Help! My Credit Report!

Why Are My Debts Still Showing up on My Credit Report as Currently Owing?

This is a common question that I am asked almost weekly by my bankruptcy clients. My answer to that question is that the Fair Credit Reporting Act has little or nothing to do with the Bankruptcy Code. Once the debt is discharged, the Creditor should honestly report the debt as having been included in a bankruptcy and the debt should be listed as “zero,” nada, zilch! So why do creditors and debt buyers continue to list the debt as owing? It is common for collection agencies or third party debt buyers to buy even discharged debt from creditors hoping that some unsuspecting consumer will simply pay off or settle the debt rather than taking months if not years to repair their credit.

So what can a debtor do when a creditor reports false information to the Credit Bureaus. Answer: pay an attorney a hefty retainer to file a complaint against any creditor who reported the false information. There is nothing in the bankruptcy code that stops this type of frustrating behavior. Original creditors have been pretty good about correctly reporting when a debt was discharged in bankruptcy. However, collection companies and debt buyers are notorious for falsly reporting that money is still owing on a debt included in bankruptcy.

On July 15, 2015, Senate Bill S.1773 ‑ Consumer Reporting Fairness Act of 2015 was introduced into the Senate.  The bill proposes to amend Section 525 of the Bankruptcy Code as follows:

Section 525 of title 11, United States Code, is amended by adding at the end the following:

“(d) If a creditor has provided or furnished to a consumer reporting agency, as defined in section 603 of the Fair Credit Reporting Act (15 U.S.C. 1681a), any item of information pertaining to an account based on a debt discharged in a case under this title, the creditor shall inform the consumer reporting agency that the debt has been discharged in bankruptcy and has a zero balance.

“(e) An individual injured by any willful violation of this section—

“(1) shall recover actual damages, including costs and attorneys’ fees; and     

“(2) in appropriate circumstances, may recover punitive damages.

“(f) Nothing in this section shall be construed to prohibit the reporting of payments on a mortgage loan, whether or not the debtor has reaffirmed that loan.”.

There is good news and bad news with this bill.  Let’s start with the good news:

  • The amendment is being made to the Bankruptcy Code. This gives bankruptcy attorneys power to seek damages against these “false reporters” before the Bankruptcy Court.
  • The bill requires the creditor to 1) list the account balance as “zero” and inform the credit reporting agency that the debt was discharged.
  • The bill infers that the consumer “shall” be awarded actual damages, including costs and attorney’s fees.
  • The bill allows for punitive damages in “appropriate circumstances.”
  • This bill allows mortgage companies and mortgage servicers to correctly report when the debtor continues to make payments on their mortgage.

Here’s the bad news

  • The three judges here in Utah have rarely, if ever, awarded any damages to a debtor who has been injured by a creditor who violated the automatic stay. Our judges are reluctant to give debtors a windfall when they have just wiped out thousands of dollars of debt.  It is doubtful that the Bankruptcy judges will even award fees that sufficient to punish creditors  for their false reporting.
  • The bill requires a “willful violation” of this section. Congress, do you know what this means to me as an attorney?  It means that there will be protracted litigation (i.e., a huge loophole for the creditor) over the meaning of whether the creditor acted willfully.  Willfullness is often interpreted as being intentional.  But, intent to do what?  Intent to make the false report, or intent to cause the injury to the consumer?  The elements of proof required to prove intent to report falsely is almost impossible, but if we (attorneys) have to prove that the creditor intended the harm that resulted from the false reporting – well, you just may as well not sign this legislation because it won’t do the consumer any good at all.
  • The term “creditor” is defined in 15 U.S. Code § 1691a to mean “any person who regularly extends, renews, or continues credit; any person who regularly arranges for the extension, renewal, or continuation of credit; or any assignee of an original creditor who participates in the decision to extend, renew, or continue credit.” This definition does not protect consumers from debt buyers.  By definition, this bill would only apply to original creditors or their assignees.
  • Even if this bill requires only creditors to ensure that a debt discharged in bankruptcy shows a zero balance on the consumer’s credit report in an accurate and timely manner, by the time a consumer files bankruptcy, most of their debt has been either assigned or sold and the original creditor no longer has control over that account.


To do any good, this bill needs to be applicable to any entity that reports the information.  This should include individuals, original creditors, collection companies, attorneys, and third-party debt buyers who falsely report to the credit bureaus.  Additionally, the word, “willful” needs to be removed from the bill.

Please write to your senator and let them know that this bill needs to be tightened up in order to offer any protection to the injured consumers.

If your credit report is incorrect, please call me at 801-281-3075 and let me help you.

Last Edited on July 31, 2015