Two banks to update their credit reporting
A debt discharge is one of the things a person can receive in a bankruptcy, like a Chapter 7 bankruptcy. Having a debt discharged through a bankruptcy can have several general benefits for a debtor. One is that such a discharge generally removes the person’s legal obligation to pay the debt. Another is that debts that are discharged through bankruptcy are supposed to be changed on the debtor’s credit report so that they are no longer listed as being owed.
Some banks have been accused of having deprived some individuals who have received debt discharges through bankruptcy of this second possible benefit we mentioned. Specifically, the banks have been accused of having deliberately failed to update credit reports of some consumers after bankruptcy discharges to reflect the fact that the debts discharged are no longer owed.
It can be very harmful to a person when a debt they had which has been discharged in bankruptcy is not changed on their credit report like it is supposed to be. It can hurt their overall credit situation and can make them feel pressured to pay the debt even though they no longer legally owe it.
Two of the banks accused of this sort of credit report updating failure, JPMorgan Chase and Bank of America, recently agreed to make mass updates to credit reports of individuals who have borrowed from them to ensure that bankruptcy discharges that have occurred are actually reflected in the reports. As a note, while they agreed to do this, they did not admit to having committed any wrongdoing in regards to their credit reporting.
One hopes that all banks and creditors will take care to act properly when it comes to their credit reporting regarding debts that have been discharged in a bankruptcy.
Source: The New York Times, “Bank of America and JPMorgan Chase Agree to Erase Debts From Credit Reports After Bankruptcies,” Jessica Silver-Greenberg, May 7, 2015