The Bankruptcy Notification Service is a joint effort of the two major worldwide credit card companies (MasterCard and Visa) to log, track and assess bankruptcy filings and related items. All individual and business bankruptcy filings, and related cases, are gathered from all district bankruptcy courts, sent to the major credit bureaus (Experian, Equifax, etc.), and are assigned identifying numbers. Using these numbers, this bankruptcy information is routed daily to appropriate parties who have paid for the data and have special access to it.
Bankruptcy Services largely enable debt buyers to increase their recovery rate on business and merchant accounts that have defaulted on loans or are approaching bankruptcy. When a debt buyer purchases a debt and realizes that an account is approaching bankruptcy, or has already made a Chapter 7 or a Chapter 13 filing (in the United States), the service can detect this crucial information rendered from the credit bureau reports. The credit bureaus gather all of their information from what are termed “data furnishers.” These include creditors, debt collection agencies, utilities and, of course, the courts. All of this information ends up in the credit bureau’s data files, which are made available for credit scoring for a range of financial and business needs, from determining mortgage rates and buying a house to employment decisions.
Bankruptcy Services provide Bankruptcy Notifications to help debt buyers manage their portfolios, usually on a daily basis, as new information comes into them. As it is now done electronically, hardcopy bankruptcy filings do not have to be sent to previous account holders, thus allowing the debt buyer nearly two weeks’ lead time. This can forestall expensive collection agency efforts in cases where it is still possible to make arrangements with the debtors to repay their debt without having to file bankruptcy.