What should my credit report look like after bankruptcy?

So you’ve filed for bankruptcy, gotten a discharge, and pulled your credit report.  What should it look like?  Should it be blank?  Should all of your creditors be on there with a special notation?  What exactly should you expect to see?
First of all, make sure that your case is completed and you’ve actually received your discharge.  Many people unfamiliar with the bankruptcy process and procedures aren’t clear on when the discharge actually occurs.  You will receive an official notice from a U.S. Bankruptcy Court, and the caption on the document will read “Order of Discharge” or something substantially similar.  Your attorney has also probably sent you a letter around the same time confirming in clear language that you’ve received your discharge and that he will be closing out your file and concluding representation.  If you’re not sure, you can always call your attorney to confirm whether you’ve received your discharge or not.  If you filed a Chapter 7 Bankruptcy case, the discharge is issued about 2 months after your hearing with the Trustee.
Second, after you’ve received your discharge, I would wait a few months before pulling your credit report.  Some creditors will notate your account as being discharged right away after your case is filed.  That’s an internal procedural practice some creditors have.  Most wait until you actually receive your discharge (just in case you don’t get it), because legally, that’s when certain debts are – permanently – no longer collectible.
All right, so let’s take a simple and common example.  You’ve filed a Chapter 7 Bankruptcy, you’ve gotten your discharge, and you’ve waited a few months to pull your credit report.  In the bankruptcy, you reaffirmed on your mortgage and car loan, and you had a single student loan that you knew wouldn’t be discharged in the bankruptcy case.  Everything else you had – credit cards, medical bills, payday loans, etc. – should have been discharged.
First, pull the credit reports.  You are entitled to a free report from all three major credit bureaus (TransUnion, Experian, and Equifax) once every 12 months under the FACT Act.  To access those free reports, go to http://www.annualcreditreport.com/.
What is described below is based on the formats used in July 2016 – these may change over time.
The Bankruptcy Itself
All three reports have a section on Public Records, and this is where a notation about your bankruptcy case will reside for up to 10 years after your case is filed.  On the Experian report, it won’t be labeled as Public Records, but it will show up near the top of the report.
Reaffirmed / Non-Dischargeable Debts
These should appear exactly as they had before you filed for bankruptcy, plus whatever payments have been made since the last time you pulled your report.  So any reaffirmed mortgages or car loans that you’ve continued to make payments on, any student loans or other non-dischargeable debts that were not affected by your bankruptcy case – these will all continue to show up as they had in the past.
Old Accounts Settled / Closed Prior to Bankruptcy
In the reports we examined, accounts that had been satisfied, paid in full, transferred to another creditor, or closed – all continued to appear on the credit report.
Debts Discharged in Bankruptcy
In none of the credit reports did any of the debts discharged in bankruptcy show up in any way, shape, or form on the credit reports – save for one, which was never the debtor’s account in the first place and erroneously reported; although that creditor was listed on the debtor’s bankruptcy schedules for good measure.

Credit Reports

Everyone should be in the habit of checking their credit reports once per year.  Remember that you are entitled to a free credit report (charges apply for credit scores) once every 12 months from all 3 major credit bureaus by way of annualcreditreport.com.
If you need to dispute errors that you find on your credit report, visit the FTC website here.
If you need information pertaining to your bankruptcy case, including replacement copies of your discharge order or bankruptcy schedules, go here for additional information.

Reaffirmation Agreements That Never Were

Scenario:  John Doe filed Chapter 7 Bankruptcy in 2013, discharging about $60k in unsecured debt while reaffirming on his mortgage and car loan.  He has never missed a payment since his bankruptcy case was filed.  Now, 2 years later, he has pulled his credit report and is dismayed to find out that while his auto loan payments have been reported, his mortgage payments have not.  As a result, his credit score hasn’t improved as much as he would have hoped by now.  He calls his bankruptcy attorney and finds out that while he entered into a reaffirmation agreement on the auto loan, he did not enter into such an agreement on the mortgage.  Instead, he was doing what is referred to as a “ride through” – making payments sans a reaffirmation agreement.
Why is this happening?
To be honest, we’re not really sure.  Last October, after the conclusion of the Annual Bankruptcy Update in Milwaukee, I had a discussion with 7 other attorneys concerning a lender’s requirement to report payments with or without a reaffirmation agreement.
On the one hand, the Fair Credit Reporting Act (FCRA) only requires creditors to make accurate reports to the credit bureaus.  It does not, however, confer an affirmative duty to report at all.  In other words, any creditor can choose to report or not report, but if they do report, those reports must be accurate.
There was nothing in either the FCRA nor the bankruptcy code that any of us were aware of that indicated that lack of a reaffirmation agreement meant that a lender could not report payments, nor that filing a reaffirmation agreement forced a lender to report payments.  (In fact, it is entirely possible that payments might not be reported, even if a reaffirmation agreement is filed.)
It just seems to be “the way it is” – a matter of convention and policy rather than law.  At least one attorney reported being told by a creditor that the creditor’s policy was to not report without a reaffirmation agreement because to do so would be a violation of the discharge injunction.  Not only do we feel that argument is specious, but the inducement that creditors are making (no reaffirmation, no reporting) might itself be the bigger violation of the discharge injunction.
To the best of my knowledge, this has not yet been litigated in this district.
Can a reaffirmation agreement be filed now so that my payments get reported?
No.  At least, not in the Eastern District of Wisconsin.  The judges here (and I imagine in most districts) have a very strict policy that reaffirmation agreements will not be approved if they are entered after the discharge order is issued, and that cases cannot be reopened for this purpose.
Whose fault is this?
Usually, it’s nobody’s fault.  Reaffirmation agreements are voluntary agreements between a debtor and creditor.  A creditor cannot force an unwilling debtor to enter into an agreement, nor can a debtor force an unwilling creditor to enter into an agreement.
Unless someone deliberately obstructed transmission of the agreement, or if the debtor failed to notify the creditor of their intent, or if the creditor simply neglected to draft the agreement – there is no blame.
Why didn’t my bankruptcy attorney draft the reaffirmation agreement?
I have yet to meet a single debtor attorney who drafts reaffirmation agreements.  And I think we all refuse to draft them for the same reasons.  Reaffirmations are agreements between the creditor and debtor.  I’m happy to review the agreement, advise in favor of or against signing the agreement, and signing off on the agreement when appropriate.  But the agreement should still be drafted by one of the parties to the agreement.  And the creditor has access to contractual information (interest rates, maturity dates, current payoff balances, etc.) necessary to properly complete the agreement that the debtors’ attorney may not have access to (at least, not all of the information).
This is the worst thing ever!
Not necessarily.  Reaffirmation agreements turn otherwise dischargeable debts into non-dischargeable debts.  Yes, secured debts like mortgages and auto loans are dischargeable and presumed to be discharged in the absence of a reaffirmation agreement.  One of the nice things about a ride-through is that it allows you to retain your property without assuming the risk of having to pay a deficiency if you ever default and have your property repossessed.
In other words, let’s say a year after you file for bankruptcy, you default on your mortgage payment.  Without the reaffirmation agreement, the lender is only empowered to foreclose the property.  They cannot collect a balance from you.  With the reaffirmation agreement, they can foreclose AND collect a deficiency balance from you.
In fact, the only good reason to sign a reaffirmation agreement is for the credit reporting to help rehabilitate your score.  But there are other ways to rebuild credit.
I still want my payments reported, gosh darn it.
You have a couple of options, but none guaranteed to work.
  1. Talk to the lender.  Ask them to report your payments.  (This works better with smaller local banks and credit unions than it does with the big banks.)  If the creditor failed to provide you with an agreement – tell them that you would have signed the agreement if they had drafted one.  Since they chose not to, it’s hardly fair to punish you for their inaction.
  2. Refinance.  This is going to be difficult without the payment history to help rebuild your credit.  If you’re refinancing with the same lender – many of them refuse to refinance because of the lack of the reaffirmation agreement (which is really stupid, because with the refinance, they have a legal claim to the money; without it, they do not).
  3. Dispute the lack of reporting with the credit bureaus.  This has been suggested by a few attorneys.  Gather evidence of all of your post-petition payments and send them in to TransUnion, Experian, and Equifax.  Explain that your payments haven’t been reported because a reaffirmation agreement was not filed.  The problem with this approach is that – if you’re disputing a credit reporting error – there’s no error to correct.  Again, FCRA only requires that creditors report accurately, it does not require them to report at all.  Even if the credit bureaus do amend your report to show the payments, it still doesn’t mean that your lender will report payments going forward, which means that you will have to continually update the bureaus yourself.