Large Banks Accused of Ignoring Bankruptcy Laws

Posted on May 20, 2015 at 12:00pm by

JP Morgan Chase and Bank of America have announced they will no longer list debts discharged in bankruptcy as delinquent. While the move could give many people a fresh start, this was not an act of goodwill on the part of two of the largest banks in the United States.

The change emerged from a federal bankruptcy court in White Plains, New York. Bank of America and JP Morgan Chase, along with Citigroup, Synchrony Financial and GE Capital Retail Finance, faced lawsuits alleging they had ignored debts discharged in bankruptcy.

According to the lawsuits, the banks would purposefully ruin the credit ratings of consumers who had filed for bankruptcy in an attempt to get them to pay more money on discharged debts. These unsecured debts on credit reports should clarify that they were discharged in bankruptcy. If the allegations are true, the banks may have violated bankruptcy law.

People caught up in the lawsuit have claimed that it has been difficult to find jobs, as their credit reports are still listing discharged debts as unpaid debts.

In one case, a woman was denied a job at a credit union because her credit report still listed two delinquent credit card accounts. At the urging of her bankruptcy attorney, the woman gave proof to the credit union that the debts had been discharged. She was later hired for the job.

Can Filing for Bankruptcy Help My Credit Report?

Filing for bankruptcy can help people discharge eligible debts that are now listed on their credit reports. In the case above, for example, heeding the advice of a bankruptcy attorney allowed a woman to successfully discharge her unsecured debts and land the job she wanted.

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