I’m applying for a loan modification. No, this has nothing to do with the housing bubble, we bought our house long before then.
Anyway, it asks if I declared bankruptcy and if and when it was discharged. I filled in 1997 and it stays on your record for 10 years so it went off in 2007. So, since it’s been off of my record for three years do I have to put down that I filed for it?
Yes. It is civil fraud if you don’t. Additionally, if the application is signed under penalty of perjury, it is criminal fraud if you don’t. And it will most certainly show up on a records check that anyone can do on the internet.
Don’t ask us, ask the loan officer.
Call them anonymously if you like - say your interested in a loan mod, but were concerned because you’d filed for Chapter X in 1997 and didn’t know if that would affect the loan.
I figured. What’s the point of it going off of your record after 10 years if financial institutions can demand to know about it anyway?
I don’t think it goes “off your record”. You are discharged from bankruptcy, meaning that you are no longer subject to the legal restrictions that apply to a bankrupt, but the fact that you did at one stage become a bankrupt, and the circumstances in which you were discharged from bankruptcy, are obviously of interest to someone who is considering extending a loan to you now.
It does go off your credit report after 10 years (7 years for a Chapter 13), which could possibly result in your score going up. But there’s nothing I’m aware of preventing the bank from asking the question anyway.
I’ve seen the question once before so they do ask, but my point is, I thought that going off your record was for the purpose of not having it count against you. If banks or other agencies can ask about it anyway with it being illegal to say no, then that seems to run counter to that.
I’m open to correction here, but I think that a “credit record” is simply an agreed finance industry standard about how creditworthiness information is collated, stored and shared. It has no legal standing. Banks are not required to rely on it when making lending decisions, though they mostly do. More to the point, they are not required to rely only on it when making lending decisions. If there is other information not reflected in your “credit record” which they think would be useful, they are free to take account of that information.
The poitn is that if information is reflected in your credit record, then banks almost certainly will take it into account in their lending decisions. If it isn’t, then they may or may not.
To expand on what UDS wrote, the credit agencies have no obligation to remove the bankruptcy info at any point. They simply choose to do so. If the law would obligate them to hide this info after a certain number of years, then one could argue that it is illegal to ask applicants after that point has passed. But since there is no such requirement, it is not wrong to ask, and that makes it perjury if one lies.
Bankruptcy is done through the courts, so I thought that the whole thing was a legal procedure. You’re saying that the removal from records in 7 or 10 years is voluntary?
Second, the mortgage company wants the filing date and case number. I got rid of that info three years ago when I thought the whole thing was supposed to be behind me. What agency do I contact to get the number?
“Discharged” is NOT what occurs at the end of the ten years.
Here are the stages one goes through:[ul]
[li]First, one is an ordinary - but broke - person, struggling to juggle his debts.[/li]
[li]Then, he applies for bankruptcy. At this point, technically he does still owe the money, but the creditors are no longer allowed to hound him for payment, pending the court’s ruling. On the other hand, IIRC, he is not allowed to take on additional debt, because he hopes to get discharged and not have to pay it back; taking on such new debt would be fraud.[/li]
[li]Then, if the court approves his application, he is “discharged”, and does not owe that money any more. He is free to apply for new loans (if anyone will lend to him) because this bankruptcy is over and done with. There’s no way he can escape having to pay these new debts, because he would need a whole new bankruptcy for that.[/li]
[li]The credit agencies keep this info on his record for 10 years. After that, they remove it, because it is “old news” and doesn’t affect his current creditworthiness. But that doesn’t mea8n it didn’t happen.[/li][/ul]This is a very different matter than having one’s criminal record expunged. My understanding is that in that case, for all intents and purposes, we consider the events as never having happened, and so one IS allowed to say, “No, I never got arrested.” But the bankruptcy DID happen, and it is NOT expunged. It is simply old news, and one cannot lie about it.
Creditors ask for the same reason job applications used to say “Have you ever been convicted of a felony.”
NOW they say
Have you ever been CHARGED with a felony.