Prepare for Simplified Bankruptcy Reporting Guidance in 3 Steps

Adoption of the Metro 2^® simplified bankruptcy reporting guidance is required by May 2025 and it will undoubtedly impact furnishing and disputes programs. Bridgeforce recommends three critical system enhancements and process changes to ensure your bank is equipped for the new guidance.

Simplified Bankruptcy Reporting Guidance Required in May 2025 – Original Guidance Retiring

The Consumer Data Industry Association (CDIA^®) officially announced the original bankruptcy reporting guidance will be retired in May 2025. These changes impact furnishing and disputes programs. So, if your organization hasn’t updated processes or made necessary system enhancements to prepare for these changes, now is the time! Here are valuable tips for successfully transitioning from the original to the alternate simplified bankruptcy reporting guidance.

3 Steps to Prepare Furnishing and Disputes Programs for New Guidance

Get ready for the simplified bankruptcy reporting guidance with the following system enhancements and process changes:

• Perform system updates to your loan servicing software for bankruptcy reporting.
• Review and update procedures, process maps, and data mapping documents.
• Train your staff on the bankruptcy reporting guidance changes.

1. Update your loan servicing software – contact your vendor or perform in-house

If your organization uses a loan servicing software vendor, contact them to receive system updates for bankruptcy reporting. Most vendors have a prepared solution ready for implementation and will support you with delivery of the updated solution for furnishing bankruptcy accounts. Whether you use a loan servicing software vendor or not, here are some key steps to take for implementing necessary changes to your software:

1. First and foremost, engage with your organization’s change management program to ensure that all key stakeholders understand how any system changes may impact their programs.
2. Use the Credit Reporting Resource Guide^® (CRRG), to build a business requirements document outlining the accurate reporting for each bankruptcy scenario. Validate that the logic, whether built internally or by your software vendor, meets the guidelines outlined in the CRRG^®.  Note: Reference FAQ 27 and 28, options C and D of the CRRG^® to find the alternate simplified reporting requirements to be used for building test scripts.
3. Review current logic and identify any previously implemented custom code that could impact necessary changes for new bankruptcy logic. Work with the vendor, your engineering team, or both to document these scenarios and consider potential impact of logic changes on current processes.
4. Conduct thorough testing of all systems in a non-production test environment to ensure successful implementation upon installation. Document and resolve all defects before implementation, unless a sustainable workaround can be executed, until a fix can be tested and implemented post-implementation.
5. Perform sustainability testing after implementation to confirm and document that all changes were executed successfully.

2. Review procedures, process maps, and data mapping against new guidance – update accordingly

Review and update procedures, process maps and data mapping documentation. The simplified bankruptcy reporting guidance differs significantly from the original reporting guidance. For example:

• The original guidance requires the Account Status be frozen at the time of bankruptcy petition. Under the simplified guidance this is no longer the case.
• The original guidance is to place Ds in the Payment History Profile during the active bankruptcy period for chapters 7 and 11 bankruptcy. Simplified guidance has removed this requirement.

Thoroughly review and update furnishing and disputes procedures, process maps, and data maps to align with the simplified bankruptcy reporting guidance.

For a refresher on creating proper procedures that reduce operational risk, read our all-encompassing guide.

3. Train your staff to introduce new bankruptcy changes

Train all relevant teams and staff members to understand the bankruptcy changes. Teach them how changes affect processes and how to effectively execute processes and controls post-implementation.

A word of caution: inadequate training for your team and inaccurate responses to bankruptcy disputes could prevent timely updates to your customers’ credit reports, potentially increasing dispute volumes. And higher dispute volumes can open you up to potential FCRA violations and lower customer satisfaction.

Keep in mind that employee training is most effective when it includes hands-on examples. These examples provide your team with the experience needed to handle difficult situations. Check out our blog that breaks down the 5 critical elements for productive employee training. Use these tips to plan your new bankruptcy lessons.

Managing Change is Straightforward with Bridgeforce

If you need support with implementing the new bankruptcy changes, Bridgeforce can help. We can steer your operations through regulatory changes like the updated bankruptcy guidance. From loan servicing changes to process and procedure updates to agent training, we provide comprehensive support.  Our experience-backed advisors have completed more than 140 regulatory projects and more than 300 successful change projects. Contact us to get a quote.

[Editor’s note: this article was contributed to by former Senior Program Manager at Bridgeforce, Dianna Cooper]