i filed chapter 7, 5 years ago. At that time, the bankruptcy was reported on my credit bureaus.
Included in the Chapter 7 was my mortgage.
Now, after working with the lender for nearly 5 years to try to sell the property unsuccessfully, we have agreed on a deed in lieu.
The lender says they will report it to the bureaus as "settled for less than full" or something.
Can they report anything? Does the Chapter 7 discharge prevent further derogatory information from being reported on my credit?
1 Answer from Attorneys
A credit report of short sale settlement for less than the total owed would violate the bankruptcy discharge injunction, since your personal obligation to pay was probably wiped out 5 yrs. ago your bankruptcy, so long as you did not reaffirm your mortgage. Reaffirmation, however, would have allowed full reporting of your credit performance on the loan, as if bankruptcy had never occurred. Either way, nothing would happen to them for this violation unless you hire an attorney to enforce it. In our legal system, the general rule is that no court orders get enforced, unless someone pays for the enforcement litigation. In criminal matters and certain civil matters, such as child support, the government gets involved in enforcement after the judgment, but in most other cases, orders can be freely ignored unless someone is willing to go back to court over them. So, the answer to your question "can they report anything. . ." is clearly yes, depending upon what you are willing to do about it if the report is illegal. A polite warning letter from a lawyer before the closing, would probably prevent any improper report from occurring, however.
This answer is not legal advice and I am not your lawyer just because I answered it on a public website. Feel free to view my past answers to similar questions on AVVO at https://www.avvo.com/attorneys/53566-wi-jay-nixon-1529181/answers.html . Also see 15 years of past answers at http://www.lawguru.com/answers/atty_profile/view_attorney_profile/jknixon and https://www.facebook.com/NixonLawOffices . Answers may contain attorney advertising materials and both questions and answers may be may also be used in attorney advertising.