A reaffirmed account is a debt that the consumer has chosen to continue paying, even after filing for bankruptcy, through a formal reaffirmation agreement approved by the bankruptcy court. Because reaffirmed debts are excluded from the discharge, they must be reported differently than other accounts affected by bankruptcy.
Accurate reporting of reaffirmed accounts is essential to reflect ongoing responsibility, prevent misleading negative reporting, and remain compliant with the FCRA.
Why Reaffirmation Changes Reporting
In bankruptcy, most debts are discharged, meaning the consumer is no longer legally obligated to pay them. However, if an account is reaffirmed:
- The consumer remains responsible for payment
- The account should not be reported as included in bankruptcy
- Positive payment history can continue to build after reaffirmation
Failure to report this correctly can misrepresent the consumer’s creditworthiness and lead to disputes.
Steps for Reporting a Reaffirmed Account
1. Update the Account Status
If the account was current before bankruptcy and is reaffirmed:
- Continue to report current payment status going forward.
- Do not mark the account as “Discharged in Bankruptcy.”
If the account was delinquent before reaffirmation:
- Retain historical delinquency data
- Begin reporting ongoing payments after reaffirmation is in effect
2. Use the Proper Consumer Information Indicator
Set the Consumer Information Indicator to:
- “D – Reaffirmation of debt”
This code distinguishes reaffirmed accounts from discharged or dismissed accounts.
3. Continue Reporting Balance and Payment Information
- Balance Amount: Reflect the actual amount owed after reaffirmation
- Scheduled Monthly Payment Amount: Show the agreed-upon payment under the reaffirmation
- Continue to update payment activity monthly as long as the account remains active
4. Remove Bankruptcy Inclusion References
If the account was initially coded as “Included in Bankruptcy” before reaffirmation, update the reporting to remove that designation once reaffirmation is finalized. Leaving the bankruptcy code could mislead lenders and harm the consumer’s credit profile.
FCRA Compliance Requirements
The FCRA requires that:
- Credit reporting is accurate and not misleading
- Accounts are updated promptly when status changes (e.g., from bankruptcy inclusion to reaffirmed)
- Historical records are preserved while reflecting the current legal standing of the account
Failure to adjust reporting after reaffirmation may be considered inaccurate or incomplete under the law.
Impact on the Consumer’s Credit Report
- Preserves Positive Credit History
Reaffirmation allows the account to continue contributing to the consumer’s credit score if paid on time. - Avoids Misleading Bankruptcy Notations
Lenders see the account as active and being repaid, not discharged. - Supports Future Credit Applications
A properly reported reaffirmed account can demonstrate financial responsibility post-bankruptcy.
Conclusion
When a consumer reaffirms a debt in bankruptcy, the account should be reported as active and current, with the “Reaffirmation of debt” consumer indicator applied. By removing incorrect bankruptcy designations, maintaining accurate balance and payment data, and updating the account promptly, furnishers stay compliant with the FCRA while giving lenders a fair view of the consumer’s creditworthiness.