Kill zombie debts that outlast bankruptcy

zombie-debts-that-outlast-bankruptcyWhen people’s debt are canceled by a bankruptcy judge, the “zombie” debt should be cleared from their consumer records, too. The Consumer Reporting Fairness Act of 2015 would make it happen.

Specifically, the legislation would force major banks and other lenders to notify credit reporting firms after bankruptcy. Without the change, the outdated credit information can linger and make the consumers inaccurately appear to be mired in unpaid debt — harming their credit scores and ability to get future loans at low interest rates. The zombie debt could even cost them a job or an apartment. Given that the point of bankruptcy is to give people a fresh new start, these zombie debts should be wiped off once they’ve been legally discharged.

The bill was introduced by Senators Sherrod Brown (D-OH), Jeff Merkley (D-OR), Richard Blumenthal (D-CT), Dick Durbin (D-IL), and Al Franken (D-MN), with the backing of numerous groups including Americans for Financial Reform, Consumers Union, National Association of Consumer Advocates, National Association of Consumer Bankruptcy Attorneys, and National Community Reinvestment Coalition.

For  more information, see “A Law to Kill Zombie Debts That Outlasted Bankruptcy,” Wall Street Journal (2015).