One of the greatest benefits of filing bankruptcy is the ability to
obtain debt relief through a discharge. Under bankruptcy law, consumers who fulfill the terms of their case will
have certain debts discharged, including credit card debt, medical bills,
utility bills, personal loans, and other unsecured debt. Consumers who
receive a discharge will no longer be obligated to pay money toward these
debts and creditors will not be allowed to collect on them.
In a recent article published in the
New York Times
, federal officials have announced that they are taking steps to uphold
the rights of consumers who do receive bankruptcy court discharges. According
to the article, the U.S. Trustee Program, a division of the Department
of Justice, is investigating some of nation's largest banks and lenders
to ensure they remove debts from credit reports after they have been discharged.
Some experts believe that because creditors have an interest in selling
debt to third party debt collection agencies, they may not actively attempt
to remove discharged debt from consumer credit reports. Pressuring consumers
to pay discharged debts would allow the creditors to more easily sell
off debt to collection agencies. State and federal officials plan to continue
their investigation to make sure banks and institutions are complying
with federal bankruptcy laws.
Moving Forward After Bankruptcy: Your Credit
Although this article reveals the shadowy underbelly of debt collection,
it can also serve as a reminder of how important it is to
monitor credit following a discharge. Aside from monitoring, consumers should also make an effort to practice
responsible credit behavior so that they can successfully rebuild their
Bankruptcy was created for a purpose –
to give people in need a
fresh start and help them wipe out insurmountable debts. At Wadhwani & Shanfeld, we advise our clients to focus on making
the most of this fresh start and to take advantage of the new opportunities
it affords. With a positive outlook, smart credit practices, and time,
many people who have filed bankruptcy have found that they were able to
rebuild credit scores higher than they ever had before.
If you have questions about how bankruptcy affects credit, or how our attorneys
may be able to help with your current financial situation,
contact Wadhwani & Shanfeld today for a free consultation.