Bankruptcy can impact your credit report in ways you may not understand. When you file for bankruptcy, it is reflected on your credit report and can stay there for up to ten years.  Some people believe bankruptcy credit reporting is a bad mark.  However, what bankruptcy does is eliminate debt when debts are discharged in bankruptcy. This means that the accounts discharged in bankruptcy should be reported with a zero balance making you a potentially more attractive candidate for credit in the future since your outstanding debt is reduced by the bankruptcy discharge.  While true that some lenders may view you as a higher risk borrower due to the bankruptcy on your record, other lenders will see you as less of a risk if you have income since you cannot file for bankruptcy again without waiting a certain number of years, and since there would not appear to be a line of creditors  in a race to the courthouse to sue you for old, discharged debts.

There are several things you can do to help re-establish and rebuild credit after bankruptcy, such as opening a secured credit account, paying new and future credit obligations on time,  ​or being added as an authorized used to a credit account that is in good standing. While bankruptcy can have a negative impact on your credit report in the short term, you can rebuild your credit if you take the right steps. 

As mentioned, bankruptcy can stay on your credit report for up to ten years. However, the impact of bankruptcy on your credit score can be minimized over time, especially if you take proactive steps to improve your credit. By demonstrating responsible financial behavior, you can show lenders that you are a reliable borrower.

One of the first steps you can take after filing bankruptcy to rebuild your credit is to review your credit report to ensure that all discharged debts are reported accurately.  If there are credit report errors on your credit report after filing bankruptcy, these can cause you to be denied credit.  Lenders may assume that you either engaged in fraud that prevented you from obtaining a discharge of that debt, or that you became delinquent on a new or existing debt after your bankruptcy discharge. 

There are several types of post-bankruptcy credit report errors to look out for such as:​

1. Discharged debts not reporting as discharged in bankruptcy or with a $0 balance: Debts that are discharged in bankruptcy should be reported on your credit report as “Discharged in Bankruptcy” (or similar language), and with a balance of $0. 
   
2. New collection accounts being reported for discharged debts: sometimes debts that are discharged in bankruptcy will be sold or assigned either before, during, or after the bankruptcy. This type of credit report error can occur when a collector reports the collection account as having been "opened" after the bankruptcy even though other reported account information reveals that the collection account pertains to a discharged debt.  
   
3. Charge-offs Reported After the Bankruptcy Filing or Bankruptcy Discharge: Sometimes creditors will report a charge-off after your bankruptcy.  Charge-offs typically occur when an account is 90-120 days or more delinquent and are more derogatory than an account that is merely delinquent, but not charged-off. This is another type of credit report error after bankruptcy.
   
4. Failure to Accurately Report Reaffirmed Accounts. When you reaffirm a debt during bankruptcy, you remain liable for the debt after the bankruptcy. Therefore, the reaffirmed debt should not be reported as discharged in bankruptcy and  payments made after the bankruptcy should be reflected on your credit report. 

Identity theft lawyers understand that identity theft laws often intersect between criminal laws intended to punish criminals, civil laws intended to compensate or make identity theft victims whole, and consumer protection laws intended to protect identity theft victims.  Each type of law can offer various protections and benefits, but for practical purposes the consumer protection laws regarding identity theft can help consumers restore their credit and identity, and move on with their lives.

​Identity theft laws are intended to protect individuals from having their personal information misused by others for fraudulent purposes and unauthorized transactions. Identity theft laws aim to prevent unauthorized access to personal data such as social security numbers, credit card information, and other sensitive details, which can be used to open new, fraudulent accounts, or to access existing accounts without authorization.  

Other identity theft laws can help consumers dispute credit report errors and file lawsuits under federal or state consumer protection laws with the help of a credit lawyer or identity theft lawyer. These types of lawsuits are intended to protect consumers from inaccurate credit reports, such as fraudulent accounts or fraudulent charges appearing on the identity theft victim's credit report.

​There are many types of identity theft laws, including criminal statutes that outline specific illegal activities related to identity theft. Civil lawsuits are also available to provide victims with legal recourse to recover damages caused by identity theft. Additionally, there are federal and state laws addressing different aspects of identity theft, such as credit reporting, data breaches and identity fraud.

There are various federal and state laws intended to protect identity theft victims in Michigan, including laws intended to deter identity theft in the first place, laws that limit the use of personal information to prevent identity theft or unauthorized transactions, and laws intended to protect identity theft victims from inaccurate credit reports, such as identity theft credit report errors, and from being denied credit because of identity theft.

The Michigan Identity Theft Protection Act lists various prohibited activities that are crimes under MCL 445.65. These include using or attempting to use the personal identifying information of another person, with either intent to defraud, or by concealing, withholding, or misrepresenting the person's identity, to obtain credit, goods, services, money, property, a vital record, a confidential telephone record, medical records or information, or employment. See MCL 445.65.
 
The Michigan Identity Theft Protection Act also prohibits using or attempting to use the personal identifying information of another person, with either intent to defraud, or by concealing, withholding, or misrepresenting the person's identity, to commit another unlawful act. See MCL 445.65.
 
The Michigan Identity Theft Protection Act also lists various defenses. See MCL 445.65.
 
In addition to the above, the Michigan Identity Theft Protection Act also lists various Additional Prohibited Activities regarding: the use of a business name without authority or approval, advertising, communications, and electronic activities, misusing, obtaining, possessing or selling personal identifying information, and falsifying an identity theft police report. See MCL 445.67.
 
Under the Additional Prohibited Activities, a person shall not:

• Make any electronic mail or other communication under false pretenses purporting to be by or on behalf of a business, without the authority or approval of the business, and use that electronic mail or other communication to induce, request, or solicit any individual to provide personal identifying information with the intent to use that information to commit identity theft or another crime.
• Create or operate a webpage that represents itself as belonging to or being associated with a business, without the authority or approval of that business, and induces, requests, or solicits any user of the internet to provide personal identifying information with the intent to use that information to commit identity theft or another crime.
• Alter a setting on a user's computer or similar device or software program through which the user may access the internet and cause any user of the internet to view a communication that represents itself as belonging to or being associated with a business, which message has been created or is operated without the authority or approval of that business, and induces, requests, or solicits any user of the internet to provide personal identifying information with the intent to use that information to commit identity theft or another crime.
• Obtain or possess, or attempt to obtain or possess, personal identifying information of another person with the intent to use that information to commit identity theft or another crime.
• Sell or transfer, or attempt to sell or transfer, personal identifying information of another person if the person knows or has reason to know that the specific intended recipient will use, attempt to use, or further transfer the information to another person for the purpose of committing identity theft or another crime.
• Falsify a police report of identity theft, or knowingly create, possess, or use a false police report of identity theft.

The Michigan Identity Theft Protection Act also prohibits certain conduct in trade or commerce.  See MCL 445.71.  In essence, these prohibitions pertain to the denial of credit or public utility services solely because the consumer was a victim of identity theft.  Under the Act, a consumer is presumed to be a victim of identity theft for the purposes of this prohibition if he or she provides the following: 

1. A copy of a police report evidencing the claim of the victim of identity theft.
   
2. Either a properly completed copy of a standardized affidavit of identity theft developed and made available by the federal trade commission under 15 USC 1681g or an affidavit of fact that is acceptable to the person for that purpose.

The Act also prohibits certain solicitations to extend credit to consumers who do not have existing lines of credit or credit cards or who have not applied for a line of credit or credit cards with the solicitor within the preceding year. 

The Act also prohibits banks, credit card companies or other financial institutions from extending credit to a consumer without exercising reasonable procedures to verify the identity of that consumer. 

Violations of the Michigan Identity Theft Protection Act can lead to criminal and civil penalties.

​Under the Fair Credit Reporting Act, credit bureaus and furnishers of credit information have various responsibilities to ensure accurate credit reporting, which encompass identity theft, credit report disputes, and credit report errors caused by identity theft.

Credit bureaus are referred to as Consumer Reporting Agencies in the Fair Credit Reporting Act.
​
1. Reasonable Procedures: Credit Bureaus are required to follow reasonable procedures to assure maximum possible accuracy of consumer credit report information.  Credit report disputes can lead to lawsuits when a credit bureau fails to follow reasonable procedures when reporting consumer credit information. The failure to follow reasonable procedures can lead to a consumer protection lawsuit arising under 15 U.S.C. Sec. 1681e(b). 

2. Reasonable Reinvestigation of Consumer Disputes of Identity Theft: Credit bureaus are also required to Conduct A Reasonable Reinvestigation of Consumer Disputes under 15 U.S.C. Sec. 1681i. Credit report disputes can also lead to lawsuits when a credit bureau fails to conduct a reasonable reinvestigation of consumer credit report disputes of identity theft. During an FCRA lawsuit, your credit lawyer or identity theft lawyer can help discover whether the credit bureau conducted a reasonable reinvestigation of a consumer dispute. ​This will typically occur during the "discovery" phase of litigation where evidence of the furnisher's investigation can be obtained through written requests for information, documents, admissions, and depositions.

​Banks, lenders, credit card companies, debt collectors and other entities that report account/tradeline information on credit reports are referred to as Furnishers under the Fair Credit Reporting Act.

Failure to Conduct A Reasonable Investigation of Consumer Dispute By Furnisher of Credit Report Information: Credit report disputes can also lead to lawsuits when a furnisher fails to conduct a reasonable investigation of consumer credit report disputes of identity theft. During an FCRA lawsuit, your credit lawyer or identity theft lawyer can help discover whether the furnisher conducted a reasonable investigation of a consumer dispute.  This will typically occur during the "discovery" phase of litigation where evidence of the furnisher's investigation can be obtained through written requests for information, documents, admissions, and depositions.

​Litigation Practice Note: Prior to suing a furnisher under the FCRA for an unreasonable investigation, the consumer must first submit a credit report dispute to the credit bureau, which then sends the consumer’s dispute to the furnisher.

 

In short, identity theft laws may not prevent you from becoming an identity theft victim, but identity theft laws along with consumer protection laws can protect you and help you restore your credit if you are the victim of identity theft. 

Identity theft laws play a key role in combating identity theft and protecting individuals from financial and emotional harm if they become identity theft victims. Criminal identity theft laws provide some deterrence and restrict the use of personal information which can reduce the likelihood of identity theft or misuse of personal information. However, many cybercriminals are not be deterred by these laws, may be untraceable, or outside the jurisdiction of state or federal law enforcement.

Civil liability for identity theft can help consumers obtain recourse, but this is dependent upon identifying the criminal or perpetrator, which is not always possible. 

Consumer protection laws can offer broad protection and remedies to identity theft victims. Consumer protection statutes like the Fair Credit Reporting Act create private rights of action for certain identity theft victims and have fee-shifting provisions to ensure that consumers have access to credit lawyers and identity theft lawyers, who otherwise would be too expensive for the consumer to retain on their own or who would not be interested in pursuing identity theft lawsuits or credit report dispute lawsuits. 

Congress understood that fee-shifting was necessary to encourage credit lawyers to take on consumer cases, and to enforce the Fair Credit Reporting Act through civil lawsuits/private actions on behalf of consumers. Thus, the Fair Credit Reporting Act is an incredibly powerful tool available to consumers and identity theft victims.  

The Fair Credit Reporting Act has encouraged consumer attorneys to handle credit and identity theft lawsuits, which in turn permits consumers to secure experienced credit and identity theft lawyers. Additionally, the Fair Credit Reporting Act helps consumers and identity theft victims restore their credit to ensure that credit bureaus and furnishers of credit report information do not report inaccurate information about identity theft victims or attempt to hold the identity theft victim responsible for fraudulent accounts or fraudulent transactions.  

Identify theft lawyers can help consumers report identity theft to the appropriate law enforcement agencies, dispute identity theft credit report errors, and help ensure that credit bureaus and furnishers, such as banks, financial institutions, and credit card companies, do not hold identity theft victims responsible by reporting fraudulent accounts or fraudulent charges on consumer credit reports. ​

Attorney Nick Hadous is an accomplished consumer lawyer licensed in Michigan, Arizona, and California.  He has litigated cases arising under the Fair Credit Reporting Act in federal district courts and federal courts of appeals. Mr. Hadous has helped consumers dispute their credit reports in accordance with the Fair Credit Reporting Act, including identity theft credit report errors, and other common credit reporting errors, and has helped consumers sue and recover damages against credit bureaus and furnishers of consumer information that violate the Fair Credit Reporting Act.  Mr. Hadous currently serves on the Litigation Advisory Board for the Institute of Continuing Legal Education (ICLE) where he is a content contributor and author in consumer protection litigation, including the Fair Credit Reporting Act.

If you are struggling with identity theft credit report errors or other credit report errors, please contact us for a free phone or Zoom consultation by calling today or using the contact form below.