United States District Court Judge David Carter recently approved a sweeping class action settlement under which the three credit reporting agencies have agreed to scrub historical data regarding bankrupt debtors. White v. Experian, et. al. Case No. SACV 05-1070 DOC (MLGx) (C.D.Cal. 2008) Essentially, the CRAs typically would remove pre-bankruptcy debts from consumers’ credit files only if the furnishers updated their accounts. Now, any debt that preceded the bankruptcy will be reported as discharged, unless the CRA has information indicating that the debts are nondischargeable or the furnishers tell the CRA otherwise. The CRAs also must inform furnishers of their obligations:
3.5 Notice of New Procedures: Defendants shall notify furnishers of the new procedures set forth herein as well as of their responsibility to report accurate information about accounts discharged in bankruptcy. Such notification may be given in any reasonable manner as the Defendant may choose as part of or in connection with Defendant’s notification to furnishers, pursuant to 15 U.S.C. § 1681e(d)(1), of furnishers’ responsibilities under the Fair Credit Reporting Act, and addition of such notification to (or transmission with) the form described in 16 C.F.R. Part 698, Appendix G, shall not cause any Defendant to lose the legal benefit of the safe harbor provisions set forth in 15 U.S.C. § 1681e(d)(2) and 16 C.F.R. § 698.2, or of any analogous safe harbor provision of state law. Nothing in this Order shall require a Defendant to notify a furnisher when it applies the Agreed Bankruptcy Coding to alter its reporting of the civil judgments, tradelines, and/or Collection Accounts in a specific Consumer’s File or when it otherwise alters a File pursuant to the provisions of this Order.