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If you filed for bankruptcy, it would show up on your credit report. You can’t delete it most of the time because it’s legit, but on the rare occasion, you can.
We’ve uncovered the secret to removing a BK from your credit report to help you build a better credit score faster.
What is a Bankruptcy?
Bankruptcy is an official court order to dismiss or rearrange your debts when you can’t keep up with them. It may eliminate debts or restructure them in a more affordable payment and structure.
Either way, bankruptcy has serious effects on your credit score and should be taken seriously. Knowing how it affects your credit and how long it follows you is important before you decide.
Related: What Affects Your Credit Score?
How Long Does a Bankruptcy Stay on My Credit Report?
The good news is a bankruptcy doesn’t stay on your credit report forever. The bad news is that it may remain there for at least 10 years. It depends on the type of BK you file:
Chapter 7
A Chapter 7 bankruptcy dismisses all or most of your debts. It’s called liquidation because you liquidate your non-exempt assets, giving the proceeds to your creditors. The courts then wipe clean the rest of the debt.
A Chapter 7 BK stays on your credit report for 10 long years.
Chapter 13
A Chapter 13 bankruptcy restructures your debts rather than dismiss them. You don’t have to liquidate your assets. Instead, you keep everything and work out a 3 to a 5-year repayment plan with the courts. Most people pay a large portion (or all) of the debts owed in that time.
A Chapter 13 BK stays on your credit report for 7 years.
How Does Bankruptcy Affect My Credit Score?
As you probably guessed, bankruptcy hits your credit score hard. How hard depends on where you started.
If you had ‘good’ credit and filed BK, you could lose as much as 150 points. If you had average or ‘bad’ credit and filed, you may lose fewer points, but it still hurts your credit score, bringing you down in the fair to poor credit ranking.
Can I Remove a Bankruptcy from My Credit Report?
This one is tricky. Can you remove a bankruptcy from your credit report?
Possibly. But if everything about your BK listing is accurate, then no, it will stay there.
But, if there are ANY mistakes, you may dispute them. The Fair Credit Reporting Practices Act (FCRA) protects your rights. If any information is inaccurate, the credit bureau must remove it, but you must prove it.
Here’s where the work begins.
How to Remove a Bankruptcy from Your Credit Report
If you find ANY error on your credit report regarding your bankruptcy, you can dispute it using these steps.
Step #1: Review Your Credit Report
To dispute anything on your credit report, you must review your credit report. Grab your free copy here, and go over your report carefully.
Look for errors in the bankruptcy listing. We’re talking about anything – incorrect dates, payment amounts, outstanding balance, original balance, or even a misspelled name or wrong account number.
Step #2: File a Dispute with All Three Credit Bureaus
Next, file a dispute with each of the reporting credit bureaus. Usually, all three bureaus have the same credit reporting information, but if they don’t, file a dispute with the bureaus that do. Write a separate letter to each bureau.
Step #3: Submit a Verification Request
If the credit bureau claims your bankruptcy information is accurate, file a verification request or request proof of what they used to determine it.
In your letter, ask for proof of who they contacted, where, and the phone number used. Also, ask for proof of any documentation they used to determine the bankruptcy listing is legitimate.
Step #4: Get Information from the Courts
If you still aren’t getting anywhere or want to follow up on what the credit bureaus state, contact the court yourself.
Do it in writing and include a self-addressed and stamped envelope to get a response. Look up the court’s information yourself, including the right department to contact.
Each court is different, so call and find out where to direct your correspondence, so it doesn’t get lost.
The credit bureau probably didn’t follow up with the court because most courts don’t verify bankruptcies for credit bureaus. If you’re persistent enough, you may get a court clerk to write a letter stating this.
Step #5: Follow Up with the Credit Bureaus
If you get the letter from the court, write to the credit bureaus again, including a copy of the letter. With this proof, you can ask (and should get) the account deleted from your credit report.
The credit bureaus have 30 days to respond to your request, so follow up in a month to make sure they did it.
Can a Credit Repair Company Help?
Credit repair companies are supposed to ‘fix’ your credit, but they may not. It’s a toss-up. They can do as much as you can.
If the credit bureaus say they verified the BK, then the credit repair company’s job ends there. It’s up to you to contact the courts and take it further.
Related: How to Repair Your Credit
Can I Rebuild My Credit After Bankruptcy?
Everyone can rebuild their credit after bankruptcy. It’s not a death sentence. It’s a reprieve from the overwhelming debt.
Once the courts discharge the bankruptcy, you can start from scratch. I recommend going slow. Don’t overextend yourself.
Take one secured (or unsecured if you can) credit card. Use it wisely. It’s okay to charge things, but don’t overdo it. Only charge what you can pay off.
The idea is to show lenders you’ve overcome whatever issue you went through and can use your credit responsibly now.
Once you establish yourself with one account, open a personal line of credit or installment loan. The idea is to have a decent mixture of credit with timely payments and responsible use of credit.
It takes time – it won’t happen overnight, but eventually you’ll bounce back from the BK with a decent credit score.
Learn More: How to Build Your Credit
Bottom Line: How to Remove a Bankruptcy from Your Credit Report
A bankruptcy on your credit report isn’t the end of the world, but it can put a damper on things for a while. You’ll lose 100 – 150 points on your credit score, but if you play your cards right, you can bounce back.
If you know the information reported on your credit report isn’t accurate, though, you have every right to dispute it and have it removed from your credit report.
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