01 Jun Bankruptcy and Credit Reports: The real story Part I
Bankruptcy and credit reports: many people try to avoid bankruptcy thinking their credit scores will drop and they will be harmed because of filing. I saw a statement from an insider at Equifax, one of the three main credit reporting agencies, about filing and credit scores.
This insider stated that consumers may not realize the impact of having a Bankruptcy on your credit report.
This insider is Neil Munroe, and he is the external affairs director at Equifax. As a board certified consumer bankruptcy attorney who has sued more than my fair share of creditors, I am a bit cynical whenever a creditor or Credit reportingagency issues such a self-serving statement.
Usually, a statement issued has some ramifications which will benefit the company.
I see these statements as designed to throw consumers another red-herring. The logic behind the statement is to scare consumers who are considering bankruptcy into thinking that they will never receive credit again or that they will only receive credit at very unfavorable interest rates.
In my experience, nothing could be further from the truth.
You and I both know that creditors only make money when they are lending money and receiving interest on that money.
It is a very competitive industry and these creditors cannot afford to throw all consumers who file bankruptcy to the curb. The idea is ridiculous.
What is really going on is much more interesting. Debtors and their attorneys are starting to use the Fair Credit Reporting Act to their advantage and making the Credit Reporting Agencies follow the law.
The laws are often ignored, especially when it hurts their bottom line. Lawsuits to enforce the law will not stop until these reporting agencies and creditors fix their problems.
Whether intentional, negligent, or even innocent mistakes, there is no excuse for not reporting accurately as required by the law. Until they are forced to clean up their act, these problems and disregard are part of the reasons that approximately 40% of individual credit reports have mistakes.
See also: How Do I Read A Credit Report?
Get your yearly free credit report by going towww.annualcreditreport.comfor more information.
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