Is My Credit Going To Be Bad As Long As A Bankruptcy Shows Up
Myth: You might as well not even try because youll have poor or bad credit as long as the bankruptcy is on your record.
The truth: Yes, bankruptcy tanks your credit score in the short term. But how much a bankruptcy impacts your credit score depends in part on how old the record is. Like many other types of items reported on your credit file, bankruptcies lose some power over time. Thats especially true if you start managing credit and debt in a more positive way while youre waiting for the bankruptcy to fall off your report.
Some ways to help positively impact your score after bankruptcy can include:
- Adding new credit, such as secured credit cards or small installment loans, to offset the negative information on your credit report.
- Making on-time payments for all debt, new and old.
- Keeping your credit card balances under 30% utilization.
Rebuilding Credit After Bankruptcy
You can work to improve your credit scores even while a bankruptcy is still listed on your credit reports. Establishing new credit can help. You shouldnt expect those positive accounts to fix everything, but they can be a step in the right direction if you manage them carefully.
Its true that qualifying for new credit after bankruptcy can be tricky. Yet if you apply for the right kinds of accounts, your odds of success should be higher.
Do I Still Have To Pay The Debt
If youre wondering how long something stays on your credit report, its important to keep this in mind: Your debt isnt simply erased once it falls off your credit reports. If you never paid off the debt and the creditor is within the statute of limitations, they may try to collect the money. The creditor can call and send letters, sue you or get a court order to garnish your wages.
Even outside the statute of limitations, collection companies can still try to collect the debt. Stale debts represent a thriving business, as they are often sold and resold for pennies on the dollar. Even a partial payment makes a call or letter worthwhile for the collector.
The only sure way to get rid of a debt is to pay what you owe, or at least an agreed-upon part of what you owe. If youre looking to put your debt behind you and move on with a clean slate, contact the collectors listed on your credit report. Before making the phone call, make sure you know:
- The debt is legally yours.
- How much you owe the creditor.
- What you can realistically afford to pay per month or in a lump sum.
If you negotiate a payment for less than the full amount owed, be sure to get the payment agreement in writing from the collector before you send in any payment.
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Checking Credit Report Accuracy After Bankruptcy
You’re entitled to get a free credit report from the three major credit reporting agencies each year. You can claim your reports by visiting www.annualcreditreport.com.
Instead of getting them all at once, a prudent approach is to claim one report three months after receiving your bankruptcy discharge. That should allow enough time for creditors to report the bankruptcy information.
Thoroughly review each listed debt for accuracy. Also watch out for unfamiliar creditor names or debts, as they might be discharged debts that were bought and sold to a third party, but are not accurately reflected as having been discharged. To make changes, follow the instructions under the “Correcting Misreported Discharged Debt” heading.
You’ll want to claim each of the remaining two credit reports at three-month intervals. Each time, check to see if the credit report reflects the previously requested changes, and, take steps to correct any remaining inaccurate information. This approach should allow you to clean up your credit report at no cost to you.
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 reportmeaning, you filed the bankruptcy, went through the legal process, and you know the bankruptcy is the real dealthe chances of getting it removed early are slim.
You can improve your credit score.
Get your FREE, no-obligation online credit evaluation now.
- FREE access to your credit report.
- FREE review of your negative items.
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But 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 accuratelyand 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.;
Heres how to do it:
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What Happens After Bankruptcy
Its almost certainly going to be hard to get any kind of loan or credit once you have a bankruptcy on your record.
However, here are some things you can do in order to start the process of rebuilding your credit.
It wont happen overnight. Therefore, its important to understand that its going to take time.
There is an old riddle you may have heard: How do you eat an elephant? One bite at a time.
File A Dispute Directly With The Reporting Business
Reporting businesses include credit card issuers and banks. Upon receiving a dispute, they are required by law to investigate and respond. If the reporting business corrects the issue, you saved yourself the step of contacting the credit reporting agency. It is vital to make sure the items are cleaned up for all three credit bureaus mentioned above.
However, trying to work out your debt directly with the lender will not necessarily change the amount of time said negative item would remain on your credit report. It will only change if the dispute is resolved with the lender and deleted from your credit report.
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Can You Still Get A Loan Even With A Bankruptcy On Your Credit Report
Many people think that just because they filed for bankruptcy, then this means that they will not be able to get a loan or a new line of credit. The truth is, there are many different companies and lenders that specialize in lending to people who just filed for bankruptcy or with bad credit.
Of course, you will find that the interest rates and the fees are high compared to when you still had a stellar credit score. Thats why its important to be cautious and to not be blinded by the unbelievable offers immediately after your bankruptcy discharge. Make sure that you read the fine print and clarify all the details before going for a loan or a credit card. You dont want to end up in a more dreadful situation than you were in pre-bankruptcy.
So, what types of loans or credit are you still eligible for even after filing for bankruptcy? We listed down the credit options for you
How Long Do Bankruptcies Stay On Your Credit Report Cnbc
We may receive a commission from affiliate partner links. Filing for bankruptcy can cause a good credit score to drop at least 200 pointsheres what;
How To Remove Chapter 7 Remove From Your Credit Report Early While you might hear that you cant remove a chapter 7 bankruptcy from your credit report, you;
To remove a bankruptcy early, the best method is to look carefully at your bankruptcy papers for any inaccuracies and dispute them with the three;
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Confirm With The Courts
Now its time to go back to the court and check if the credit bureau did in fact go and verify your bankruptcy. It should probably be the same court with which you filed your original bankruptcy but double check the correspondence from the credit bureau to see which one they supposedly contacted.
In many cases, the court wont confirm that they actually verified your bankruptcy. You need to request this information in writing and then send a copy to the credit bureau .
Since the court doesnt have proof that there was any verification process, you can tell them that they have violated the Fair Credit Reporting Act and should remove the bankruptcy.
Follow Up On The Verification
Next, if the dispute process doesnt work, its time to follow up with the credit bureau again. This time, however, youre going to send a procedural request letter.
What exactly is that?
Its a letter that asks the credit bureau who they verified the bankruptcy with. In most cases, the bureau will state that they reached out to the actual court system.
But heres the catch.
Courts typically dont verify bankruptcies for any type of credit agency. Heres where the next step comes in.
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Can A Chapter 7 Be Removed From Credit Report Before 10 Years
A chapter 7 bankruptcy can only be removed from your credit report before the 10 year period if there are any inaccuracies in the information thats reported. You cannot remove a bankruptcy from your credit report simply because you dont want it to be there. Most people will have to wait the 10 years before the bankruptcy falls off their credit report on its own.
Can I Remove A Bankruptcy From My Credit Report On My Own
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.
People who have needed to remove a bankruptcy from their credit reports have achieved success by working with a provider like Lexington Law Firm. 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 report consultation to find out how we can help you meet your credit goals.
Reviewed by Vincent R. Mayr, Supervising Attorney of Bankruptcies at Lexington Law. by Lexington Law.
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Another Option: Vacate The Bankruptcy Case
In some cases, an individual files for bankruptcy but later finds that its unnecessary because he or she is able to work out the problem that prompted the filing in the first place.;For example, a person facing foreclosure files bankruptcy to buy time to reinstate their mortgage.
Once the problem is solved, the bankruptcy is no longer necessary and even though the individual withdraws the case, it still appears on their credit report. In this case, one should ask the bankruptcy court to vacate the bankruptcy, which essentially treats the bankruptcy case like it was never filed. Once vacated, it may be possible to have the bankruptcy removed from public record and credit reports.
If not removed, credit reporting agencies should be contacted and the dispute process should be initiated. If an agency refuses to remove a bankruptcy, a debtor has the right to add a statement onto their credit report explaining the situation.
How Long Do Bankruptcies Stay On Your Credit Report
The length of time that a bankruptcy filing stays on your credit report depends on what type of bankruptcy you filed. We took a look at Chapter 7 and Chapter 13, which are the two main types of consumer bankruptcies, and to see how their impacts on your credit score differ.
- Chapter 7 bankruptcy: Also known as liquidation bankruptcy, Chapter 7 is what Harrison refers to as “straight bankruptcy.” It’s the most common form of consumer bankruptcy and is usually completed within three to six months. Those who file for Chapter 7 will no longer be required to pay back any unsecured debt , like personal loans, credit cards and medical expenses, but they may have to sell some of their assets to settle secured loans. Chapter 7 bankruptcies stay on consumers’ credit reports for 10 years from their filing date.
- Chapter 13 bankruptcy: Harrison refers to Chapter 13 as the “wage earner’s bankruptcy.” This form of filing offers a payment plan for those who have the income to repay their debts, just not necessarily on time. About a third of bankruptcies filed are Chapter 13 . Those who file are still required to pay back their debts, but instead over a three-to-five year time frame. Chapter 13 bankruptcies stay on consumers’ credit reports for seven years from their filing date.
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When Is Bankruptcy Removed From Your Credit Report
A Chapter 7 bankruptcy can stay on your credit report for up to 10 years from the date the bankruptcy was filed, while a Chapter 13 bankruptcy will fall off your report seven years after the filing date.
After the allotted seven or 10 years, the bankruptcy will automatically fall off your credit report.
Re: Removing Ch 7 Bankruptcy From Credit Report
There’s no legal requirement to remove a dismissed bankruptcy. Yes there are companies that claim to be able to do it. The answer is that it IS discretionary on the part of the individual bureaus involved. Whether it is likely to work or not depends largely on the circumstances and how persistent the person attempting to clear it is.
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Getting Professional Help For Bankruptcy Disputes
Some people prefer to outsource credit disputes to someone else because theyre busy or feel overwhelmed by the process. If this describes you, you might want to consider hiring a reputable professional to help.
A credit repair specialist can send disputes to the credit bureaus on your behalf and follow up with additional suggestions if the credit bureaus fail to remove inaccurate data from your credit report. Call 1-877-637-2673 to schedule a free credit consultation with a Credit Saint counselor today.
Filing Date 341 Meeting Of Creditors
The 341 meeting is scheduled about 30 days after the petition date. The meeting itself typically takes less than 10 minutes to complete.;
While waiting for your 341 meeting, youll likely hear from your trustee. Theyll let you know what documents they need from you to prepare for your 341 meeting. As long as youve kept the documents you used when preparing your bankruptcy forms, doing this shouldnt take very long.;
Most filers also get the financial management course out of the way while they wait for their 341 meeting. Bankruptcy law requires every person filing bankruptcy to complete this education course. It tends to be a little longer than the first course, usually around 2 hours.;
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Can A Bankruptcy Come Off My Credit Report Early
A legitimate bankruptcy record cannot be removed from your credit report, but a bankruptcy can come off your report if it is inaccurately entered or otherwise incorrect.
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 its not uncommon for errors to creep in.Some of the most common errors we find include:
- Debts that were discharged in the bankruptcy are still showing a balance.
- Individual accounts included in the bankruptcy are 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 starting from original delinquency date, not the filing date of the bankruptcy in which they were discharged.
- The bankruptcy is 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 the 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. The reporting agency must remove them if the reporting agency cannot substantiate the item.
What You Can Do To Rebuild Your Credit After A Chapter 7
Rebuilding your credit after filing for Chapter 7 is hard work. Luckily there are ways to minimize the impact of bankruptcy and start repairing your credit.
- Monitor your credit – Keeping an eye on your credit is an essential step in rebuilding it. It helps you track any progress you make as well as helps you quickly identify any errors and inaccuracies.
- Verify information – According to the FTC, 20% of the population has at least one error on their credit report. Inaccurate negative marks hurt your score. That’s why it’s important to verify info on your report.
- Check your credit report for errors – Before you can dispute an error, you have to find it first. You can find common errors in personal info, account status, and balance & data mistakes.
- Dispute inaccuracies – Once you have found errors, you can dispute them. This means gathering evidence, writing a dispute letter to all 3 credit bureaus, & waiting.
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