credit reporting after bankruptcy on car

[down @ out]

About 7 months before I filed my bankruptcy petition,(old law) I bought a new car with great financing. 2.9%. Really needed the vehicle and knew that if I had to file bankrutpcy my ability to buy a new car at any kind of reasonable interest rate would be impossible.

Anyway the bankruptcy went through fine and I am keeping the vehicle and just making the payments. In my district that was allowed. As long as i keep the payments current I can keep the vehicle and if not turn it back at anytime with no concerns.

Well in looking at my credit reports, 2 of the cra`s are reporting the account as closed and one is reporting as open. On none of the cra`s is the balance decreasing. I would like to not re-affirm the car note if that is what it takes to have this reported correctly.

Does anyone out there have experience with this sorta situation. How should the creditor be reporting this? Would be nice to have this shown as open with the account current and the balance decreasing.

A part of me believes that maybe the creditor should not report anything and simply delete the whole thing.

Thoughts?


Thanks,

[SinkingFast]

Technically, since you did not reaffirm the loan, the debt was discharged in your BK. That's why it's not being reported as normal.

If you look at your monthly statements, there probably some sort of verbage on them that says, "For informational purposes only." or something to that effect. Legally, the lender cannot contact you about the loan. If you call, you probably don't deal with regular Customer Service. You probably get directed to the BK Dept. Lenders have specially trained people who know what they can and cannot say and do with BK customers.

About the only thing you can do is request and keep payment statements or get a payment history print out. Save that for when you go to apply for loans in the future.

With the CRA's, you need to get that one updated to show ZERO balance as well. That could be hurting you when you apply for new credit to have a sizeable outstanding balance showing there. Try disputing it as "Not Coded Correctly". That seems to be working well lately.

[down @ out]

Thanks for the response.

Never thought to dispute since it is listed as a positive on my credit report. You do have a good point. It is showing up as a debt on my credit report and a pretty big one. About 21k. If I have the positive trade line deleted I also get rid of the big debt. Wonder what kind of impact that would have on my report?

[down @ out]

Spoke to the folks at experian today and i believe they are just as confused as i am. On one hand if I get the loan off the report it simply goes to a zero balance and then becomes a negative. I will move over and be a debt discharged in bankruptcy. That will hurt.

If I simply leave it alone it will stay on the positive side of the ledger without activity.

Not sure what to do.

Any help would be appreciated

Thanks,

[AfterBkMortgage]

Tradelines After Bankruptcy

Down@Out,

Hoping I understand your question correctly -

You will only be able to show that item "Included in Bankruptcy" if your car was listed in Schedule D of your bankruptcy paperwork under Secured Debt.
A good rule of thumb to use when "fixing" items to show they were part of a bankruptcy and getting the balance to zero - do it as soon after your bankruptcy as possible! For example, say you waited two years after your bankruptcy to resolve this issue. For two years, you were reporting a tradeline under a bureau as an open account. Then, you change it to "included in bankruptcy", your score can potentially drop, because your new score will reflect a bankruptcy account vs. an open, non-bankruptcy account. The fact it was included in the BK might outweigh the absence of a balance on that account, giving a drop in score.

If your car was legally re-affirmed, I would suggest to dispute that item online or in writing to the appropriate bureaus to have all three bureaus reporting. Hopefully, you have little or no late payments when the CRA contacts the creditor and reviews your payment history.

Basically, you want to have any item included in your bankruptcy to have a zero balance on your credit report as quickly as possible after your discharge.

But...you also want to have active tradlines with as much credit history as possible. So, even though a balance is carried on that tradeline, you will have credit history for x months that will boost your score.

I speak with a lot of people after bankruptcy who go to apply for a home loan and they explain to me that "I don't want to have any more debt...I learned the hard way." Although I completely understand where they are coming from, the only way to raise your credit score is by having and using credit (as well as fixing errors).

You can contact me or visit my website for the Credit Builder Program. It gives you template letters for the major CRAs as well as some good information on credit building.

Hope this helps! Let me know if you need any clarification!

[down @ out]

Thank you for the response.

What happend was that in my district, (nevada) you were allowed under the old laws to keep the vehicle by just making payments after the bankruptcy. The obvious advantage to me is that if something happens and I can`t make the payments I can simply give the vehicle back and the credior has no recourse to collect any deficiency from me.

This does seem to create a mess as far as credit reporting goes. The car is included in the bankruptcy, it is not re-affirmed, but I am keeping the car by making payments. The question is then what is the best way to deal with this?

Right now two of the cbr`s are reporting it as current and closed, with one reporting it is closed but current. They show no activity since last October. So if I challenge the reporting I guess the good tradeling would move to the negative side of the sheet, but I would get the balance due off of the file.

Not really sure why the creditor doesn`t simply report it as a good debt. Guess if I pursued it with them they would say fine, just re-affirm the debt which I do not want to do.

Have to say it is a great car and at 2.7% interest there is no way I could get that today. Gosh knows what I would have to pay.

thanks,