Bankruptcy can be scary, but it’s important that you arm yourself with as much information as possible to navigate the process.
In this article, we’ll walk you through some of the most commonly asked questions about bankruptcy, how it can affect your credit score, and how to get a bankruptcy removed.
Is it Even Possible to Get a Bankruptcy Removed From Your Credit Report?
We want to be upfront and transparent: it’s very hard to get a bankruptcy removed from your credit report. If all information is accurate and complete, it is not possible to remove a bankruptcy from your credit report. But if the bankruptcy entry contains any inaccurate or incomplete information, it may be possible to have it removed.
How Long Does a Bankruptcy Stay On Your Credit Report?
The amount of time a bankruptcy stays on your credit report is determined by the type of bankruptcy you filed for.
- A Chapter 7 bankruptcy will be removed from your credit report automatically in 10 years because, in this case, none of the debt is repaid.
- A Chapter 13 bankruptcy is cleared in 7 years since the debt is partially repaid.
How does bankruptcy affect my credit score?
Both chapter 7 and chapter 13 bankruptcies can drastically affect your credit score, with chapter 7 having more of a negative impact because accounts were discharged without payment.
You can expect bankruptcy to reduce your credit score by 100+ points. As mentioned before, these will stay on your credit report for 7-10 years.
It’s important to note the ramifications of this kind of a hit to your credit score for such a long period of time. A Bankruptcy can set your plans to buy a home back by a decade. And in certain cases, some bankruptcies may hang around for even longer due to an error on your credit report. An infrequent but possible issue could be an improper involuntary bankruptcy case, in which a bankruptcy is filed improperly and involuntary against a debtor because they are not paying their debt. Make sure to check your credit reports to make sure past bankruptcies fall off when they are supposed to and that you don’t have any incorrect negative items placed on your report from a third party.
DIY vs Professional Credit Repair
It can often feel like credit repair is a catch-22. You may not have a lot of expendable income to hire a professional credit repair company, but you likely don’t have the know-how or emotional bandwidth to tackle it yourself either. We get it.
Bankruptcy is the negative item we most encourage our readers to get professional help with though. The steps we’ve outlined are advanced tactics that in most cases are best left to credit repair specialists. They are more familiar with the ins and outs of the credit bureaus and court systems, as well as the steps we’ll be outlining.
Below are the credit repair companies we recommend.
The 4 Steps to Remove a Bankruptcy from Your Credit Report
Step 1. Check Your Credit Report For Bankruptcy Errors
In this step, you’ll need a copy of all 3 of your credit reports. This is where having a credit monitoring service comes in handy. TransUnion is the best credit monitoring service in my opinion, plus you get a free credit score.
Review the credit report carefully for any inaccurate or incomplete information. Here is a list of the most common bankruptcy errors.
- Names, addresses, and phone numbers
- Incorrect dates
- Discharged debts that still show a balance
If you have found no inaccuracies within the information on your credit report, then unfortunately there’s nothing that can be done to remove it prematurely, you’ll have to wait 7-10 years for it to fall off your credit report. Read how to fix a bad credit score for ways to improve it in the meantime.
Step 2. Dispute Inaccurate Bankruptcy Entries With A Credit Dispute Letter
If you were able to find some inaccurate information within the credit report, then your next step will be to dispute the inaccurate entries with each of the credit bureaus using a credit dispute letter.
The best-case scenario is that they’ll be unable to verify the bankruptcy and remove it from your credit report. This is unlikely if it’s a recent bankruptcy. The older the bankruptcy, the better chances you have of getting it removed from your credit report this way. Nonetheless, if it happens, then great, you can skip the other steps.
If the bankruptcy is verified by the credit bureaus, continue to the next step.
Step 3. Ask the Credit Bureaus How The Bankruptcy Was Verified
If the bankruptcy is verified by the credit bureaus, you will next need to send them a procedural request letter asking them who they verified the bankruptcy with.
In some instances, they will claim it has been verified with the courts, even if it is not. In most cases, the courts do not verify bankruptcies for the credit bureaus.
If the credit bureau claims it was verified with the courts, then proceed to step 4.
Step 4. Ask The Courts How The Bankruptcy Was Verified
Next, you will need to contact the courts that were specified by the credit bureaus.
Ask them how they went about verifying the bankruptcy. If they tell you they didn’t verify anything, ask for that statement in writing.
After you receive the letter, mail it to the credit bureaus and demand that they immediately remove the bankruptcy as they knowingly provided false information and therefore are in violation of the Fair Credit Reporting Act.
If all goes well, the bankruptcy will be removed.
Whether you attempt to remove the bankruptcy entries yourself or hire a credit repair company, we hope this walk-through has been informative and helpful as you navigate the challenges of bankruptcy.
Let us know in the comments below if you have additional questions, or if you were able to get an entry removed.