Reported by: Robert DeMarco
Bank of America Corp. and JPMorgan Chase & Co. (the “Banks”) announced they are preparing to delete negative credit reporting records for some borrowers who filed for bankruptcy. The Banks, along with Credit One Bank N.A., General Electric’s Synchrony Bank and Citigroup Inc., were sued by people who had filed for bankruptcy and gotten their debts canceled with a discharge order but still had notices on their credit reports that their old credit card debt had been “charged off.” This decision by the Banks is significant because, as reported by The Wall Street Journal on May 13, 2015, a bank’s failure to fix the records negatively impacts credit scores, making it tougher to get a job, find an apartment or borrow money.
The point made by the attorneys representing the borrowers in the lawsuit is that a debt that is listed as “charged off” typically looks worse than a debt listed as discharged. This is great news as the announcement could affect more than 1.3 million people.