Bankruptcy clients frequently ask what their credit reports should say following the filing of bankruptcy. I generally recommend that clients check their credit reports a few months after their bankruptcy discharge. In 2008 a national injunction on how credit bureaus are to report debts included in bankruptcy was put into place because of litigation originating in California. That injunction (known as the “White Order”) requires credit bureaus, within sixty days of receiving notification of a bankruptcy discharge, to update credit reports to say that debts the bureaus presume to have been discharged in bankruptcy were included in bankruptcy and have a zero balance. If a creditor or debt collector reports a debt owed after that initial “scrub”, the bureaus must conduct another review or “scrub” to determine whether the newly reported debt was part of the bankruptcy discharge. Experian claims it does the initial “scrub” within eight days of receiving notice of the bankruptcy discharge order. It also claims it continues to run “scrubs” every other month for an eighteen month period following notice of the discharge.
If someone who has filed bankruptcy sees a debt being listed on their credit report without a zero balance they can file a dispute with the credit bureaus. The dispute should be made in writing through the mail and should include a copy of the discharge order (a copy of the bankruptcy schedules might also be helpful). The Federal Trade Commission and Consumer Protection Financial Bureau websites provide helpful information about how to dispute credit reports. Credit bureaus are obligated to use reasonable procedures to determine whether debts have been discharged in bankruptcy and when these “scrubs” of information contained in the reports are done.
Unfortunately, even if someone who has filed bankruptcy can show a debt was improperly listed on their credit reports, they may not be able to recover damages from the credit bureaus. Debtors still have the burden to show they suffered damages as a result of the credit reporting violation.