.


Should you find a thread offensive or out of line, then notify a Mod in a PM so they can evaluate the situation and do the action deemed necessary.

All moderators do have active "other" lives outside of the forum and help moderate this forum in their spare time throughout the days and weeks.

If you have a problem with a member or Mod follow the proper channels of reporting it.

BKF reserves the right to delete any posts which contain anti-BKF comments or discussion. Any bashing of moderators or administrators, or any of their discussion or actions will also be deleted, and the responsible posting party(s) will be banned. Any public anti-BKF advertising, communication, or posts on another forum will result in permanent bans as well.

All warnings and bans are decided by individual moderators and administrators. Warnings are preferable to bans however, for serious offenses and repeat abusers bans will go into effect. The length of the bans can vary from several hours to permanent.

All messages posted or sent including through PM are the property of BKforum.com.

All BKF users agree not to advertiser on the forum (Niether by posting, private messaging or using your signature). If you are a company/attorney/legal adviser wishing to advertise on the site or sell a product, you must contact the head administrator and inquire about our advertising packages.

All bankruptcy related opinions expressed on BKForum.com are those of their authors and not necessarily of BKF, its staff or representatives.

You agree not to copy any material/post/content from BKF without written permission from our head administrator .

By posting on this forum you agree to these terms and conditions, including any punishment deemed appropriate by moderators or administrators in the event of an offense.

Administrators/Moderators can change these rules at any time without prior notice.
See more
See less

Debts Canceled by Bankruptcy Still Mar Consumer Credit Scores

Collapse
X
  • Filter
  • Time
  • Show
Clear All
new posts

  • Debts Canceled by Bankruptcy Still Mar Consumer Credit Scores

    November 12, 2014

    By JESSICA SILVER-GREENBERG

    In the netherworld of consumer debt, there are zombies: bills that cannot be killed even by declaring personal bankruptcy.

    Tens of thousands of Americans who went through bankruptcy are still haunted by debts long after — sometimes as long as a decade after — federal judges have extinguished the bills in court.

    The problem, state and federal officials suspect, is that some of the nation’s biggest banks ignore bankruptcy court discharges, which render the debts void. Paying no heed to the courts, the banks keep the debts alive on credit reports, essentially forcing borrowers to make payments on bills that they do not legally owe.

    The practice — a subtle but powerful tactic that effectively holds the credit report hostage until borrowers pay — potentially breathes new life into the pools of bad debt that are bought by financial firms.

    Now lawyers with the United States Trustee Program, an arm of the Justice Department, are investigating JPMorgan Chase, Bank of America, Citigroup and Synchrony Financial, formerly known as GE Capital Retail Finance, suspecting the banks of violating federal bankruptcy law by ignoring the discharge injunction, say people briefed on the investigations.

    The banks say that they comply with all federal laws in their collection and sale of debt.

    Still, federal judges have started to raise alarms that some banks are threatening the foundations of bankruptcy.

    Judge Robert D. Drain of the federal bankruptcy court in White Plains said in one opinion that debt buyers know that a bank “will refuse to correct the credit report to reflect the obligor’s bankruptcy discharge, which means that the debtor will feel significant added pressure to obtain a ‘clean’ report by paying the debt,” according to court documents.

    For the debt buyers and the banks, the people briefed on the investigations said, it is a mutually beneficial arrangement: The banks typically send along any payments that they receive from borrowers to the debt buyers, which in turn, are more willing to buy portfolios of soured debts — including many that will wind up voided in bankruptcy — from the banks.

    In bankruptcy, people undergo intense financial scrutiny — every bank account, bill and possession is assessed by the bankruptcy courts — to win the discharge injunction, which extinguishes certain debts and grants a fresh start. The heavy toll of personal bankruptcy, which can tarnish a credit report for a decade and put some loans out of reach, is worthless, bankruptcy judges say, if lenders ignore the discharge.

    At the center of the investigation, the people briefed on it said, is the way banks report debts to the credit reporting agencies. Once a borrower voids a debt in bankruptcy, creditors are required to update credit reports to reflect that the debt is no longer owed, removing any notation of “past due” or “charged off.”

    But the banks routinely fail to do that, according to the people briefed on the investigation, as well as interviews with more than three dozen borrowers who have discharged debts in bankruptcy and a review of bankruptcy records in seven states.

    The errors are not clerical mistakes, but debt-collection tactics, current and former bankruptcy judges suspect. The banks refuse to fix the mistakes, the borrowers say, unless they pay for the purged debts. And many borrowers end up paying, given that they have so much at stake — the tarnished credit reports showing they still owe a debt can cost them a new loan, housing or a job. The Vogts, a couple in Denver, for example, paid JPMorgan $2,582 on a debt that was discharged in bankruptcy because they needed a clean credit report to get a mortgage.

    There are many more who make payments on debts that they no longer legally owe, but never alert anyone because they do not realize the practice is illegal or cannot afford to litigate.

    Humberto Soto, a 51-year-old unemployed hospital worker who went through bankruptcy in 2012, said he was almost one of those people who paid. In January, he was rejected for a Brooklyn apartment after the housing agency pulled his credit, which was tarnished by $6,411 on a Chase credit card, according to a letter from the agency, a copy of which was reviewed by The New York Times.

    When he called JPMorgan, Mr. Soto said, he was told that the black mark would remain unless he paid. “It was either pay or lose the apartment,” he said. But after his bankruptcy lawyer explained the situation to the rental agency, Mr. Soto ultimately did not pay. (He got the apartment.)

    JPMorgan and the three other banks declined to comment for this article, citing pending litigation in federal bankruptcy court in White Plains.

    But the banks have offered defenses in court documents filed in conjunction with those lawsuits brought by Charles Juntikka, a bankruptcy lawyer in Manhattan, and George F. Carpinello, a partner with Boies, Schiller & Flexner. Those lawsuits — seeking class-action status on behalf of the borrowers — accuse the banks of bolstering the value of their debt by refusing to erase debts that were discharged in bankruptcy.

    The banks have moved to throw out the lawsuits, arguing that they comply with the law and accurately report discharged debts to the credit agencies. Their lawyers have argued that the banks typically sell off debts to third-party debt buyers, and have no interest in recouping payments on the stale debts.

    Some bankruptcy judges, however, have questioned whether the banks’ sale of the debts is precisely what the problem is.

    Judge Drain, who is presiding over the cases, posited that the banks’ ability to sell the soured debts depends on ignoring the bankruptcy discharge in order to collect money from people who don’t have to legally pay it.

    In July, the judge refused to throw out the lawsuit against JPMorgan, saying that the “complaint sets forth a cause of action that Chase is using the inaccuracy of its credit reporting on a systematic basis to further its business of selling debts and its buyer’s collection of such debt.”

    During a hearing last year on a related case, transcripts show, Judge Drain said, “I might refer this, if the facts come out as counsel’s alleging, to the U.S. attorney,” for criminal prosecution.

    Newly unsealed court documents reviewed by The Times illustrate how the banks handle payments from borrowers on stale debts, including those voided in bankruptcy. In contracts with debt buyers that were filed with the court, the banks outline the steps they will take when payments are made on charged-off debts.

    In one contract between FIA Card Services, a subsidiary of Bank of America, and a debt buyer, the seller can keep any payments it receives 18 months or later after the sale. Before then, the contract shows, the lender will send any payments to the debt buyer.

    Another contract between JPMorgan and a debt buyer allows the bank to keep a percentage — the exact amount is redacted in the court’s copy of the contract — of any payments sent in on the debts.

    Those contracts shed light on the shadowy market of soured debts, including tens of billions of dollars that were voided in bankruptcy. Some banks sell off long overdue bills, which eventually wind up being extinguished in bankruptcy after the sale, for steeply discounted prices to debt buyers.

    None of the banks specifically outline how much of their overdue loans are sold to debt buyers, but a review of publicly traded debts buyers like the PRA Group in Norfolk, Va., shows that the sums of bad debt bought and sold are vast. Since 1996 the company has bought more than 36 million accounts with a face value of $81.3 billion. Roughly 16 percent of those accounts — with a face value of $23.4 billion — are bankruptcy debts.

    If the United States Trustee’s office determines the banks have violated bankruptcy law, say the people briefed on the investigations, they could audit the lenders and extract steep penalties.

    The costs are more immediate for people like Bernadette Gatling, a 46-year-old hospital administrator whose credit report is still marred by Chase credit-card debts that were voided in bankruptcy three years ago. Since being laid off in March, Ms. Gatling said she has lost one job opportunity after another because potential employers pull her credit report.

    “It’s just so unfair,” she said.

    http://dealbook.nytimes.com/2014/11/...credit-scores/

  • #2
    The solution is pretty simple. Legislation must be effected to forbid credit reporting agencies from posting discharged debt.

    Comment


    • #3
      Originally posted by kornellred View Post
      The solution is pretty simple. Legislation must be effected to forbid credit reporting agencies from posting discharged debt.
      Here, here.
      11/23/'10-filed ch 13. 1/6/'11-341, confirmed. Below median. Plan completed 11/30/2015. DISSCHARGED 4/4/2016.JP

      Comment


      • #4
        True, but the real problem is that there are too many overlapping laws. FCRA and FDCPA layered with State laws such as Florida's Unfair and Deceptive Practices Act (FUDPA). You then add the discharge injunction in the Bankruptcy Act and now you have so many overlapping issues. (You can readily see this by just searching for FCRA/FDCPA claims in bankruptcy over discharge injunction issues!)

        Just change the FCRA to include items excluded from collection under Title 11 (Bankruptcy Act). The FCRA technically already prohibits this because it prohibits the reporting of inaccurate information. This prohibition is clearly the issue that the Office of the United States Trustee (OUST) seeks to address.

        The problem is that the creditors just don't care!

        These creditors don't mind paying the mere $1,000 fine under the FCRA "if" the debtor files an actual "cause of action" in the right venue. Some Federal Bankruptcy courts don't like to hear FCRA claims even though the Federal "District" court, under which the Bankruptcy court sits, would hear the case! The creditors are using probability of no suit to empower them to still "sell" not only stale debt, but also legally discharged (and noncollectable) debt and make "some" money (if not all the money through coercive tactics).
        Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
        Status: (Auto) Discharged and Closed! 5/10
        Visit My BKForum Blog: justbroke's Blog


        I am not an attorney. Any advice provided is not legal advice.

        Comment


        • #5
          Justbroke, I think the issue is the $1,000 fine. Even with attorney fees, it's not much of a disincentive.

          Perhaps the answer is raising the fine or making willful noncompliance of the FCRA a criminal offense.
          Chapter 7, above median, no asset. Discharged with no UST involvement.

          Comment


          • #6
            Originally posted by TXskyblue View Post
            Justbroke, I think the issue is the $1,000 fine. Even with attorney fees, it's not much of a disincentive.
            Exactly my point. The $1,000 fine... if the debtor ever even files a complaint... is nothing. The Bankruptcy Court, however, has much more inherent contempt powers under 11 USC 105. This is why the creditors fight hard when someone re-opens a bankruptcy case to file an FCRA cause of action in a complaint.
            Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
            Status: (Auto) Discharged and Closed! 5/10
            Visit My BKForum Blog: justbroke's Blog


            I am not an attorney. Any advice provided is not legal advice.

            Comment


            • #7
              Originally posted by TXskyblue View Post
              Perhaps the answer is raising the fine or making willful noncompliance of the FCRA a criminal offense.
              I think the prevailing attitude with this Congress is that if they are too big to fail, they are too big to jail.

              The court decision reference in this article is here: http://www.nysb.uscourts.gov/sites/d...63_opinion.pdf I wouldn't mind having this judge as my BK judge.

              The NY Times also did a rather lengthy piece on this tale of a debt buyer and debt collector, a book excerpt this past summer. Too long to cut and paste IMO, so link only.

              http://www.nytimes.com/interactive/2...collector.html

              I like how further light is shed in this article and the court case on debt-buying practices and the relationship between creditors and debt buyers. Confirms the insidiousness of it all for me.

              Comment


              • #8
                I don't understand why people pay discharged debts. I get that it's not reported accurately, but the date of the debt is also reported. Also, my debts are noted as being included in my bankruptcy on my credit report. If enough time has passed, and you have demonstrated responsible repayment behavior more recently, like paying your car payment on time or any other credit cards you've opened after BK, does it really have that much weight with lenders or landlords? I haven't been discharged yet, I have 2 more payments to go on a 5-year CH 13, but my credit score has gone up quite a bit over the last 5 years. My guess as to why is because of my car payment, which has been paid outside the plan all these years. This is a much more recent debt that I have been paying on time for 5 years and it's close to being paid off in full. I can't imagine a debt that was included in a BK and has had no activity for 6+ years would have more weight than that.
                Filed Ch 13 - 2/2010
                341 meeting - 4/2010
                Confirmed! - 6/2010

                Comment

                Unconfigured Ad Widget

                Collapse
                Working...
                X