When you file for bankruptcy protection, you know that your credit rating may take a hit. Not because the bankruptcy filing has some magic property, but you recognize that by the time you need to file a bankruptcy, your financial situation is less than stellar. Your finances have deteriorated to the point that your debts are so overwhelming that you simply cannot meet your obligations any longer and a Chapter 7 or Chapter 13 bankruptcy becomes your only option.
Imagine the surprise and frustration when some customers of Fifth Third Bank received a letter informing them that the bank had “inadvertently” reported that they had filed for bankruptcy to the four major credit bureaus.
A report of a bankruptcy filing can impair your credit, and such a report at a critical juncture could cause another financial institution to reject your application for a car loan or mortgage on a home.
In the case of a home mortgage, a negative report from a credit bureau could mean losing your financing, and at a time when the housing market is tight, it could mean losing a home to another offer by a party with unimpaired credit.
The bank claims it has “fixed” the issue and all of the credit reporting agencies have been informed of the error. If you have received such a letter, you should check with all of the agencies and check your credit report to ensure that the error is in fact fixed.
And for those who have filed a bankruptcy, remember that while a bankruptcy may limit some types of credit you may be able to obtain, you can rather quickly begin to rebuild your credit health and your credit score after a bankruptcy.
Source: WLWT.com, “5/3 Bank accidentally reported some customers as filing for bankruptcy,” February 12, 2014