Late last year I wrote about the federal government’s investigations into zombie debts that were persisting on people’s credit reports after they filed New York bankruptcy. Uncorrected errors on credit reports like these can cause serious consequences for those trying to obtain new credit, especially those who’ve exited bankruptcy. The good news on this front is that New York State has moved ahead, and on March 9, Attorney General Eric T. Schneiderman’s office announced a settlement with the three credit reporting bureaus.
The settlement came after the attorney general initiated an investigation into the bureaus’ practices. One of the triggers for the investigation was a 2012 Federal Trade Commission study that found that as many as 26 percent of participants had a material error in their credit reports, and 13 percent saw score improvements after corrections were entered.
Here are a few changes the settlement will require of the credit bureaus:
- Over the course of three years, the credit reporting bureaus have promised to employ trained personnel to evaluate claims of mixed files, fraud, and identity theft in credit reports. Previously, the bureaus used automated systems that often rejected claims solely on the word of the creditors.
- Medical debts will not appear on credit reports for up to 180 days after they are first incurred. Many medical debts exist because of delays and disputes with insurance companies, so the agreement will give debtors time to resolve them rather than allowing errors to occur.
- The credit reporting bureaus will now be required to offer a second free report to consumers who initiate disputes with the credit bureaus.
- Debts owed to lenders whom the attorney general deems as violating New York law will not be included in consumers’ credit scores. This change will benefit many debtors who are victimized by payday lenders.
- The credit reporting bureaus’ Web sites will now contain prominent links to AnnualCreditReport.com, where consumers can obtain their free credit reports. This will help consumers stay away from sites that claim to be free but begin charging membership fees after a month, like FreeCreditReport.com did a few years back.
The credit reporting bureaus have promised to change other practices, which can be found at the state attorney general’s official Web site.
If you finished bankruptcy and you believe a discharged debt is improperly reported on your credit report, an experienced New York bankruptcy lawyer can help you start a contempt proceeding against the creditor. A ruling in your favor may result in monetary damages, attorney’s fees, and other sanctions.
For answers to more questions about bankruptcy, the automatic stay, effective strategies for dealing with foreclosure, and protecting your assets in bankruptcy please feel free to contact experienced New York bankruptcy attorney Bruce Weiner for a free initial consultation.
