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Banking Case Study

Write Off Extends Bad Credit Record

You are on: The Problem

From the Perspective of the Client

Although the RBC® client’s debt had been written off by RBC several years ago, she was upset when she noticed the debt was still reflected on her credit bureau report. She thought the information would have been cleared from her report long before, and asked RBC to change her credit record. However, RBC insisted the information was correct, so she appealed to the Ombudsman.

From the Perspective of RBC

After determining that recovering the full amount of the client’s debt was unlikely, RBC reported their loss of income (known as a write off) in that accounting period. Banks are required to update loan records with consumer rating agencies, and the information they provide remains on the debtor's record for six or seven years. In the event of a write-off it can be even longer if the bank takes legal action against the client for their non-payment.

You are on: The Resolution

The Office of the Ombudsman Reports:

“Our investigation showed that the client's interpretation of the term write off differed from RBC practice. By writing off the debt, the client thought this meant RBC would no longer pursue her for payment, erasing her debt and cancelling her bad credit. After several conversations with the Ombudsman, she learned and accepted that the length of time for the information to stay on her credit record did not end with the write off, but actually began.”

You are on: What Can be Learned

For RBC:

Make sure clients understand RBC is required to report all debts left unpaid, partially paid or settled in full after being written off to credit bureaus. RBC cannot alter a client’s credit record, except to correct an error in reporting or add a note to say the debt was settled.

For Clients:

Be sure you understand or ask about the consequences of an overdue or unpaid loan. Review your credit record regularly to ensure it’s accurate.