“The Walking Debt”: Consumers’ Credit Reports to be Cleared of Zombie Debts by Bank of America, Chase

zombie-debt-collection

In a settlement recently reached in a federal bankruptcy court, Bank of America and Chase have agreed to remove so-called “zombie” debts from consumers’ credit reports.

The accounts are ones that were discharged in bankruptcy, meaning that consumers no longer owe them. But the credit card companies have been reporting them anyway, even selling them to debt collectors for collection.

This has been called “subtle but ruthless debt collection tactic, effectively holding borrowers’ credit reports hostage, refusing to fix the mistakes unless people pay money for debts that they do not actually owe.”

The decision to file for bankruptcy usually is not an easy one. But bankruptcy is supposed to give consumers a fresh start, unburdened by their past debts. The vast of bankruptcies are filed by people who are in positions they have been put in involuntarily, such as medical emergencies and divorces. Federal law prohibits a creditor from trying to collect an account that was discharged in bankruptcy.

The accounts are scheduled to be removed from consumers’ credit reports within the next three months.

If you have had a credit card or other account settled or discharged, but the creditor is still reporting a balance on your credit report, you may have a claim for violation of the bankruptcy discharge order or other federal law such as the Fair Credit Reporting Act.

The original story is here: Bank of America and JPMorgan Chase Agree to Erase Debts From Credit Reports After Bankruptcies

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CULIK LAW is a Massachusetts based law firm who believes in doing good work in our New England community to help individuals Champion Your Rights. We help clients with debt, credit reporting, mortgage, consumer protection, employment, and personal injury. If your rights are being violated or you need a new beginning, we want to hear about it and find a way to help.