Tougher Legislation For Banks And Debt Buyers

Posted on Jul 27, 2015 By Cynthia Lawson

Attorney Cynthia LawsonOn July 15, 2015 Senator Sherrod Brown (D-OH) introduced a Bill that would require Banks and Debt Buyers to notify the credit reporting agencies when a consumer’s debt has been extinguished in Bankruptcy.  The Bill, known as The Consumer Reporting Fairness Act would amend bankruptcy law to require creditors to ensure that a debt discharged in bankruptcy shows a zero balance on the consumer’s credit report in an accurate and timely manner. The bill also would permit consumers to take legal action against creditors that fail to report a discharged debt that is no longer owed.  Here is a link to the Senator’s New Release.

The Bill is drawing wide support among others in the Senate.  Senators Richard Blumenthal (D-CT), Dick Durbin (D-IL), Al Franken (D-MN), and Jeff Merkley (D-OR), joined Brown in introducing the legislation.

“Every consumer should have a credit score that accurately reflects how creditworthy they are”, said Franken. “When creditors fail to report that debt is no longer owed, they drive down consumers’ credit scores, costing consumers money and opportunities. The Consumer Reporting Fairness Act will help ensure that creditors fulfill their responsibility to provide correct and timely information about consumers’ credit”.

“A disturbing number of creditors have failed to ensure that bankruptcy discharges are reflected on consumer credit reports – and some appear to have done so deliberately, seeking unfair and illegal leverage over consumers,” said Blumenthal. “This bill, which will require banks to notify reporting agencies about discharged debts, will help prevent those debts from hanging over consumers’ heads as they seek a more financially secure future”.

“When a family makes the difficult decision to go through bankruptcy proceedings, they shouldn’t also have to worry that their discharged debts will continue to haunt their credit report,” said Durbin. “This bill is about protecting consumers’ right to a credit report that is a true representation of their financial status, and a credit score that is fair and accurate.”

The Bill is also garnering wide support from consumer advocacy groups.  Currently The Consumer Reporting Fairness Act is supported by Americans for Financial Reform, Center for Responsible Lending, Consumer Action, Consumer Federation of America, Consumers Union, Demos, Leadership Conference on Civil and Human Rights, National Association of Consumer Advocates, National Association of Consumer Bankruptcy Attorneys, National Coalition for Asian Pacific American Community Development, National Community Reinvestment Coalition, National Consumer Law Center (on behalf of its low-income clients), National Council of La Raza, Public Interest Research Group, and Public Citizen.

At Bond and Botes, we applaud Senator Brown and those standing with him.  We see firsthand the struggles our clients face.  Any legislation designed to improve the lives of our clients is certainly good news and has our full support.  As soon as the Bill has a number we will post a revision of this blog so that you can write your representatives to help support this timely and much needed legislation.