01 Mar What is the Bankruptcy Notification Service?
Bankruptcies affect thousands of decisions made by financial institutions on a daily basis. Banks and companies that extend credit use bankruptcies and other types of background information as a way to determine how much risk would be involved with loaning a person or business any amount of money.
The Bankruptcy Notification Service is a streamlined process that gathers relevant bankruptcy data on a person or entity and distributes it to interested parties.
The Ins and Outs of The Bankruptcy Notification Service
Visa and MasterCard developed this process as a way to streamline and collect data on bankruptcy cases nationwide in an efficient manner.
The process begins by collecting data from every district bankruptcy court in the United States, analyzing the data, assigning identification numbers to each case, and then forwarding the information to all three credit bureaus.
Once the bankruptcies have been logged and archived appropriately, the cases are sent to relevant organizations that have paid for the data and have special access privileges. This process is done on a daily basis and includes both individual and company bankruptcy information.
The Main Purpose of The Bankruptcy Notification Service
The Notification Service is primarily used to assist with the efficient recovery of monetary assets for as many cases as possible. Debt buyers are able to increase the amount of money they recover from merchant accounts, businesses and individuals by purchasing this information ahead of time and performing extensive research using the data provided by the Service.
Does This Service Adversely Affect Small Businesses?
Negative credit information is reported more accurately when bankruptcy filings are compiled and sent electronically using this system. Once the information shows up on a credit report, financial institutions are likely to decline any type of application made for loans, merchant accounts or lines of credit. For those applying to open a credit card processing service, a bankruptcy might be used in determining the final decision.
Before the Bankruptcy Notification Service existed, bankruptcy filings were sent to interested parties as hard copies. This method often took two weeks or more and prevented any debt collection from occurring before court proceedings were finished. Business owners who are planning to file for bankruptcy to get rid of past due loans can benefit from the Service because debt collectors now have a chance to contact the business to try and resolve the debt for a reduced amount, thereby helping the business with potentially avoiding a damaging bankruptcy record on their credit report.
If a business plans on applying for a credit card processing account with a bank, they should do whatever is necessary to avoid a bankruptcy, and the efficiency of the Bankruptcy Notification Service can help them negotiate any debts with debt collectors.