J Thomas Black
Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization

For quite a while, when someone filed bankruptcy, credit bureaus took no action to update or correct the person's credit file. Unless the bankruptcy person (the Debtor) asked for a reinvestigation or their file, by disputing the incorrect entries, oftentimes the individual "tradelines" or records of different accounts such as Citibank, Bank of America, Chase, etc. would still show that there was money owed, and if the Debtor was delinquent when he or she filed bankruptcy, it would show that they were delinquent.

The problem with that was, that unless the Debtor requested a reinvestigation, when they applied for credit years later, it still looked like they owed money to all these places. In fact, it looked like they had incurred new debt after the bankruptcy, and then not paid it, which I understand is even worse on your credit.

My firm has been doing a complimentary "credit clean-up" for clients for several years now, and it has worked rather well. We help our clients order a reinvestigation of credit from all the major credit bureaus, when each client receives a bankruptcy discharge. It requests that all the discharged debts show as a zero balance and that they were discharged in bankruptcy. I'm told it increases clients' credit scores by anywhere from 25-150 points.

Anyway, for most people that go through bankruptcy, whose lawyer does not do a "credit clean-up" for them, having the old trade-lines still show up can be a major problem. It can keep them from getting credit, car loans, mortgages, all kinds of things. Finally, someone brought a class action, and Terri White is one of the named plaintiffs.

The credit bureaus have agreed to fix your credit after bankruptcy now, apparently without being asked, and pay some money damages to certain consumers. Who is covered? If you received a Chapter 7 discharge and your credit report was issued by one of the Defendants between March 15, 2002 and May 11, 2009 (or, for California residents in the case of TransUnion, between May 12, 2001 and May 11, 2009), and the credit report reported debts that were due and owing which were discharged in the bankruptcy.

If this is you, you may be due certain payments, from $20 to $750, depending upon if you can prove that you were denied a job, a mortgage, or other credit by reason of the erroneous credit report(s). Should you take it? It's a decision for you and your lawyer, if you have one. Of the $45 Million settlement, the lawyers for the class get $10 Million. Consumers split the remaining $35 Million.

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