When Virginia residents seek relief from overwhelming debt, bankruptcy is often an option. In situations where the individual or couple filing for bankruptcy has a steady income as well as property that they would rather not lose, Chapter 13 bankruptcy may make sense. In this type of bankruptcy, the debtor enters into a court-approved repayment plan for a period of three to five years. Once the plan is completed, any unpaid debt is discharged.
In a recent case, a debtor entered into a Chapter 13 plan and made payments as arranged. When the debtor reviewed her credit reports, she found that plan payments were not always reflected within her credit history. Eventually, she decided to file suit against two banks and two credit reporting bureaus in hopes of forcing them to report her payments.
However, a federal judge ruled against the debtor, stating that credit bureaus and creditors are not obligated to mention payments in credit reports. The court noted that if the plan was completed, the reports would reflect this fact. Since there is no guarantee that the plan will be completed nor the debts discharged, the creditors and reporting bureaus were not obligated to report a change in the status of the debts.
Individuals who are considering bankruptcy as a way to stop creditor harassment and protect property may benefit from speaking with an experienced bankruptcy attorney. The lawyer may be able to review the client’s case and make recommendations regarding bankruptcy and other possible strategies for managing financial problems. The attorney may also be able to assist the debtor in deciding between a Chapter 7 or Chapter 13 plan.