Discharged Debts on Your Credit Report
After a bankruptcy discharge, your credit report should reflect that discharged debts are no longer owed. When creditors report them incorrectly, you have rights under both Section 524 and the Fair Credit Reporting Act.
How Discharged Debts Should Be Reported
After your discharge, each debt included in the bankruptcy should appear on your credit report with the following characteristics:
| Field | Correct Reporting | Incorrect Reporting |
|---|---|---|
| Balance | $0 | Any amount greater than $0 |
| Status | "Included in bankruptcy" or "Discharged" | "In collections," "Charged off," "Past due" |
| Payment status | No payment due | "30 days late," "60 days late," etc. |
| Collection activity | None | Transferred to collections, new collection tradeline |
The bankruptcy itself will appear on your credit report for 7 years (Chapter 13) or 10 years (Chapter 7) from the filing date. But individual discharged debts should show zero balances and no ongoing delinquency.
Key point: A creditor cannot report a discharged debt as "charged off" with an outstanding balance. "Charged off" is an accounting term that means the creditor wrote the debt off its books, but it implies the debtor still owes the money. After discharge, the debtor owes nothing. The correct notation is "included in bankruptcy" or "discharged in bankruptcy" with a $0 balance.
Common Credit Reporting Problems
These are the most frequent credit reporting errors debtors encounter after discharge:
- Balance not zeroed out. The most common problem. The creditor's automated system never updates the balance to $0 after the discharge. The debt continues to appear as owing the original or last-known balance.
- New collection tradeline. The original creditor sells the debt to a debt buyer after the bankruptcy. The buyer opens a new tradeline on your credit report, making it appear you have a new collection account -- even though the debt was discharged.
- Continued delinquency reporting. The account keeps accruing "late" marks month after month, even though no payment is or could be due. This progressively damages your credit score.
- Not marked as "included in bankruptcy." The debt shows on the report with no indication that it was discharged, making it appear like a separate, active delinquent account.
- Duplicate entries. The debt appears both as the original account (correctly marked) and as a new collection account (not marked), creating a false impression of additional debt.
How to Dispute Incorrect Reporting
The Fair Credit Reporting Act (FCRA), codified at 15 U.S.C. Sections 1681-1681x, gives you the right to dispute inaccurate information on your credit report. Here is the process:
Step 1: Pull Your Credit Reports
Get your reports from all three bureaus at AnnualCreditReport.com. You are entitled to free weekly reports. Review each one for discharged debts that are incorrectly reported.
Step 2: File Disputes with Each Bureau
For each incorrect entry, file a dispute with the credit bureau that is showing the error. You can dispute online, by phone, or by mail. Mail is recommended because it creates a paper trail.
- Equifax: P.O. Box 740256, Atlanta, GA 30374 | equifax.com/dispute
- Experian: P.O. Box 4500, Allen, TX 75013 | experian.com/disputes
- TransUnion: P.O. Box 2000, Chester, PA 19016 | transunion.com/dispute
Include a copy of your discharge order with each dispute. State clearly: "This debt was discharged in my bankruptcy case [case number] on [date]. The balance should be $0 and the status should reflect 'Included in Bankruptcy.'"
Step 3: Dispute Directly with the Creditor
Under the FCRA, the entity furnishing the information (the creditor) also has obligations. Send a letter to the creditor demanding they correct their reporting. Include your discharge order.
Step 4: Wait for the Investigation
The credit bureau has 30 days (sometimes 45) to investigate your dispute. They must contact the creditor, and the creditor must verify or correct the information. If the creditor does not respond, the item must be removed.
Step 5: Review the Results
The bureau will send you the results of the investigation. If the item was corrected, verify the correction on your report. If it was not corrected and you believe the dispute is valid, you have several options:
- File a complaint with the Consumer Financial Protection Bureau (CFPB)
- File a complaint with the Federal Trade Commission (FTC)
- Consult a consumer attorney about an FCRA lawsuit
- File a contempt motion in your bankruptcy court for violation of the Section 524 discharge injunction
FCRA Damages
If a creditor or credit bureau willfully or negligently fails to correct inaccurate reporting of a discharged debt, you may be entitled to damages under the FCRA:
- Actual damages -- Financial harm caused by the inaccurate reporting (denied credit, higher interest rates, lost housing or employment)
- Statutory damages -- $100 to $1,000 per willful violation, even without proving actual harm
- Punitive damages -- Available for willful violations
- Attorney fees and costs -- The court can require the violator to pay your legal fees
These FCRA remedies are in addition to any damages available through a contempt motion in bankruptcy court for violating the Section 524 discharge injunction.
Two paths, not exclusive. You can pursue both an FCRA claim (in federal district court or state court) and a contempt motion (in bankruptcy court) simultaneously. The FCRA addresses the credit reporting violation; the contempt motion addresses the discharge injunction violation. An attorney experienced in consumer law can advise which approach is best for your situation.
Not legal advice. This page provides general information about credit reporting after bankruptcy. It is not a substitute for legal advice from a licensed attorney. Consult a consumer attorney for advice on your specific situation.