If you’ve been forced into bankruptcy, you are far from alone. More than 700,000 Americans declared bankruptcy in 2017, all of whom want to get this financial red flag off their credit reports as soon as possible.
Assuming that the bankruptcy is legitimate rather than the result of identity theft or a clerical error, it will remain on your credit report for seven to 10 years. However, desirable as it may be, getting bankruptcy off your credit report shouldn’t be the overriding concern.
5 Simple Ways to Remove A Bankruptcy From Your Credit Report
- Review your credit reports. Check to see if there are ANY errors on your credit report regarding the bankruptcy.
- File a dispute. Dispute the bankruptcy with the credit bureau(s) while making sure NOT to admit any fault.
- File a verification request. If the credit bureau denies your dispute, make them verify their information about your account is accurate.
- Send a letter to the court administrator. Follow up with the court to make sure the credit bureau actually verified your bankruptcy.
- Follow up with the credit bureau. Send a letter to the credit bureau saying the court was unable to verify your account records, and request another deletion.
How to remove a legitimate bankruptcy from your credit report
I hate to start with the bad news, but here you go: if you have a legitimate bankruptcy on your credit report—meaning, you filed the bankruptcy, went through the legal process, and you know the bankruptcy is the real deal—the chances of getting it removed early are slim.
But credit repair is all about knowing the rules of the game and using little technicalities to your advantage.
And one thing you MUST understand is that the credit bureaus are required by law to report items on your credit report accurately—and this includes bankruptcies.
If you can find something inaccurate about the way the bankruptcy is reported, you may have a chance at getting it deleted from your credit report.
In other words, you shift the burden of proof to the credit bureaus by requiring them to verify that the bankruptcy is totally and completely accurate.
Here’s how to do it:
1. Review your credit reports for ANY errors
Start by reviewing your credit reports and looking for ANY errors regarding your bankruptcy.
By law, you’re entitled to a free copy of your credit report once every 12 months, and you can request your free report by visiting www.annualcreditreport.com.
Once you have your credit report, check it over for accuracy.
You want to look for any type of error: a misspelling of your name, an incorrect address, the wrong account number, the wrong date, etc.
Basically, any type of technicality that you can use in order to bring on a dispute.
2. File a dispute
Your next step is to file a dispute with the credit bureaus.
Important: When you do this, do not admit ANY fault or that the bankruptcy is legitimate.
Instead, simply state that you’re disputing the bankruptcy and point out exactly which aspect of it you believe is inaccurate.
Keep in mind that you’re more likely to be successful if you dispute a specific detail about the way the bankruptcy is reported rather than the entire bankruptcy itself.
For example, you might dispute an inaccurate filing date or discharge date.
You can also file a dispute if your credit report lists the wrong type of bankruptcy (a Chapter 7 versus a Chapter 13).
These smaller details are more difficult for the credit bureaus to investigate than the bankruptcy as a whole.
3. File a verification request
If the credit bureaus claim that your bankruptcy is accurately reported, the next step is to make them confirm where they got their information about the bankruptcy.
Under the Fair Credit Reporting Act (FCRA), the credit bureaus are required to tell you the source of their information when it comes to the items on your credit report.
In your letter or communication requesting verification, ask the credit bureaus to confirm the following information:
- Name and address of the courthouse
- Phone number of the courthouse they contacted
- Name of the person who verified the disputed information
- Any documentation used to verify the dispute
Chances are, the credit bureaus will claim they verified the bankruptcy with the court.
But here’s the thing: the federal bankruptcy courts explicitly state that they “do not provide information to the credit reporting agencies.”
We will use this bit of information to our advantage!
4. Send a letter to the court administrator
If the credit bureaus claim they verified their information with the bankruptcy court, you can also write the court yourself, asking the court administrator about its procedure for verifying records with the credit bureaus.
When you do this, be sure to include a self-addressed stamped envelope to increase your chance of getting a response.
When you contact the bankruptcy court, you might have to dig a little bit to find the right department and address for your letter.
Start by visiting the court’s website, and then look for any tab or menu item that says “clerk’s office” or “clerk of courts.”
The court’s website should list phone numbers for various departments—don’t hesitate to call around to make sure you’re sending your letter to the correct department.
Depending on which court you’re dealing with, you might receive any number of responses.
But the bankruptcy courts say they don’t verify bankruptcy information with the credit bureaus. Instead, the courts post bankruptcies on their dockets, which are public records.
In short, if a credit bureau claims it “verified” your bankruptcy with the court, this almost certainly isn’t true.
If you can get a letter from the court saying as much, you might have a chance of getting the credit bureau to remove your bankruptcy.
5. Follow up with the credit bureaus and request a deletion
Once you have a letter from the court stating that it hasn’t verified your bankruptcy with the credit bureaus, follow up with the credit bureaus.
Mail another letter saying you contacted the administrator of the courthouse and they told you they don’t furnish records and information to the credit bureaus.
And be sure to include a copy of the court’s response letter to back up your statements.
In your follow-up letter, you should also request a deletion of your bankruptcy based on a lack of verification.
There is no guarantee of success, but it’s definitely worth a try!
How Long Does a Bankruptcy Stay on My Credit Report?
According to the Fair Credit Reporting Act (FCRA), a Chapter 7 bankruptcy can remain on your credit history for up to 10 years from the filing date and a Chapter 13 bankruptcy can remain for a maximum of seven years.
The FCRA states only the legal maximum amount of time bankruptcies can appear on your report and not the minimum. This means a bankruptcy can be removed earlier than the legal maximum, but it must be proven that it is misreported, unsubstantiated or otherwise found inaccurate. A bankruptcy cannot be removed simply because you do not want it there.
How Does Bankruptcy Affect My Credit Score?
The impact of bankruptcy on a credit report can be devastating and entirely depends on your credit score prior to filing.
According to FICO’s published Damage Points guidelines, the effects range from 130 to a 240 point drop. For example:
- A person with a 680 credit score would drop between 130 and 150 points.
- A person with a 780 credit score would drop between 220 and 240 points.
So, if your credit score was high, a bankruptcy would drop it instantly to the poor category. Starting with a good score, you likewise end up with a poor score, but your score does not plummet nearly as far.
The end result is still negative — your credit score is bad and it will keep you from getting approved for new credit. The lower your initial score, the less drastic the impact.
What is Chapter 7 bankruptcy
If you file a Chapter 7 bankruptcy, you’ll probably have to wait the full 10 years for the derogatory mark to drop off your credit reports.
Debts included in your bankruptcy can also negatively impact your credit reports — any discharged debts are likely to be listed as “included in bankruptcy” or “discharged,” with a balance of $0. In a Chapter 7 bankruptcy, these accounts should fall off your reports seven years from the date you filed, unless the accounts were delinquent before the bankruptcy filing date (then they could fall off sooner).
What is Chapter 13 bankruptcy
A Chapter 13 bankruptcy is a little different. In a Chapter 13 bankruptcy, you agree to a repayment plan that usually takes place over three to five years. Once you’ve completed the repayment plan, the debts included in the plan may be eligible to be discharged.
A completed Chapter 13 bankruptcy and the accounts included in it should disappear from your credit reports seven years from the date you filed. Accounts that were delinquent before the bankruptcy filing may be removed from your reports sooner.
Another thing you should know is that lenders may look at Chapter 13 bankruptcy a little more favorably than Chapter 7, because with Chapter 13 bankruptcy you normally agree to repay at least some of your debt.
Rebuilding your credit after bankruptcy
Bankruptcy can be a low point in your financial life, but it’s not the end of the world.
Many people describe bankruptcy as a fresh start or a clean slate. If you approach it this way—with a determination to learn from past mistakes—you can start rebuilding your credit right away.
To do this, you can implement a number of credit repair strategies, although it’s best to pick one or two rather than attempting to take on every strategy at once.
Here are a few to consider:
1. Secured credit cards
Many people start the bankruptcy recovery process by opening a secured credit card.
With a secured card, you make a small deposit, which acts as collateral.
As you make purchases and pay them off, your creditor reports your on-time payments to the credit bureaus.
Many secured credit cards have an option to transition to an unsecured card with a higher limit after a certain period of time.
2. Credit builder loans
You can also apply for a credit builder loan, which can help boost your credit score.
With a credit builder loan, the lender deposits a certain amount of money in a sort of savings account, and you make payments into the account. (See our full Self Lender review).
Once you’ve “paid off” the balance, you get your money back, plus any interest your lender offers.
Basically, you pay yourself over time, and the lender reports your payments to the credit bureaus.
3. Become an authorized user
Another strategy for boosting your credit score is to become an authorized user on someone else’s account.
If you know someone (like a parent or spouse) with good credit, ask them to add you as an authorized user on one of their credit cards.
If you choose this strategy, you’ll want to make some kind of agreement to pay your share of the card balance.
You should also make sure the creditor reports your payment history to the credit bureaus—you can verify this by contacting the credit card company and asking if they report an authorized user’s payments to the credit bureaus.
Credit tips after bankruptcy
Here are some steps you might want to take to try to keep your bankruptcy from having a worse impact than it could on your credit reports and credit scores.
1. Make sure the right accounts were reported
After your debts are discharged, review your credit reports to make sure that only the accounts that were part of your bankruptcy are reported by the credit bureaus as “discharged” or “included in bankruptcy” on your reports. If you find mistakes, notify the credit bureaus and dispute the errors on your credit reports (it can take a couple of months for the accounts to be updated).
2. Work on rebuilding your credit with a secured card
After your bankruptcy, you might want to try to get a secured credit card. Making all of your payments on the secured card in full and on time and keeping your credit card utilization rate low could help you improve your credit over time.
3. Review your reports once the time is up
Once your bankruptcy has been completed and the seven- or 10-year clock has expired, review your reports again to make sure the bankruptcy was removed.
A bankruptcy should fall off your credit reports automatically, but if it doesn’t, notify the credit bureaus and ask to have the bankruptcy removed and your reports updated.
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