How to Remove a Bankruptcy from Your Credit Report
April 4, 2019
Many people see declaring bankruptcy as hitting financial rock bottom. In 2017, more than 767,700 people filed for personal bankruptcy. Encouragingly, this is nearly half the number of bankruptcies filed in 2010, when the fallout from the Great Recession was at its worst. Still, it is enough to show the enormity of bankruptcy’s wide effect on Americans.
Beyond the stress, heartache, and inconvenience that comes with filing bankruptcy, one of the biggest and longest-standing impacts is what it does to your credit report and score. While most people realize a bankruptcy is going to hurt their score, there are a number of factors involved. And, in some circumstances, the negative impact can be mitigated with the right help.
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. For a Chapter 13 bankruptcy, the maximum is seven years, like most other negative items. There are some key phrases in that statement that need to be clarified:
- "Can" - The FCRA does not require that a bankruptcy remain on your credit report a full decade.
- "Up to" - Again, 10 years is not a legal minimum, it is the maximum. So, legally, a bankruptcy can be removed from a credit report before that limit is reached.
- "From the filing date" - Sometimes, bankruptcy proceedings take months to finally result in a discharge. If it is still impacting your credit score 10 years later, it certainly should not be counting from the discharge date.
How Does Bankruptcy Affect My Credit Score?
The impact of bankruptcy on a credit report can be devastating and entirely depends on the starting credit score prior to filing.
- 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.
Can I rebuild my credit after bankruptcy?
Rebuilding your credit after bankruptcy is a long process. At the start, your options will be limited, but it is key to not be discouraged. As time goes on, if you consistently pursue a credit rebuilding strategy, your reports and scores can improve. Here are some recommendations to start with:
- Understand the cause - Identify, accept, and learn from the root causes of your bankruptcy. Whether you overspent, lost your job, or made some bad decisions, you’ve sacrificed a lot to hit this reset button. Make sure you won’t find yourself in the same position down the road.
- Stick to a budget - No matter how well you used to think you handled finances, if you’ve filed bankruptcy, it almost certainly means you need to make some changes to your spending and saving habits. Re-evaluate your finances and see where you can cut expenses and save more money if you can.
- Start establishing a new credit history - No, this does not mean using an alias (which is something unethical credit repair companies may recommend). It means starting fresh with whatever credit you can obtain. This may mean settling for an extremely high-interest rate, taking on a co-signer, depositing cash into a secured credit card, or other options that have been designed specifically to help you re-establish a positive credit record. Use these credit options sparingly and never put more on a card than you can pay off by the end of the month so that your credit improves over time.
When Bankruptcy can Come Off Your Credit Report
A legitimate bankruptcy record cannot be removed from your credit report simply because you do not want it to appear there. However, the FCRA makes provisions for challenging anything on your credit report that is incorrect, has remained on your credit report beyond the maximum time allowed, or cannot be substantiated by the creditor who reported it.
In the case of bankruptcies — especially because they remain on the credit report for so many years — it’s not uncommon for errors to creep in. Some of the most common errors we find include:
- Debts that were discharged in the bankruptcy still showing a balance.
- Individual accounts included in the bankruptcy still appearing on the report after seven years (in both Chapter 7 and Chapter 13 bankruptcies, the individual affected accounts can only impact your report for seven years, and that period counts from the original delinquency date, not the filing date of the bankruptcy in which they were discharged.)
- The bankruptcy still showing up on a report more than 10 years after the filing date.
- Any sort of material error in how the bankruptcy was reported, from spelling of names to accurate addresses, phone numbers, dates, etc.
If any of these or other errors appear on your credit report, you have the right to challenge those errors. If the reporting agency cannot substantiate the item, they must remove it.
Another possibility, although it is rarer, is that the bankruptcy on your credit report isn’t your responsibility. An error can occur because of a clerical error, or identity theft, causing a bankruptcy that isn’t yours to show up on your credit report.All it takes is for one person to transpose or mistype the numbers in a Social Security number for a bankruptcy to be added to the wrong person’s records. Clerical errors, mistaken identities, or identity theft could all result in a bankruptcy showing up on your credit report when it shouldn’t be there.
If there is an error, your first step is to contact the U.S. Bankruptcy Trustee’s Office to file a report. The case is typically referred to the F.B.I., then reopened. You’ll need to defend your claim in court in order to prove that the bankruptcy is fraudulent.
While the government is often understanding of those in a faulty bankruptcy predicament, the legal process for removing it from your records can be long and drawn out. The help of a trusted advocate can be essential. Through effective credit bureau challenges and creditor interventions, Lexington Law Firm has helped many clients see removals of bankruptcies from their credit reports.
Can I remove a bankruptcy on my own?
Technically, it is possible to pursue removing a bankruptcy from your credit report on your own, and some people have managed to do so. However, it is a time-consuming, labor-intensive process that many people find complicated, confusing, and frustrating.
We encourage you to learn as much as you can about credit report disputes and credit repair processes, then count the real cost of DIY credit repair before committing to handling this important task on your own.
Many people who have needed to remove a bankruptcy from their credit reports have achieved success by working with a credit repair services provider like Lexington Law Firm. Lexington Law Firm has successfully helped hundreds of thousands of clients remove millions of negative items. If other questionable negative items are affecting your credit report and score, we can help you challenge those as well.
Contact us today for a free personalized credit consultation to find out how we can help you through your fraud crisis so that you can move on to a financially stress-free future.
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Lexington Law has helped clients work towards fair and accurate credit scores by leveraging their rights. We’ve helped hundreds of thousands of clients remove unfair, inaccurate and unverified accounts from their credit reports.Call 1-855-255-0139