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Bankruptcy Law/Reaffirmation & Credit Bureaus

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Expert: - 1/24/2008


Question
We filed for bankruptcy in 2005 and reaffirmed with the mortgage company.  We are on an ARM loan and decided when the payment went up to 1,600/month to refinance on a fixed rate.  My mortgage company denied our refi because our credit report stated that we included our mortgage in the bankruptcy.  I told them that all they had to do was check their files to verify the reaffirmation agreement and that we were current on mortgage payments.  They said that the computer only recognizes the credit bureau reports.  I immediately went online and requested my free credit report.  I filed a complaint with the credit bureaus.  Nothing changed.  I made many calls to mortgage company and finally received a letter stating that they were going to correct the reporting to the credit bureaus and apologized for any inconvenience.  Three months later nothing had changed.  I had a bankruptcy lawyer draft a letter to all involved stated the discrepancy in the reporting.  Six months later - no changes.  

How is the bankruptcy supposed to read on our credit report?  It currently reads "Chapter 7 Bankruptcy".  I have been told it should state "Reaffirmed".  We have been denied financing from our current mortgage company and many others due to this error.

PS I am also looking for a lawyer to represent me when I sue them.

Answer
I think the problem is with your mortgage company. The credit bureaus basically report what your creditors tell them to report. If you really did have a valid reaffirmation, then the loan should be reported as if no bankruptcy had ever happened. Of course the report should reference the bankruptcy  with respect to all of the other debts that were discharged and report the basic case info such as filing date, case number and discharge date. I think you need to lean on your mortgage company to report correctly and accurately. I think the letter they sent to apologize is going to be important evidence if you sue them. I think daily calls to them, including calls and letters to high ranking corporate officers with copies to local consumer media reporters will work wonders. Good luck!

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Los Angeles Bankruptcy Lawyer Leon D. Bayer

Expertise

Leon Bayer has successfully represented clients in bankruptcy for over 30 years. He is frequently called upon by the media, the California Bar and other associations to provide insight and help educate attorneys on bankruptcy issues. If you or other readers want to keep up with my blog postings about life in and out of bankruptcy, you can follow my blog at http://www.bankruptcyblogger.org/ and my personal web site at http://www.debt-relief-bankruptcy.com and A Human Guide to Bankruptcy at http://www.thebankruptcyguide.net/ Leon also writes about bankruptcy law for Nolo, see http://www.nolo.com/law-authors/leon-bayer.html and his "Ask Leon" bankruptcy law blog column at http://blog.nolo.com/bankruptcy/

Experience

Leon is a Certified Specialist in Bankruptcy Law by the State Bar of California, and has been a practicing bankruptcy lawyer in Los Angeles, California for 33 years.

Organizations
National Association of Consumer Bankruptcy Lawyers, California Bar Association, Los Angeles County Bar Association.

Publications
Author, ?The Essentials Of Chapter 13,? Daily Journal Report, December 18, 1987.
Contributing Editor, Basic Bankruptcy, California Practice Handbook, Matthew Bender 1992, 1993.
CEB Consultant, CEB-Personal and Small Business Bankruptcy Practice in California, 2003.


Education/Credentials
B.A., J.D.

Awards and Honors
President, 1995-1996-Los Angeles Bankruptcy Forum; Member - Los Angeles County Bar Association Committee on Commercial Law & Bankruptcy, 1988. Law Advisory
Commission-Personal & Small Business Bankruptcy Law of the State Bar of California, 1996-2000

MR. BAYER SAYS: The big banks and credit card companys have been working overtime for many years to undermine the Consitutional right of the American people to be able to claim bankruptcy protection. In 2005 the banking lobby successfully convinced Congress and the President to make the laws and proceedures more complicated, hopeing that it will stymie legitimate people from filing bankruptcy. They succeeded in gaining these complex new legal proceedures by greasing the legislative system with hundreds of millions of dollars in "campaign contributions." The good news for the American people is that while the new laws have made the proceedures needlessly complex to the point where inexperienced people can't help but trip over the maze of new rules and regulations, the process is still doable, especially with a lawyer who is well trained and experienced in this specialty.

Past/Present Clients
I have probably handled something on the order of about 15,000 bankruptcy cases thropughout my career.

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