Thomas F. Miles, Attorney and Counselor at Law
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Zombies and personal bankruptcy: The risk is real

When faced with a bankruptcy filing, California consumers have a great many details to attend to. Gathering information on all existing debts, completing the required paperwork and meeting with one's bankruptcy attorney are all important tasks on the debt relief to-do list. Once a personal bankruptcy is complete, a new set of tasks is required. One of the most important steps to take after the discharge process is complete is to keep an eye out for zombies.

Zombies are debts that were discharged through the bankruptcy process but which continue to be reported to the credit bureaus as active or delinquent accounts. They have been killed by way of the discharge, yet remain alive within one's credit report. While the name may inspire chuckles, the realities of zombie debt are anything but laughable. Having these accounts improperly reported can lead to credit scoring errors and collection efforts that continue long after the bankruptcy is complete. Having these debts remain in place can even impede one's ability to find a new job.

The problem has led to a proposed bill called the Consumer Reporting Fairness Act. If passed, that legislation would force creditors to report all debts that are discharged through bankruptcy as having a zero balance. If this step fails to be taken, the debtor would have the right to pursue a civil lawsuit against the creditor.

Should this proposed bill be signed into law, consumers in California and elsewhere could have more leverage when it comes to having debts correctly noted within their credit reports. Until then, individuals who emerge from personal bankruptcy must take the time to check their own reports in the months following the discharge process. If there are any errors or omissions, it is important to go through the credit bureau's challenge process to have those items properly reflected within the report.

Source:, "The Zombie Lurking in Your Last Debt Payment", David Dayen, July 17, 2015

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Thomas F. Miles, Attorney and Counselor at Law
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