So, you’ve made it through your bankruptcy. What’s the one thing you should do first after bankruptcy discharge? I mean, aside from the obvious things, like continuing to make the payments on the car or the house you’re keeping.
For starters, enjoy your newfound liberation after bankruptcy discharge for at least a couple of months. It was stressful. Then, re-run your credit report. You might have run a report when you were getting ready to file bankruptcy. Sooo… why would you do it again?
To make sure lenders are sticking to the rules. Discharge of your debts in bankruptcy means your former creditors are not allowed to continue trying to collect money from you. If a creditor continues to report a debt on your credit report as owed or past due, it’s breaking the rules. It’s violating the discharge. It is possible to go back into bankruptcy court and ask the judge to punish the creditor with sanctions.
A surprising number of creditors violate the discharge after bankruptcy. Why? Here are a couple of educated guesses. First, it may be a simple mistake. A large institution, several departments, one doesn’t communicate correctly with the other, and BAM! No one pushes the button that stops the creditor from reporting. Sometimes, though, it’s more sinister. A creditor may have enough history to know they have a high risk of violating the discharge after bankruptcy, yet they haven’t put in safeguards to ensure it doesn’t happen more, and more often.
Why would they be so reckless? It may be as simple as playing the odds. They know they’re unlikely to get caught, and that many people will assume that if the creditor is reporting the debt, it must be okay for them to do so. It is NOT okay (unless you reaffirmed the debt. You’d know whether you have reaffirmed a debt.) Some others take a calculated risk that the sanctions they’ll end up paying pale in comparison to the amount of money they stand to collect by the improper reporting. For these creditors, it’s strictly a bottom line business decision.
There is no government agency or regulatory body to police creditors to ensure they’re doing the right thing reporting debt. It will probably surprise you to know that there is actually a market for the sale of debt discharged in bankruptcy. Yep, someone out there is prepared to pay for the opportunity to try and collect debt that’s been discharged in bankruptcy! Go figure.
The only way to discover it is to regularly run your credit report. I recommend quarterly for the first year after your bankruptcy case ends, then annually after that. There are several resources available to you. If you haven’t already used your one annual free report, you can run your report for free at: http://www.annualcreditreport.com. This is a site the FTC requires the Big Three credit reporting agencies to maintain for consumers. As the name suggests, you can get your report for free, annually. There are, of course, for-fee services charging a variety of rates and offering a lot of different options. All of these that I know of require their customer to give a credit card account to which the fee may be charged. Shop carefully. Don’t buy more service than you need.