A recent court order in a class action will help millions of consumers who filed bankruptcy but have been plagued with old debts showing up on their credit reports. The old debts, which are typically forgiven by the courts in a bankruptcy filing, are still being reported as active on many consumers' credit reports.
As reported in the Wall Street Journal, Experian and TransUnion say they have already updated their credit files to be compliant with the court order. TransUnion also sent notices to some customers saying they "may experience a slight change" to their credit scores if any of their accounts are updated because of a bankruptcy.
Consumers with so-called zombie debt -- old loans they may have paid off years ago that can resurface when an aggressive debt collector erroneously demands payment -- are also likely to get some relief, if those debts also were discharged under Chapter 7 protection.
In many cases, old debts linger on credit reports if lenders don't update their records, or if collection agencies ignore the fact that debts were discharged in bankruptcy. The credit bureaus' new procedures should ensure that anyone who files for bankruptcy in the future will have more-accurate
credit reports.
