It’s not often that good news comes from credit-reporting agencies changing their behavior, but it appears that many consumers’ credit scores have risen in the last few years, hopefully reducing the number of New York bankruptcy cases. The National Consumer Assistance Plan is the name for a joint program by the agencies to change their practices in a variety of ways to benefit consumers. It came about after 2015 thanks to an agreement between thirty-one states attorneys general and the agencies. Here are some of the ways they make debtors’ lives easier.
- Beginning July 1, 2017, Equifax, Transunion, and Experian wiped away entries of tax liens and civil judgments from 12 million consumers’ credit reports, accounting for 7 percent of everyone in the U.S. who has a credit score. This alone will make it much easier for them to obtain credit.
- The same day, the agencies will also adopt the practice of updating their public records information every 90 days. This should prevent stale entries from persisting.
- After September 15, 2017, collection agencies and debt buyers cannot report medical debts that are less than 180 days delinquent. The goal is to ensure that consumers aren’t punished because of delays by insurance companies for issuing their payouts.
- Collection firms are also no longer allowed to report debts that consumers did not voluntarily agree to pay, which might not sound like much but is quite significant. It means that traffic tickets and similar involuntary penalties will no longer appear on credit reports because they don’t reflect consumers’ ability to repay their debts.
- The credit-reporting agencies will also improve their dispute-resolution processes to make them more consumer friendly. Consumers who successfully dispute an entry in their credit reports can now receive another one free of charge.
The change lurking in the background of this agreement is that debt collectors must now correctly identify the people whom they believe owe unpaid debts. This now includes capturing debtors’ addresses and either Social Security numbers or dates of birth. Previously, many debtors with the same name as someone else were sometimes penalized for other peoples’ debts. Moreover, tax liens and judgments frequently fail to properly identify the debtor, creating many hassles that couldn’t always be corrected by the processes the credit reporting agencies had in place.
According to a New York Times article, the typical credit-score increase for someone who owes a tax lien or judgment will be 20 points. Apparently, owing these kinds of debts tends to correspond to other debt problems, so removing them doesn’t really improve credit scores much.
More information on the National Consumer Assistance Plan can be found here.
Many debtors encounter financial difficulties because they cannot obtain credit due to reduced credit scores. If you are in serious financial trouble, then talking to an experienced New York bankruptcy lawyer can help you strategize your options.
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 Brooklyn bankruptcy attorney Bruce Weiner for a free initial consultation.
