A big victory for consumers, as the New York Times explained late last week:
Two of the nation’s biggest banks will finally put to rest the zombies of consumer debt — bills that are still alive on credit reports although legally eliminated in bankruptcy — potentially providing relief to more than a million Americans.
Bank of America and JPMorgan Chase have agreed to update borrowers’ credit reports within the next three months to reflect that the debts were extinguished.
The move is a victory for borrowers whose credit reports have been marred as a result of the reported debts, imperiling their job prospects and torpedoing their chances of getting new loans.
Why the change? The two banks (and several others) were sued for ignoring bankruptcy discharges so that they could sell off consumers’ debt and enable the debt buyers to make a profit because the consumers, facing marks against their credit score, had an incentive to pay off the debts even though they no longer legally owed them.
The Times estimates the changes could help more than one million Americans, who labor under erroneously marred credit reports. Citigroup, another of the defendants in the lawsuit, appeared poised to join its co-defendants in implementing this change, based on the comments of its lawyers.
Read the story here.