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Banks Agree to Remove Credit Notations on "Zombie" Debt

Friday, May 8, 2015

A million or more consumers nationwide may see their credit histories improve as a result of an agreement in a Federal Bankruptcy Court in White Plains, New York.  As a result of two separate lawsuits brought in the court Bank of America and JPMorgan chase have agreed to update borrowers' credit reports to eliminate data on so-called zombie debts, delinquent accounts that had actually been extinguished in bankruptcy.

The banks, along with Citigroup and Synchrony Financial (formerly GE Capital) had been charged in the suit with retaining the information on the credit reports as live debts to enable the banks to generate higher prices for the loans when sold in pools to investors as bad debts. 

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