Are You Properly Reporting Bankruptcies to Credit Bureaus?

Linda Straub Jones

If you’re like many collection agencies, you report collection items to the bureaus. This not only helps to paint a truer picture of the consumer for creditors and others who obtain copies of the consumer’s credit report, but it may also aid in your collection efforts. But by posting collection items to a credit bureau, you put your company in the position of a “furnisher” as defined by the Fair Credit Reporting Act (FCRA). You must make sure to not only be in the know about what that means for your company, but you should also have a written procedure in place to handle changes in the status of the debt and the status of the consumer; such as bankruptcy.

In May of this year, several of the larger banks were in the news for not correctly reporting debts on credit bureaus that were discharged in bankruptcy. Pursuant to lawsuits, which were filed in White Plains, New York Bankruptcy Court, and investigations by the US Trustee’s Office, the banks were not correctly updating trade-line accounts on consumer’s credit bureaus with information that the debt was discharged in bankruptcy.

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