Bankruptcy

Table of Contents

Credit Bureau Extract Metro 2 Format users. Bankruptcy process overview and processes for reporting various bankruptcy scenarios.

• All borrowers file bankruptcy Chapter 7 or 11
• One borrower files bankruptcy Chapter 7 or 11; others do not
• All borrowers file bankruptcy Chapter 12 or 13
• One borrower files bankruptcy Chapter 12 or 13, others do not
• One borrower files bankruptcy Chapter 7 or 11; at a later time, second borrower also files Chapter 7 or 11
• One borrower files bankruptcy Chapter 12 or 13; at a later time second borrower also files Chapter 12 or 13
• One borrower files bankruptcy Chapter 7 while second borrower files Chapter 13 during same reporting period
• One borrower files bankruptcy Chapter 7; at a later time, second borrower files Chapter 13
• One borrower files bankruptcy Chapter 13; at a later time, second borrower files Chapter 7
• Lease Assumption (from bankruptcy)
  • When client in Chapter 7 or 11 bankruptcy assumes a lease they might otherwise cease making payment for

Steps Applicable to All Bankruptcy Scenarios

1. User receives notification that a client has filed for bankruptcy
2. Through interactive U0241 Credit Bureau Bankruptcy or third-party interface via API, the User sets the Chapter of bankruptcy and the stage 'Petitioned' for that client, which in turn updates the Consumer Information Indicator (CII) to reflect that a petition has been filed for a particular bankruptcy Chapter. API users can instead have their interface update CII values directly
3. When the CII of a client on the lease changes, LP checks to see if conditions are met to freeze values during bankruptcy proceedings (values may already be frozen if custom Activity Status/Substatus combination rules apply or the lease has been charged off)
4. When U0462 Credit Bureau Extract creates monthly data for credit bureau reporting, it will check to see if there are any frozen values for the account and use those values instead of current values
5. LP will report the current month's PHP tick as D (no payment history available this month) after first month (if applicable)
6. During each relevant stage of the bankruptcy, the user must set the appropriate stage ('Discharged', 'Dismissed', 'Withdrawn') for the affected client. This will update the CII with the corresponding value for Chapter/stage
7. With each CII change, LP will recheck to see if values need to continue to be frozen and if PHP tick still needs to be D (values may remain frozen if custom Activity Status/Substatus combination rules apply or the lease has been charged off)
8. When the user updates the stage for the client to indicate that a bankruptcy resolution has been reached, LP will check again to see that all requirements are met to clear frozen field values and, if so, resume normal reporting for that account (values may remain frozen if custom Activity Status/Substatus combination rules apply or the lease has been charged off)
9. When a bankruptcy is discharged (CII set to E, F, G, or H), LP will report the discharge once, then cease reporting for that client. If or when the discharge affects all clients on an account, LP will report the final discharge, then cease reporting the account
10. If a bankruptcy is closed or terminated without being discharged, dismissed, or withdrawn, the User must check the box "Report removal request" to report a CII of Q (removal of previous value)
11. If any stage of the bankruptcy requires that a lessee, co-lessee, or guarantor be terminated (ECOA set to T – Terminated), U0462 Credit Bureau Extract will report and mark the lessee, co-lessee, or guarantor on the lease as having been "terminated" from the lease

Field Values to Freeze and When to Freeze Them

When these conditions are true, LP will freeze the field values and set DOFD to either the current DOFD or the date of bankruptcy petition or notification, whichever is earlier, if the values have not already been frozen.

Payment Rating will only be present if lease has been terminated. If current DOFD is (blank) or (NULL), U0462 Credit Bureau Extract will use the date of bankruptcy filing date.

When to Clear Frozen Values

As a bankruptcy proceeds to resolution, the User will need to make appropriate changes to each affected client's bankruptcy stage ('Discharged', 'Dismissed', 'Withdrawn'). With each corresponding CII change, LP will recheck the conditions for freezing field values. If all conditions are no longer true, LP will clear the frozen values and normal reporting on those values will resume.

How to Update Bankruptcy Information

Interactive U0241 Credit Bureau Bankruptcy or third-party interface via API allows the User to set the Chapter of bankruptcy and appropriate stage for any or all leases or loans that a client is associated with. Each Chapter/stage combination corresponds to a unique CII value.

Consumer Information Indicator Values for Borrower Filing Bankruptcy Chapter 7 or 11

Code Values Used in Typical Flow

A – Petition for Chapter 7 Bankruptcy
B – Petition for Chapter 11 Bankruptcy
E – Discharged through Bankruptcy Chapter 7
F – Discharged through Bankruptcy Chapter 11
I – Chapter 7 Bankruptcy Dismissed
J – Chapter 11 Bankruptcy Dismissed
M – Chapter 7 Bankruptcy Withdrawn
N – Chapter 11 Bankruptcy Withdrawn
2A – Lease Assumption
Q – Removes previously reported Bankruptcy Indicator. Also used to report Bankruptcies that have been closed or terminated without being discharged or dismissed. Note: Do not report Q as a default value
S – Removes previously reported Lease Assumption Indicator

Typical Flow

• Month bankruptcy filed: Use U0241 Credit Bureau Bankruptcy to set chapter 'Chapter 7' or 'Chapter 11' and stage 'Petitioned' (CII A or B)
• Months between petition and bankruptcy resolution: No action required
• Lease assumption: Follow process for Lease Assumption (from bankruptcy)
• Bankruptcy discharged: Set stage to 'Discharged' (CII E or F)
• Bankruptcy dismissed: Set stage to 'Dismissed' (CII I or J)
• Bankruptcy withdrawn: Set stage to 'Withdrawn' (CII M or N)

API users updating CII directly should check with most recent CRRG for any CII value changes. Set each borrower's Chapter and stage separately according to their individual bankruptcy status.

Consumer Information Indicator Values for Borrower Filing Bankruptcy Chapter 12 or 13

Code Values Used in Typical Flow

C – Petition for Chapter 12 Bankruptcy
D – Petition for Chapter 13 Bankruptcy
G – Discharged through Bankruptcy Chapter 12 (should be reported when consumer has completed all payments through the Chapter 12 plan)
H – Discharged through Bankruptcy Chapter 13 (should be reported when consumer has completed all payments through the Chapter 13 plan)
K – Chapter 12 Bankruptcy Dismissed
L – Chapter 13 Bankruptcy Dismissed
O – Chapter 12 Bankruptcy Withdrawn
P – Chapter 13 Bankruptcy Withdrawn
Q – Removes previously reported Bankruptcy Indicator. Also used to report Bankruptcies that have been closed or terminated without being discharged or dismissed. Do not report Q as a default value

Typical Flow

• Month bankruptcy filed: Use U0241 Credit Bureau Bankruptcy to set chapter 'Chapter 12' or 'Chapter 13' and stage 'Petitioned' (CII C or D)
• Months between petition and bankruptcy resolution: No action required
• Plan confirmed: Set stage to 'Petitioned' (CII C or D), if not already set to 'Petitioned'. Optionally, select/check (set to 'Y') "Plan confirmed" in U0241/API
• Chapter 12 or 13 Converted to Chapter 7: Change chapter to 'Chapter 7' and stage to either 'Petitioned' or 'Discharged', depending on status
• Plan completed—all payments made according to plan—no further obligation: Set stage to 'Discharged' (CII G or H)
• Bankruptcy dismissed: Set stage to 'Dismissed' (CII K or L)
• Bankruptcy withdrawn: Set stage to 'Withdrawn' (CII O or P)

API users updating CII directly should check with most recent CRRG for any CII value changes. Set each borrower's Chapter and stage separately according to their individual bankruptcy status.