Many Michigan residents have turned to bankruptcy in order to get relief from financial obligations so that they can rebuild their lives after a business failure, a job loss or some unexpected emergency. When a Michigan resident files bankruptcy, he or she rightly expects that most of his or her debt will be discharged and thereby uncollectible.
The discharge is the key to a successful bankruptcy since it legally erases a person's prior debts so that he or she can get a fresh financial start. It is somewhat disturbing, then, that a recent report states that bankruptcy officials are investigating several large banks for engaging a subtle scheme to pressure debtor who have received a discharge into paying old debts that, presumably, they could not afford.
Legally, banks must update credit information so that the major credit-reporting firms will show that an old debt was discharged in bankruptcy. Allegedly, banks have consistently failed to do so, not because of carelessness, but as part of a plan to squeeze debtors into "voluntarily" repaying the discharged debt. When banks do not update their credit information, a debtor can find himself or herself either having to remove the black mark on their credit report or having to go without a job or an apartment.
No matter what one's explanation for doing so, it is simply not legal for a bank, or any other creditor, to violate a valid discharge order once the creditor knows of the order's existence. Should a bank or other creditor engage in underhanded tactics to skirt this law, a debtor may have legal remedies available to him or her so that he or she can protect the fresh financial start that he or she has been given.
Source: telegram.com, "Debts canceled by bankruptcy still held over consumers' heads," Jessica Silver-Greenberg, Nov. 13, 2014.