Incorrect credit reports can coerce payment of discharged debt
Jay Fleischman discusses whether the failure to correct a credit report after a bankruptcy discharge is really a violation of the discharge injunction. I have experienced two very real examples of how the continued reporting of discharged debt shadows a debtor’s fresh start.
The first is in the insidious use of credit scores for pricing of insurance. I find no linkage between credit worthiness and insurance claims. It appears to me to be a situation where Fair Isaacs, or other providers of credit scores, has sold insurers on the idea. Why should the insurers resist? It gives them a reason to increase premiums.
More distasteful in my mind is the situation where a homeowner has a refinance or home purchase in process. When the lender finds a credit report still studded with apparently unpaid debt, the would be borrower must chose between paying the discharged debt or losing the loan. Nice work for the creditor: do nothing, even when the law requires you to report correctly, and garner money to which you have no right.
August 17th, 2007 at 11:24 pm
As someone how has suffered from Bankruptcy (and come out the other side) I can vouch for the problems with many Insurance companies.
I actually had several Insurers refuse to do business with my purely because of my credit history. I assumed this is because they treat bad credit as being untrustworthy, but it makes no sense to me because insurance is generally paid in advance anyway. And what of the people who have an incorrect entry on their credit report and don’t know how to remove it? Pay a premium (if you can get insurance at all) or too bad? Not very nice.
In my opinion, they do this (increase prices for people with bad credit) purely because they can. I avoid these type of companies completely now my credit has been restored.
When will companies like this learn?
Thanks for an excellent blog highlighting the problems people with adverse items on their credit report have to deal with every day.
Regards
Lisa Hurley
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