A recent decision by Bank of America and JP Morgan will provide some additional relief to people who have filed for bankruptcy across the United States. The two companies finally reached an agreement to update the credit reports of borrowers within the next several months to show they have settled their debts.
This is a huge development for borrowers whose credit reports have had some major black marks because of their debt history. A credit report marred by debt could prevent a person from getting a job or a new loan.
The two banks, along with Synchrony Financial and CitiGroup, are the targets of lawsuits accusing them of purposefully blowing off bankruptcy discharges to get more money. The lawsuits also accuse these large banks of essentially holding the credit reports of borrowers hostage, as they had allegedly refused to fix mistakes on the reports unless people paid them money for debts they did not even owe. Lawyers are conducting some in-depth investigations to determine whether banks are purposefully disobeying federal bankruptcy laws through these practices.
The banks claim they have been compliant with all federal laws and that they are always accurate in their reports of discharged debts to credit agencies. The decision to update borrower credit reports came without any admission of wrongdoing. The banks have not provided any comments on the issue.
Now that these large banks have decided to stop holding credit reports hostage, smaller lenders can be expected to follow suit if they had not already made this decision themselves. This means that if you have filed or will file for bankruptcy, you may not face as many potential headaches due to inaccurate reports of debt on your credit report.
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