Banks Not Honoring Bankruptcy?

: Reese Baker & Associates

  Filed under: Filing bankruptcy

bankBankruptcy, which long had a social stigma, has finally begun to be recognized as a legitimate way for an unlucky businessman or woman to protect what little assets they have left and start with a clean slate. It is a boon for borrowers who would otherwise suffer at the hands of their creditors for an outcome they could not prevent. Unfortunately, some banks and creditors do not follow the orders of the bankruptcy courts as they should and end up not honoring bankruptcy.

While a Texas bankruptcy goes on a person’s credit history, it should not affect their credit score. In many cases, bankrupt persons should be able to improve their credit score after declaring bankruptcy. When a person declares bankruptcy and is found to be honest in his or her claim, the debts against that person are ordered by the courts to be discharged.

Instead of discharging debts, however, some banks are suspected of keeping the debts active on credit reports, forcing debtors to pay a debt they are legally free of. When a filer who has had debt discharged attempts to make a large purchase or take out a loan, he or she is denied because the credit report has not been updated to reflect the truth. This is an underhanded trick that takes away from the very concept of bankruptcy. If a person cannot get a clean slate, what was the point of filing in the first place

Bankruptcy can be a great tool for financially struggling people, but only if it is respected and upheld by the members of the financial community. Hopefully the banks that are guilty of such underhanded actions are soon brought to justice.