Court Orders Credit Bureaus to Change Bankruptcy Reporting

A recent court decision by the United States District Court for the Central District of California has impacted the way in which the credit bureaus must report accounts that have been discharged in bankruptcy.  Up to now, the credit bureaus have reported old debts that were discharged in bankruptcy as still being active on many consumers’ credit reports.  The court gave the credit reporting agencies until October 1st to revamp their systems.  The change could be important to borrowers as the credit system is tightening up.  The court ruling is expected to affect over 5 million people who filed for Chapter 7 bankruptcy by cleaning up their credit reports and possibly boosting their credit scores.   In many cases, creditors don’t update their records or reporting and the old debt that was discharged still lingers on a consumer’s credit report as past due or charged off.  The new procedures should help anyone who has filed for bankruptcy with more accurate credit reports.