Bankruptcy expert Leon Bayer answers real-life questions.
As you may remember, you represented me in a Chapter 7 bankruptcy some time ago. I am now back on my feet and would like to pay a balance that I owed to my dentist prior to my bankruptcy. I included this debt in my bankruptcy, and it was discharged.
Once I pay the debt off, is there some way to include in my bankruptcy records that I paid the balance or that it was satisfied post-bankruptcy? Also, I’d like this to be reported on my credit report.
It’s good to hear from you, and yours is a good question. Here’s my two-part answer.
You Cannot Record the Payment in Your Prior Bankruptcy
Your bankruptcy court papers contain a record of the debts you owed on the date you filed bankruptcy. Whatever payments you make after the bankruptcy is not a function of your case. There is no procedure for reporting the payment of this debt to the bankruptcy court.
Your Dentist Bill and Your Credit Report
Not all creditors report payment information to the credit reporting agencies. Generally, only financial institutions and debt collectors report debt payments. Your credit report will also usually include debts reflected in public records, such as court judgments and tax liens.
Many businesses don’t want to waste the time or money (or risk potential liability of incorrect reporting) to report to credit bureaus. As a result, it’s extremely unlikely that your delinquent dentist bill appeared on your credit report.
If, however, your dentist sued you and got a judgment for the debt, that judgment will appear on your credit report for 10 years. But your report must also reflect that the debt was “discharged in bankruptcy” and that the current balance due is $0.
(To learn more about what information appears on your credit report and how long negative items can be reported, see Nolo’s Credit Reports & Credit Scores area.)
Should You Pay Your Dentist?
The bankruptcy law specifically says that you can still pay any debt, if you want to. From your question, it sounds like you have decided to pay the dentist, but have not yet done so?
Good reasons to pay your dentist are because the dentist did a great job for you, and perhaps you would like to return there. A bad reason is because you think it might improve your credit rating — the payment of a discharged debt will not do that.
Leon Bayer is a Los Angeles bankruptcy attorney. He is a partner at Bayer, Wishman & Leotta, a California law firm specializing in bankruptcy. The opinions and advice in this blog post are from Mr. Bayer alone, and should not be attributed to Nolo. By answering a question on this blog, Mr. Bayer does not become your lawyer.