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#305506 - 01/19/05 08:50 PM Chapter 7 and Credit Bureau Reporting
RR Sarah Offline
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RR Sarah
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We have a customer who filed Chapter 7 in 2002. They did not reaffirm their debt with our bank and it currently shows as an uncollectable charge-off on our system. Since the bankruptcy we have not tried to collect on this debt but are reporting the charge-off to credit bureaus. The customers are claiming that we can not do this under The Fair Debt Collection Practices Act but I can find nothing in the act that would prohibit us from reporting. Is there any other legislation that would prohibit us from reporting the debt? Thank you for any input.
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#305507 - 01/19/05 08:57 PM Re: Chapter 7 and Credit Bureau Reporting
Andy_Z Offline
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FDCPA applies to debts you collect for others. This is your debt and it is simply being reported, not as a collection technique but as a fact.

The FCRA allows the reporting of bankrupts for 10 years.

§ 605. Requirements relating to information contained in consumer reports [15 U.S.C. §1681c]
(a) Information excluded from consumer reports. Except as authorized under subsection (b) of this section, no consumer reporting agency may make any consumer report containing any of the following items of information:
(1) Cases under title 11 [United States Code] or under the Bankruptcy Act that, from the date of entry of the order for relief or the date of adjudication, as the case may be, antedate the report by more than 10 years.
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#305508 - 01/19/05 09:15 PM Re: Chapter 7 and Credit Bureau Reporting
RR Sarah Offline
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RR Sarah
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Thanks Andy! I knew there had to be something out there and I just couldn't put my fingers on it!!
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#305509 - 01/20/05 02:06 AM Re: Chapter 7 and Credit Bureau Reporting
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But isn't there a separate code for a loan that has been discharged under bankruptcy? I don't think you can continue to show it as a charge-off - can you?
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#305510 - 01/20/05 02:05 PM Re: Chapter 7 and Credit Bureau Reporting
Andy_Z Offline
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I believe you are correct. The balance, as I recall, should show a zero since it is uncollectable and the account is identified as "involved in bankruptcy."

But this should be automatic in the reporting. Ours always was based on codes from our system, sent on tape to teh CB.

I focused on the ability to report in the original post, not the content. Thanks Randy.
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#305511 - 01/20/05 03:01 PM Re: Chapter 7 and Credit Bureau Reporting
Anonymous
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This is from the FTC Commentary on the FCRA. It seems to authorize the reporting of a loan as a charge-off even if the item was discharged in bankruptcy.

Section 605(a)(1)--"Cases under title 11 of the United States Code or under the Bankruptcy Act that, from the date of entry of the order for relief or the date of adjudication, as the case may be, antedate the report by more than 10 years."

1. Relation to Other Subsections

The reporting of suits and judgments is governed by subsection (a)(2), the reporting of accounts placed for collection or charged to profit and loss is governed by subsection (a)(4), and the reporting of other delinquent accounts is governed by subsection (a)(6). Any such item, even if discharged in bankruptcy, may be reported separately for the applicable seven year period, while the existence of the bankruptcy filing may be reported for ten years.

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#305512 - 01/20/05 03:03 PM Re: Chapter 7 and Credit Bureau Reporting
rlcarey Online
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That is just saying the individual loans can reported for seven years while the bankruptcy in general can be reported for 10 years. You still are required to report each individual loan to appropriately reflect what has happened.
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#305513 - 01/20/05 05:31 PM Re: Chapter 7 and Credit Bureau Reporting
NotALawyer Offline
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One twist to that last sentence - It is not that you are required to report, but rather that what you report must appropriately reflect what has happened.

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#305514 - 01/20/05 06:05 PM Re: Chapter 7 and Credit Bureau Reporting
Andy_Z Offline
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From the commentary, 607:

6. Content of Report

A consumer report need not be tailored to the user’s needs. It may contain any information that is complete, accurate, and not obsolete on the consumer who is the subject of the report. A consumer report may include an account that was discharged in bankruptcy (as well as the bankruptcy itself), as long as it reports a zero balance due to reflect the fact that the consumer is no longer liable for the discharged debt. A consumer report may include a list of recipients of reports on the consumer who is the subject of the report.
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#305515 - 01/20/05 06:10 PM Re: Chapter 7 and Credit Bureau Reporting
rlcarey Online
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NotALawyer - Thanks for the clarification and leave it to Andy to dig through the old commentary.
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