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Credit bureaus announce good news for consumers

Millions of Massachusetts residents who find themselves awash in consumer debt may be in for a pleasant surprise. The nation's three largest credit reporting agencies - Equifax, Experian and TransUnion - have announced changes that could directly impact consumers whose credit scores have been damaged by large credit card debt, medical bills or other financial obligations.

The agencies recently announced an agreement to improve how they collect and report consumer debt as well as respond to consumer concerns. Specifically, the agencies promised to improve customer service by providing more information on how to contest blemishes on credit reports, increasing assistance to victims of identity theft and replacing automated dispute resolution centers with live, trained employees.

The agencies also unveiled several brand new initiatives. For example, they agreed not to report medical debt for 180 days in order to account for frequent delays in insurance processing times. Additionally, they agreed to stop reporting any debt that is not based on contracts, such as fines. Experts foresee this agreement will have widespread effects on the credit industry.

For some Massachusetts consumers drowning in credit card debt or medical bills, however, this agreement offers no real financial relief. Creditors keep calling and debt continues to grow at an unsustainable rate. In many such cases, filing for Chapter 7 bankruptcy may be the best option.

Chapter 7 bankruptcy allows certain consumers to eliminate pesky debt - such as credit card and medical bills - while keeping essential assets, like their homes and automobiles. Other obligations such as student loans, child support and taxes cannot be discharged under Chapter 7.

An experienced bankruptcy attorney can help financially strapped individuals decide whether Chapter 7 is the right for them, and if so, what debts they could potentially be discharged.

Source: The Boston Globe, "Three big credit bureaus making it easier to contest their reports," March 10, 2015.

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