Credit Reporting Abuse: Listing Your Mortgage in Bankruptcy!

03 Aug Credit Reporting Abuse: Listing Your Mortgage in Bankruptcy!

On the BankruptcyLawNetwork blog, I recently wrote a post involving mortgage companies trying to force a debtor in bankruptcy to reaffirm a mortgage. They do this by refusing to up-date the information sent to the credit reporting agencies concerning the loan. Thus, a loan that is up to date, because the debtor is making his or her payments, is still listed as “in bankruptcy” years after the conclusion of the bankruptcy case.

Can the mortgage company do this? The Fair Credit Reporting Act (Federal Legislation to protect consumers from abuses of the credit reporting agencies) generally governs the actions of the reporting agencies. It is not designed to control creditor abuse of the reporting process.

Nonetheless, there are provisions requiring the reporting agencies to verify information as accurate, particularly after inquiry from the consumer, and other provisions requiring truthful reporting and a requirement to provide accurate information.

But, since the loan was once in bankruptcy, simply indicating that on the credit report and refusing to change it may not fall within the provisions of the act. At least that’s the argument that the mortgage companies are using. I don’t agree – I think it is false reporting and the mortgage companies and reporting agencies need to be taken to task. If this is happening to you, consult a competent consumer attorney in your vicinity that is familiar with the Fair Credit Reporting Act.

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Douglas Jacobs is a California bankruptcy attorney and partner in the Chico law firm of Jacobs, Anderson, Potter & Chaplin. Since 1988, Mr. Jacobs has taught Constitutional law and Debtor-Creditor/Bankruptcy law at the Cal Northern School of Law. He has served as Dean of Students since 1994. He is a frequent lecturer on the subject of consumer bankruptcy law, and has spoken at both state and national levels.
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