If you are a bankruptcy attorney, you are likely sitting on a huge pile of pontential claims from clients you have already serviced! 

Why?

Because credit reporting agencies are messing up post-BK credit reporting rampantly and these lawsuits are worth potentially tens of thousands of dollars EACH. 

Any client you have serviced with a bankrupcty over three months old very likely has valid claims.

Not only can you make additional money from clients you have already serviced in years past, you can also advertise this additional service to new potential clients:

“After we start you with a clean slate through Bankrupcty, we can very likely put tens of thousands of dollars in your pocket months down the road.”  

If you are a bankruptcy attorney, please contact us ASAP so we can teach you how to underwrite and send valid claims.

Three months after a bankruptcy, this is what to look for on credit reports.

If you see any of these common post-BK credit reporting errors, please contact us immediately:

• Failing to report that a debt was discharged in bankruptcy: Once a debt has been discharged in bankruptcy, the Data Furnisher and CRA must report it as accurately discharged. However, discharged debts are often incorrectly reported as “Charged Off” or “Closed by Credit Grantor.”  If a consumer client files bankruptcy, we should follow-up in 3-6 months after discharge to review credit reports for these types of errors/FCRA violations.  We recently settled a similar case for $135,000!

• Reporting old debts as new or re-aged: For the most part, negative reporting items may only remain on a credit report for 7 years.  Far too often, however, Data Furnishers “re-age” debts by reporting accounts as newly-defaulted or with different/new account numbers.  Another common example of this type of violation is reporting the status/negative date as the date of a foreclosure or charge-off, rather than the date of the first delinquency.  For all consumer clients, any negative reporting of a tradeline account should be removed from a credit report 7 years after the client last made payment. 

• Reporting an account as active when it was closed: Once a consumer voluntarily closes an account—or if CDA PA or Swift Law negotiate a settlement—it must be reported as such by the Data Furnisher and CRAs.  However, the CRAs often continue to report closed accounts as active, delinquent, and past-due which harms the consumer’s credit score.  Once a debt is settled—e.g., Thorpe law settles a foreclosure lawsuit with a deficiency waiver—the account must be reported as closed with a $0 balance. 

• Listing a consumer as a debtor on an account when the consumer was only an authorized user: In order for a debt to be on a consumer’s credit report, that consumer must either have been the account holder or a joint account holder (also referred to as a “co-maker”).  If a consumer client is only an authorized user of an account (e.g., on a credit card of a spouse or parent), it is a violation of the FCRA to report the debt on that client’s credit file. When a debt is discharged, it is not uncommon for the account/debt to be opened as a “new” account tradeline on the authorized user’s credit reports. 

• Failing to list an account as disputed: Once a consumer disputes a debt to a Data Furnisher or CRA, the CRA must report the debt as disputed. Failing to do so, after a dispute has been sent to the CRA, is a violation of the FCRA.  Also, if an attorney sends a dispute and verification/validation letter to a creditor or debt collector, they must report the debt as disputed to the CRAs. 

• Impermissible Credit Pulls: When a creditor, landlord, employer, timeshare company, etc. pulls a consumer’s credit without a permissible purpose, it is an FCRA violation. For example, once a debt is settled or discharged in bankruptcy, the Data Furnisher may no longer access the client’s credit report (even for a “soft pull” account review) because there is no longer a legitimate business need for the information as the account is closed.  

• Inaccurate Status after Bankruptcy Chapter Conversion: When a debtor converts from a Chapter 13 to a Chapter 7 bankruptcy, creditors and CRAs almost always screw up the credit reporting.  These cases are also ripe for debt collection violations.

• Mortgage Servicing Change Mid-Bankruptcy: When there is a change in mortgage servicer mid-bankruptcy—particularly in Chapter 13 cases—the new servicer almost always screws up the credit reporting after on-boarding the loan.  CRAs often inaccurately report the bankruptcy information, and creditors receiving payments from the Chapter 13 trustee rarely properly report the payments, balance, and status.  Just like above, these cases are also ripe for debt collection violations.