Skip to main content
Home

Main navigation

  • NC Bankruptcy Cases
    • Eastern District
    • Middle District
    • Western District
  • NC Courts
    • 4th Circuit Court of Appeals
    • NC Court of Appeals
    • NC Business Court
    • NC Supreme Court Cases
  • Federal Cases
  • Law Reviews & Studies
    • Book Reviews
  • NC Legislative History
  • Student Loan Debt
User account menu
  • Log in

Breadcrumb

  1. Home
  2. Blogs

News: Credit Invisibility and Chapter 13

Profile picture for user Ed Boltz
By Ed Boltz, 28 February, 2021

Questions about the fairness of the current credit reporting system have recently started to take new prominence with the National Consumer Law Center releasing a report The Credit Score Pandemic Paradox and Credit Invisibility and blog posts on Creditslips.org offering policy solutions in Addressing Credit Invisibility Through Federal Contracting Power. As the discussion there point out, this is a thorny issue since unreported bad credit may be worse for more people than having no credit reported.

Credit Invisibility also relates to Chapter 13 bankruptcy, as payments made by debtors during the course of their plan are usually unreported by creditors (including their ongoing mortgage payments). While many folks can get new mortgages and refinancing during bankruptcy at surprisingly low rates, that credit reporting purgatory leaves the same people stuck with subprime car loans for 5 years.

Chapter 13 Trustees could be authorized (and, to overcome institutional inertia, likely be required) to report payments, which would help debtors that were performing in the their plans tremendously. This would not only be a new burden and complexity for Trustee, but would also entail a sea change in how Trustees and the bankruptcy courts think about access for consumers to new credit during a bankruptcy. While Ch. 11 debtors routinely finance their way out of a case, the paternalism towards consumers often expects them to live for 3 to 5 years without credit.

A smaller lift would be to allow debtor's attorneys to report the repayment of their fees to the credit reporting agencies but lawyers are prohibited by the CRAs from furnishing information. When a Chapter 13 case is taken without payment of all fees in advance, i.e. most Chapter 13 cases, that lawyer is extending credit, the repayment of which over time should be considered as a sign of creditworthiness.

That my ethical obligations to my clients would prevent me from reporting negative information would not be prohibited under the FCRA, since that doesn't require any reporting, only accurate reporting. That the credit industry might find a consumer attorney only posting positive information is utterly hypocritical, since it makes the same reporting choices during bankruptcies as well.

Blog comments

Blog tags
chapter 13
FCRA
Category
News

About Us

Mountain View The purpose of the NC Bankruptcy Expert blog is to provide legal professionals with a consolidated resource for updates and case summaries about issues and decisions affecting bankruptcy, foreclosures, mortgages, and debt collection.

 
Lawyer Edward Boltz | Top Attorney Chapter 7

NC Bankruptcy Expert FREE Consultation

We Offer A Free Bankruptcy Consultation which has helped over 70,000 North Carolina families. We serve the entire state of North Carolina.

Proud Member of:












Categories

  • 4th Circuit Court of Appeals
  • Book Reviews
  • District Courts
  • Eastern District
  • Ed Boltz: Bankruptcy Attorney
  • Federal Cases
  • Forms
  • Home
  • Law Reviews & Studies
  • Middle District
  • Mortgage Modification Mediation Documents
  • NC Business Court
  • NC Court of Appeals
  • NC Courts
  • NC Supreme Court Cases
  • News
  • North Carolina Bankruptcy Cases
  • North Carolina District Court Cases
  • North Carolina Exemptions Legislative History
  • Student Loan Debt
  • Student Loan Options and Chapter 13 Bankruptcy
  • Western District
RSS feed
v. 1.2.2, © 2013-2025 ncbankruptcyexpert.com, all rights reserved. Follow @edboltz