Why do my mortgage payments not report to the credit bureaus after bankruptcy?

After bankruptcy is filed, people are often surprised and disappointed to see their timely monthly mortgage payments no longer reported to the credit bureaus.

Mortgagees (i.e., the lender that holds the mortgage note) and creditors typically reason that the automatic stay—which is invoked the moment a bankruptcy case is filed and affords debtors in bankruptcy proceedings expansive relief from creditor communications and collection activities—prevents them from credit reporting of payments and defaults. Fair enough, but the automatic stay ceases upon discharge in a chapter 7 case, which is usually 90 days after the case is filed.

Technically and unless the mortgage is reaffirmed, one’s personal liability for the mortgage note will be discharged in bankruptcy. "Discharged in bankruptcy" or “Included in bankruptcy” is likely how the mortgage will be reported to the credit bureaus and thus why future payments are no longer reported post-bankruptcy. But this is not a hard rule or law, just the mortgagee’s policy.

Even in the rare scenario that a chapter 7 debtor reaffirms their mortgage during a Chapter 7 bankruptcy proceeding, the current position of many mortgage lenders is that future payments still will not be reported to the credit bureaus even when the mortgage has been reaffirmed. How unfair does that sound?

What can you do? Plan A is not to reaffirm a mortgage. Otherwise, do not sign a mortgage reaffirmation agreement for the purpose of credit reporting without certainty from your lender that their policy is to report future payments to the credit bureaus. Alternatively, and once eligible, usually in at least 2-3 years with rebuilt credit, refinancing the mortgage will result in credit reporting for that new note.