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How To Get Bankruptcies Removed From Credit Report?

how to get bankruptcies removed from credit report

Did you know that over half a million Americans declare bankruptcy each year? While each of these cases is unfortunate, it’s helpful to know that you are not dealing with insolvency alone. Remember that after your bankruptcy gets discharged, there is the aftermath to contend with, such as repairing your credit.

With so many people facing bankruptcy and so much financial data processed by the credit bureaus, the chances for error are significant. Therefore, you should review your credit report information frequently to ensure its accuracy. You should also ensure the specifics of your bankruptcy are current and error-free.

Additionally, it’s vital to learn how to remove a bankruptcy from your credit report. First, you must know how the process works and how it impacts your credit. Then, it would help if you got prepared in case bankruptcy stays on your report for the long haul.

Below, we’ll walk you through the particulars of getting back on track, starting to repair your credit, and putting this bankruptcy behind your back.

What Is Chapter 7 Bankruptcy?

There are two general types of bankruptcy that borrowers can file, Chapter 7 and Chapter 13. It’s crucial to know that both affect your credit in slightly different ways. Therefore, before anything, you must get familiar with the bankruptcy filing procedure to tackle debt on a short note.

Chapter 7 bankruptcy is widely present and the most common type of bankruptcy. These cases make up nearly 70% of filings each year. Plus, they are usually easier to work out and discharge. In short, they don’t entail long-term payment plans. Instead, one can liquidate whatever qualifying assets they have and pay what they can to deal with Chapter 7 bankruptcies. Then, the remaining debt will disappear after some time.

Remember that there are exceptions to debts that clients can wipe away. For example, chapter 7 defaults stay on reports for ten years from the date of filing. Also, those who filed for bankruptcy Chapter 7 must meet specific requirements regarding income and bankruptcy history.

Once you file, you’ll likely wait ten years for the derogatory mark to get erased from your credit reports. So, if you wonder ‘how long does a bankruptcy stay on your credit report,’ here’s your answer. A Chapter 7 bankruptcy can get removed from your report in 10 years because the debt doesn’t get repaid.

Indeed, debt impacts your credit reports negatively. Any discharged debts can get listed as “included in bankruptcy” or “discharged” with a balance of $0. These accounts should leave your reports seven years from the date of filing. If an account was delinquent before filing for bankruptcy, you could get it removed earlier.

What Is Chapter 13 Bankruptcy?

Chapter 13 bankruptcies are a bit different. Here, you agree to follow a repayment plan that usually stretches over three to five years. Once you complete the repayment plan, the debts may be eligible to get discharged.

The completed plan and the accounts in it should disappear from your reports seven years from the filing date. Any accounts delinquent before the day you declared bankruptcy get removed from your credit reports sooner.

Moreover, lenders tend to look at Chapter 13 bankruptcy more favorably than its Chapter 7 counterpart. With Chapter 13 bankruptcy, they do so because customers agree to repay at least a segment of their debt.

By exploiting Chapter 13, many clients get the chance to pay their creditors. The good news is they don’t pay back under the original, and usually less favorable, terms and conditions. Note that these bankruptcies will remain visible on your credit report for seven years after filing.

However, Chapter 13 cases can be more complicated to work out than Chapter 7 ones. The reasoning is because you must negotiate long-term pay-off plans for each creditor. The process of repaying the creditors will involve a trustee who makes sure you abide by the agreements of the payment plan.

For a complete guide to all the eligibility requirements, processes, and forms, visit the uscourts.gov website—the site contains detailed information related to Chapter 7 and Chapter 13 bankruptcies.

How Does Bankruptcy Impact My Credit Report?

Bankruptcies will always harm your credit report. Yet, the severity will vary case by case. For instance, people with several accounts included will suffer a more significant impact than those with a single credit card.

Overall, bankruptcy can affect your credit report in two ways. The first is the filing procedure. Once you file, your credit report will include an actual entry showing you filed for bankruptcy. The entry reveals several details, including the filing time.

Second, all accounts included in your bankruptcy will be on the report. Each account will have a line item entry appearing as “included in bankruptcy.” These entries will stay on your credit report for many years after the original delinquency date.

Indeed, having a bankruptcy on your credit report can be detrimental to your credit scores. According to FICO, a bankruptcy on your credit report will lower credit scores of 680 by 130-150 points. That means that filing may cost a person with a credit score of 780 between 220 and 240 points. In a word, the higher your initial credit score is, the steeper it will fall. What is worse, a single event can immediately drop you several categories lower.

This drop will impact your ability to access future loans or credit cards. Thus, you’ll end up paying higher interest rates. Plus, the amounts you can borrow will become limited. While filing for bankruptcy may sometimes be the best financial solution, it’s essential to know how and why it affects your credit.

How Long Does Bankruptcy Stay on a Credit Report?

The timeframe any bankruptcy can remain on your credit report will depend on its type. More precisely, a Chapter 7 bankruptcy will stay on your credit report for ten years after filing. Conversely, you’ll be seeing the Chapter 13 bankruptcy for seven years from the filing date.

Yet, contrary to what many believe, you can get a bankruptcy removed from your credit report early and qualify for loans. There’s no need to wait up to ten years after the bankruptcy filing date to get a mortgage or any loan type again.

Note that it usually takes a few years to get access to loans and credit cards again. Even when you do start to qualify, you may be subject to high interest rates. So, instead of getting stuck with insane interest rates and low balance maximums, work on alleviating the effects of bankruptcy.

By disputing the bankruptcy and taking action to rebuild your credit, you can get much better loan offers. In addition, one past mistake doesn’t have to set you back financially for the next ten years. Read on to get familiar with the process of removing a bankruptcy from your credit report. We have also outlined some other ways to help you recover from undergoing insolvency issues.

How Can I Remove a Bankruptcy From My Credit Report?

Many default borrowers realize that credit bureaus have active campaigns online to urge them to think that’s impossible. Though bureaus don’t say removing a bankruptcy from credit reports is off-limits outright, they have ways of making you believe so. The worst part is that many lending sites parrot this information online and create confusion.

Luckily, you can eliminate bankruptcy from your credit report by taking concrete action. First, remember that you can’t file a dispute with only one credit bureau. Instead, you must file three separate disputes with each bureau, namely with Equifax, Experian, and TransUnion.

Second, the wording of your dispute shouldn’t make it sound irrational or unsupported by facts. Stick to relevant data, and don’t get emotional. Often, the less you say, the better impact it will make.

Applicants enjoy protection under the FCRA (Fair Credit Reporting Act). Yet, any credit bureau can also shut down consumers without legitimate disputes. So follow these five steps to get a bankruptcy removed from your credit report or hire a credit repair agency:

Check Your Credit Reports for Any Bankruptcy Errors

The initial step you must take is to look over the bankruptcy entries on your credit report. Review them in detail and look for errors regarding your default. The law entitles you to a free credit report once a year. Go to www.annualcreditreport.com and get your free credit report.

Once you have it available, spare some time to check it for accuracy. We suggest you look for tiny errors. These can include misspelling, an incorrect address, the wrong account number, or wrong dates. Indeed, try to find any technicality to bring on a dispute.

Dispute Any Errors Immediately

Your second step is to file a well-supported dispute with the three credit bureaus. At this point, it’s essential not to admit any fault on your side or that the bankruptcy is legitimate. Instead, claim that you’re disputing the case and point out which aspect of it contains the error.

Remember that the chances to win the dispute are higher if you argue a specific detail about how the bankruptcy got reported. It’s way more challenging to fight the entire bankruptcy proceedings. For example, you might emphasize an inaccurate filing or discharge date.

You can also dispute your credit report if it lists the wrong bankruptcy type. These minor details are more difficult to investigate than your default as a whole. Finally, the sooner you file, the better your credit score.

Contact The Credit Bureaus

If Equifax, Experian, or TransUnion verify the bankruptcy, consider sending them a procedural request letter. The letter should request which lender the credit bureau confirmed the default with. Typically, they will respond to your letter and say they verified it with the courts.

Their claim is most likely not honest because courts do not verify bankruptcies for the credit bureaus. If the agency restates that your default got accurately reported, urge them to confirm who provided the bankruptcy information.

Under FCRA, the credit bureaus must inform you of the information source regarding the items on your credit report. Therefore, in your letter requesting verification, ask for confirmation on the following data:

  • Title and address of the courthouse,
  • Phone number of the courthouse they had contact with,
  • The person verifying the disputed information,
  • Used documentation to verify the dispute.

Though credit bureaus claim they verified the bankruptcy with the court, this is not the case. Remember that federal bankruptcy courts state they do not provide information to the credit reporting agencies.

Request Information From The Courts

Your next move is to get in touch with the courts indicated by the credit bureaus. It would help if you asked the court administrator about their procedure for verifying records with the bureaus. We suggest you send a stamped envelope with your address to boost your chances of getting a response.

When you contact bankruptcy courts, explore a little bit to locate the correct department and address. Visit your local court’s website, and find the tab or menu item that says “clerk’s office” or “clerk of courts.” The website should also list phone numbers for various departments. Don’t hesitate to call around to ensure you’re sending your letter to the correct department.

In your letter, inquire information about how the courthouse verified the bankruptcy. Courts will probably reply they didn’t confirm anything with Equifax, Experian, and TransUnion. Instead, the courts post defaults on their dockets, which are public records.

It’s imperative to ask for any official statement in writing. If you get a letter from the court denying confirmation, you may persuade the credit bureau to remove your bankruptcy.

After receiving the letter, send it to the credit bureaus and demand bankruptcy erasure. Bureaus will know they provided false information and violated the Fair Credit Reporting Act. If all goes well until this point, you’ll get the bankruptcy removed.

Again, the process is usually challenging and time-consuming. Plus, there is no guarantee you’ll win the case. Nonetheless, it is always worth giving it a try if you’ve set your aims that high.

Turn To A Professional

Contact the credit bureaus once again after you get a letter from the court. Emphasize that you have an official statement saying that courts haven’t verified your bankruptcy with them. Be open about contacting the courthouse administrator, who told you they don’t furnish records to the credit bureaus.

Don’t forget to include a copy of the court’s reply to back up your statements. The follow-up letter should also request deletion of your bankruptcy due to a lack of verification. Of course, there is no guarantee that you’ll succeed, but you can never know unless you try.

If you believe you can’t do it yourself, contact a credit repair company. These have solid experience in disputing problematic items on your credit reports. Moreover, credit repair companies provide free credit advice and specialize in getting bankruptcies deleted. They also remove other adverse information included in the bankruptcy, such as charge-offs and collections.

How Soon Can I Get A Line Of Credit After Bankruptcy?

Once you have a bankruptcy nailed down on your record, it will be very challenging to get any loan. Lenders consider you a risky borrower and are pretty wary when dealing with troubled clients. Yet, here are some practical things you can do to start rebuilding your credit.

Be aware that getting approval for a new loan won’t happen overnight. Therefore, it’s essential to understand that it’s going to take some time. There is an old riddle that may be valid for your case, saying: “How do you eat an elephant? One bite at a time.”

Secured Loan

A secured personal loan is an excellent place to start the rebuilding process. Most local banks and credit unions will address your loan request if you secure it by a deposit into a savings account. However, you must accept the fact that lenders will likely charge higher fees and interest rates.

Lending institutions might help you out by reporting your timely payments to Equifax, Experian, and TransUnion. Besides being a low-risk proposition for them, they have the loan secured with the funds you provided.

Note that a credit-builder loan is better if you want to improve your credit. Plus, it’s best to avoid no-credit-check loans with sky-high fees when you search for credit after bankruptcy. Instead, opt for lenders that strive to keep your business for years after your credit score gets restored. Once you get things in order, you may be eligible to apply for a car loan or a mortgage.

Secured Credit Card

The second option to improve your financial situation is a secured credit card. Note that you must back this credit card with a deposit paid upfront. The credit limit here is usually equal to the amount of the deposit.

A secured card typically involves annual fees and carries high interest rates. Hence, don’t exploit it in the long term. Use credit cards only to mend your score until you become eligible for a better-termed, unsecured credit card. Again, ensure your lender reports your actions to Equifax, Experian, and TransUnion. You want to get rewarded for your good behavior!

Like other forms of secured debt, credit card providers can seize your cash deposit if you fail to repay the borrowed amount. However, on-time payments impact your credit score positively, helping you to become eligible for future loans.

Final Thoughts

Bankruptcies harm credit scores and remain on your history for up to 10 years. This makes it hard for you to qualify for loans because you’re a high-risk applicant. Yet, although it may be challenging, removing a bankruptcy from your records and getting a personal loan after that isn’t a pipe dream.

Plus, it’s possible to complete the entire dispute process yourself. Note that it takes a long time to remove a bankruptcy from your credit report early without guaranteed results. If you can’t run the process alone, enlist the help of a credit repair company to navigate you on the right path. What matters is to improve your credit score on a short note.

Article contributors

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Frank is a graduate of the Master's program in Economics Sciences. He has been passionate about writing in the financial niche. He enjoys discovering new ways to improve personal wealth and sharing them with his readers. In addition, Frank likes to travel and play board games.

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