More than 500,000 Americans file for bankruptcy every year. Source
Bankruptcies stay on your credit report for different years depending on the type. Chapter 7 (complete bankruptcy) stays on your credit report for 10 years. A Chapter 13 (payment plan) bankruptcy remains for 7 years.
The three U.S. credit bureaus (Equifax, Experian and TransUnion) receive most of their information from the lenders who granted you credit or collection agencies attempting to collect unpaid debts, according to the Equifax Credit Bureau. They do not get their information from the bankruptcy courts. The U.S. Bankruptcy Court, District of Maryland clearly stated that the courts do not report bankruptcies to the credit bureaus. Source
Ironically, most bankruptcies are reported to the 3 credit bureaus by the debtor. Bankruptcy petitions have “Schedules” which lists all creditors and more including the 3 national credit bureaus. Bankruptcy lawyers do this to protect their clients because creditors not named are not included in the bankruptcy protection and can pursue the debtor after the bankruptcy is filed. Source
A Bankruptcy can be Removed from Your Credit Report
Don’t believe the credit bureaus with their online ads making you think it is impossible to remove a bankruptcy from your credit before the 7 or 10 years are up. Contrary to popular belief, a bankruptcy can be removed from your credit report earlier. This means you do not have to wait 7 or 10 years before getting a car loan, mortgage, or other types of credit.
It’s not easy, but with some time and persistence, a bankruptcy can be removed from all three credit bureaus reports. You must file separate disputes with all three credit bureaus. They must be worded properly. One mistake can cause your dispute to be dismissed as “frivolous” which is another way of saying its “groundless”.
What types of Bankruptcies can be Removed
There are two types of dismissals of bankruptcies:
- Dismissed for improper filing meaning it should have never been filed in the first place; and
- Dismissed after being legally filed for a “technicality”. This means the bankruptcy was properly filed, but the court threw out the bankruptcy for other reasons.
Improperly filed bankruptcies can be permanently removed from your credit report.
Properly filed bankruptcies dismissed because of a technicality cannot be removed from the credit report, but the dismissal should be included.
Credit bureaus do not automatically receive news of the dismissal so the original bankruptcy filing remains on their credit reports without mentioning the dismissal.
Successfully concluding a bankruptcy is called a “discharge” which is not a dismissal.
The Process for Removing Bankruptcies
You can dispute a credit report by claiming an inaccuracy of its information or demanding verification of the bankruptcy.
To get the bankruptcy removed from your credit report because it should have never been filed or to add the dismissal of the bankruptcy, here are the steps to take: Source
- You must first obtain the bankruptcy court records showing the dismissal. A certified copy will be necessary.
- Contact the three credit reporting agencies with the certified copy of the court records showing the dismissal. If the filing was in error, request they completely remove the bankruptcy from your credit report. If a dismissal was ordered after the bankruptcy was legally filed, request that the dismissal be included in your credit report.
- If one or more credit reporting agencies refuse, you must obtain a court order removing the bankruptcy filing from your credit reports.
Challenge the Credit Reporting Agency Verification
A bankruptcy law firm recommends taking these steps in order to challenge a credit reporting agency’s verification of the bankruptcy to remove it:
- Credit reporting bureaus must take the verification of their information very seriously. U.S. consumer protection laws require credit bureaus to verify all contested and disputed information in their credit reports. Therefore, challenge any information you feel is inaccurate in your credit report.
- Know that credit bureaus do not visit courthouses or access court records on their own because they do not have the time. Credit reporting agencies are in business to make a profit and not waste time investigating court records.
- Obtain certified court records showing the dismissal or fulfillment of bankruptcy proceedings.
- File a formal complaint with each credit bureau challenging information in error and back it up with the certified court records.
- As a practical matter, such challenges requiring verification presents enough hurdles to the credit bureaus often resulting in premature removal of the bankruptcy from the credit report.
You can save tons of time and have your disputes worded properly by hiring a credit repair company. They are very experienced with disputing negative items on your credit reports. They also specialize in removing bankruptcies from credit reports. In addition, they can also remove items included in bankruptcies like collections and charge-offs.
Legal Disclaimer – Credit Repair Heroes does not provide legal advice. The information provided in this blog are for informational purposes only and not for the purpose of providing legal advice. The author is not a lawyer and no attorney-client or confidential relationship exists or will be formed between you and Credit Repair Heroes or the author. You should contact an attorney to obtain advice with respect to any particular issue or problem.