Credit Law: Can It Erase Bankruptcy?

While it is impossible to remove legitimate bankruptcy from a credit report, it is possible to dispute bankruptcy filings that are inaccurate or contain errors. Inaccurate information on a credit report can be disputed with credit reporting agencies, who are then required to investigate. If the investigation reveals that the information is inaccurate, the inaccuracy should be removed from the credit report. Bankruptcy records are automatically deleted from credit reports after seven or ten years, depending on the type of bankruptcy. Chapter 7 bankruptcy, which involves the elimination of debt without payment, will remain on a credit report for up to ten years. Chapter 13 bankruptcy, which involves debt consolidation and partial repayment, will remain on a credit report for seven years.

Bankruptcy records are automatically deleted after seven or ten years

Bankruptcy records are automatically deleted from your credit reports after seven or ten years, depending on the type of bankruptcy. Chapter 7 bankruptcy, also known as liquidation bankruptcy, remains on credit reports for ten years from the filing date. This is because Chapter 7 likely discharges more of your debt, as it involves the forfeiture of property to a trustee who distributes the proceeds among your creditors.

Chapter 13 bankruptcy, also known as reorganization or wage-earner's bankruptcy, stays on credit reports for seven years from the filing date. This type of bankruptcy involves restructuring your debts to make affordable payments over three to five years, typically resulting in a lower discharged amount compared to Chapter 7.

It is important to note that individual accounts included in the bankruptcy may be deleted from your credit history before the bankruptcy public record. This is because the original delinquency date (the date of your first late payment) is typically earlier than the bankruptcy filing date. Additionally, the negative effects of bankruptcy on your credit score can diminish over time, especially if you take steps to rebuild your credit history.

You can dispute and demand an investigation into errors on your credit report

While a bankruptcy will automatically be removed from your credit report seven to ten years from the filing date, depending on the type of bankruptcy, you can take steps to rebuild your credit history in the meantime.

The credit reporting company must then investigate your dispute and forward the dispute and all relevant information you provided to the company that provided the information about you. Disputes are generally resolved within 30 days, but may take up to 45 days if you submit additional documentation after the investigation begins. If the investigation shows that the information provided about you is wrong or cannot be verified, the company must update or remove the information and notify all credit reporting companies, which must then update your credit reports. If the investigation shows that the information is accurate, you can contact the credit reporting companies again and ask them to include a statement explaining the dispute in your credit reports.

It is important to note that credit reporting companies are not required to investigate disputes that they reasonably determine are frivolous or irrelevant. If a credit reporting company decides not to investigate a dispute, it must notify you of that decision and the reason within five business days.

Identity theft can lead to unrecognised bankruptcy notations on your report

Identity theft is a serious issue that can have a detrimental impact on your financial life. If an identity thief steals your personal information, they can open credit accounts, accumulate significant debts, and even file for bankruptcy in your name. This can result in unexpected bankruptcy notations on your credit report, causing significant damage to your credit score and financial reputation.

There are several ways that identity theft can lead to unrecognised bankruptcy notations on your credit report. One scenario is that an individual facing foreclosure or repossession of property falsely lists you as having ownership interest in the items at risk. As a result, when they declare bankruptcy, it appears on your credit report as well. The legal proceedings involved in bankruptcy provide the identity thief with time to hide their actions and avoid immediate consequences.

In other cases, identity thieves may use your stolen personal information to open credit accounts, incur substantial debts, and then file for bankruptcy in your name before disappearing. This leaves you to deal with the unexpected bankruptcy notation and its associated repercussions. Family members are known to account for a significant percentage of identity theft cases, making it even more challenging to detect and prevent such incidents.

To address unrecognised bankruptcy notations on your credit report due to identity theft, there are several steps you can take:

• Review your credit reports: Obtain your credit reports from major credit bureaus, such as TransUnion, Experian, and Equifax. These reports will help you identify any discrepancies or suspicious listings related to the bankruptcy.
• File a police report: Visit your local police station with a government-issued ID, proof of address, and any documentation related to the suspicious bankruptcy. Filing a report is essential, as it serves as a procedural milestone and contributes to the creation of your Identity Theft Report.
• Submit an identity theft complaint: File a formal identity theft complaint with the Federal Trade Commission (FTC) using their online complaint form. This step is crucial in initiating investigations and seeking support for the removal of inaccurate bankruptcy notations.
• Contact credit bureaus: Dispute the inaccurate bankruptcy notation with the credit bureaus. Provide evidence to support your claim, and follow their standard credit dispute process to have the inaccurate information removed.
• Enhance personal information security: Take proactive measures to secure your personal information and prevent future identity theft incidents. This may include enabling additional security measures and being vigilant about protecting your sensitive data.

Credit repair companies cannot promise to remove negative information

While credit repair companies can help you investigate mistakes on your credit report, they cannot promise to remove negative information that is accurate and current. Accurate negative items will be removed from your credit report automatically seven years from the date of the original delinquency. Bankruptcy information will be removed after seven to 10 years, depending on the type of bankruptcy.

Credit repair companies must explain your legal rights and costs in a detailed contract before they start work. It is illegal for them to charge you before they help you. You can do the same things a credit repair company can do, and it will cost you little to nothing. If you see a mistake on your credit report, you can write to the credit bureau and the business that reported the information. You can also file a dispute with the credit bureaus if your bankruptcy contains any inaccurate information.

Negative information on your credit report can affect how much you'll have to pay to borrow money. If there is a lot of negative information in your report, you might have to pay more in interest. However, you can start to rebuild your credit while waiting for the bankruptcy to be removed. You can take on new credit with the aim of paying on time and in full each month. Over time, this credit behaviour is likely to lead to a high score in the future.

It is important to be wary of scams. Some companies will say they can help remove negative information from your credit report, but many are scams. These scammers may tell you to dispute information in your credit report that you know is accurate, or to file a false identity theft report. They may also ask you to pay them before they help you, or tell you not to contact the credit bureaus directly. If a company promises to create a new credit identity or hide your bad credit history, that is also a scam.

Legitimate bankruptcies cannot be removed from credit reports

While it can feel devastating to have a bankruptcy record on your credit report, it is not permanent and will not remain there forever. However, it is important to note that legitimate bankruptcies cannot be removed from credit reports. The only exception to this rule is if the bankruptcy information was reported inaccurately.

According to the Fair Credit Reporting Act (FCRA), accurate negative items, including bankruptcies, will be automatically removed from credit reports after seven years from the date of the original delinquency—the date of your first late payment. This timeline may be extended to 10 years in certain cases, depending on the type of bankruptcy. Chapter 7 bankruptcy, which involves the elimination of debt without payment, will remain on your credit report for up to 10 years. On the other hand, Chapter 13 bankruptcy, which allows for a repayment plan and partial repayment of debts, will be removed from your report after seven years.

It is crucial to regularly review your credit reports, especially after a bankruptcy case, to ensure that your creditors have updated their reporting to reflect that you no longer owe the debt. Failure to do so is considered inaccurate under federal law. You can access your credit reports from Experian, Equifax, and TransUnion for free on a weekly basis through AnnualCreditReport.com.

While you cannot remove a legitimate bankruptcy from your credit report, you can take proactive steps to rebuild your credit history and improve your credit score over time. This includes taking on new credit with the aim of making timely and full payments each month, which is a credit behavior that is likely to lead to a higher score in the future. Additionally, you can become an authorized user on a trusted friend or family member's credit card to benefit from their good payment history.

In the case of identity theft or inaccurate information on your bankruptcy filing, you have the right to dispute these errors and demand an investigation by contacting the credit bureau that generated the report. The FCRA requires credit bureaus to resolve disputes within 30 days, or 45 days if additional information is provided.

Frequently asked questions