You filed for bankruptcy, completed your case, and left your old debt behind. You’ve heard there is a way to have the bankruptcy removed from your credit report and are now prepared to begin rebuilding your credit.
In the modern world, your value is measured based on your credit report. It’s the only way a potential creditor knows about your financial situation. Many employers check your credit before offering you a job. Insurance companies use credit scores to determine the rates you pay. And that’s just scratching the surface of how your credit report affects your life.
The short answer is no, credit repair companies cannot remove legitimate bankruptcies from your credit report. However, they can help you dispute inaccurate information related to your bankruptcy and improve your credit score in other ways.
Understanding the Impact of Bankruptcy on Your Credit Report
A bankruptcy filing remains on your credit report for seven to ten years, depending on the chapter you filed under. While this may seem like a long time, it’s important to remember that the impact of bankruptcy on your credit score fades over time.
Here’s a breakdown of how bankruptcy affects your credit report:
- Chapter 7: Remains on your credit report for 10 years from the filing date.
- Chapter 13: Remains on your credit report for seven years from the filing date.
- Individual accounts included in bankruptcy: Usually deleted from your credit history before the bankruptcy public record. This is because these accounts were likely already seriously delinquent before the bankruptcy filing.
- Delinquent accounts: Deleted seven years from the original delinquency date, regardless of whether they were included in the bankruptcy.
How Credit Repair Companies Can Help
While credit repair companies cannot remove legitimate bankruptcies from your credit report, they can help you in several ways:
- Dispute inaccurate information: Credit reports often contain errors, such as accounts that were included in your bankruptcy but shouldn’t have been, or accounts that were incorrectly reported as delinquent. Credit repair companies can help you identify and dispute these errors with the credit bureaus.
- Improve your credit utilization: Credit utilization is the amount of credit you’re using compared to your total available credit. Keeping your credit utilization low can improve your credit score. Credit repair companies can help you develop strategies to reduce your credit utilization.
- Monitor your credit report: It’s important to regularly monitor your credit report for errors and suspicious activity. Credit repair companies can help you monitor your credit report and alert you to any potential issues.
What to Watch Out For
Although there are many scams out there, reputable credit repair companies can help you raise your credit score. Companies that make exaggerated claims, like deleting valid bankruptcies from your credit report, should be avoided. These businesses might impose exorbitant fees on you and possibly worsen your credit.
Here are some red flags to watch out for:
- Guarantees to remove negative items: No legitimate credit repair company can guarantee the removal of negative items from your credit report, especially legitimate bankruptcies.
- High upfront fees: Legitimate credit repair companies typically charge monthly fees, not upfront fees.
- Pressure to sign a contract: Be wary of companies that pressure you to sign a contract before you’ve had a chance to review it carefully.
The Bottom Line
While credit repair companies cannot remove legitimate bankruptcies from your credit report, they can help you dispute inaccurate information and improve your credit score in other ways. However, it’s important to be aware of scams and choose a reputable company.
Remember, the impact of bankruptcy on your credit score fades over time. By making changes to your credit, you can overcome the difficulties of going bankrupt and accomplish your financial objectives.
Bankruptcy’s Impact on Getting a New Job
Credit reports may be used by employers for recruiting purposes as well as to assess candidates for promotions, reassignments, and retention. Many employers ask for credit reports, driving records, and criminal histories.
The potential employer must inform you that they will obtain your written consent before pulling your credit report.
The bankruptcy law says the government can’t deny you a job just because you filed for bankruptcy. Private employers can’t fire you because you filed for bankruptcy.
The rule is unclear to new employers because that part of the law is written poorly. Courts in New York have ruled that a private employer can’t refuse to hire you because you filed for bankruptcy. However, judges in Mississippi, Pennsylvania, and Florida have said the opposite.
Having been a bankruptcy lawyer for 27 years, I can attest that having no debts on your credit report is preferable when looking for a new job.
If you owe money, your employer may think you’ve got a motivation to steal. Once you’re debt free, that motivation disappears, and your potential employer will likely be more comfortable hiring you. Many people have come to me after being advised by headhunters and HR managers to pay off their debts in order to increase their chances of landing a good job.
Employers are required to notify you if they reject your application for a job, reject your request for a reassignment or promotion, or fire you because of information found in your credit report. In the event that this occurs to you, I advise speaking with a lawyer because the laws differ depending on where you live and work.
Creditors Are Required to Report Accurate Information
Creditors must comply with the Fair Credit Reporting Act (FCRA) and accurately report any debts discharged in bankruptcy. It might be deemed a violation of the FCRA if any of these debts show up as unpaid on your credit reports. You might be able to sue the creditor for these errors.
Furthermore, creditors have other obligations under this law to help protect consumer rights and ensure accuracy in reporting. For example, they have to furnish precise details about every account that appears on your credit report, react promptly to complaints made against them, and fix any mistakes within 30 days of being made aware of them. After filing for bankruptcy, it’s critical to periodically check your credit reports to find any problems or inaccuracies as soon as possible to prevent further damage to your credit score. By taking the time to do this, you can avoid future legal issues and save yourself a great deal of headaches from potentially false reporting.
After bankruptcy, your creditors must update their reporting to show that you no longer owe the debt. Anything else is considered inaccurate under federal law. That’s why you should review your credit reports regularly after your bankruptcy case is finished, and take the simple steps to repair your own credit.
NEW Tactics for Removing Bankruptcies from Credit Reports in 2023!
FAQ
Can you fix your credit after bankruptcies?
What can credit repair remove?
What cannot be wiped out by bankruptcies?
Can a bankruptcy be removed from your credit report?
As with other credit report information, you can’t remove a bankruptcy from your credit report if the information is accurate. However, you can wait it out until the bankruptcy eventually falls off your credit reports. Here’s a quick summary of how a bankruptcy affects your credit and how long it’ll remain on your credit reports.
How can I rebuild my credit score after bankruptcy?
Your credit report should contain updated information about your bankruptcy. For example, the bankruptcy filing date should be correct, and the accounts discharged in the bankruptcy should be reported as such. The next step towards rebuilding your credit score could be to apply for a new line of credit.
Can bankruptcy affect your credit?
Bankruptcies can significantly hurt your credit for an extended time. A bankruptcy is a negative item that will appear on your credit report and could cause your credit score to plummet. Future lenders and creditors will typically reject applicants with a bankruptcy on their credit report.
How long does a bankruptcy stay on your credit report?
A Chapter 13 bankruptcy will stay on your credit report for seven years from the filing date. In comparison, a Chapter 7 will stay on longer—dropping off your account 10 years after the filing date. How can you dispute a bankruptcy on your credit report? You can’t remove a wholly accurate and legitimate bankruptcy from your credit report.