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How To Remove A Bankruptcy From Your Credit Report
By Aja McClanahan MONEY RESEARCH COLLECTIVE
Declaring bankruptcy can have devastating effects on your history. Bankruptcy can severely limit your ability to obtain new credit or renegotiate the terms of any debt that was not discharged.
But if your situation qualifies, you may be able to remove a bankruptcy from your credit report. In most cases, the passage of time itself will remove this record from your report, but in other cases, you may have to be more proactive to get it removed. Here are the steps you need to take.
Table of Contents
Can you remove a bankruptcy from your credit report?
How to remove bankruptcy from your credit report
How long does bankruptcy stay on the credit report?
Does removing bankruptcy increase credit score?
How to remove bankruptcy from credit report FAQs
Summary of our guide on how to remove bankruptcy from credit report
Can you remove a bankruptcy from your credit report?
Yes, you can remove a bankruptcy from your credit report under the right circumstances. Bankruptcy can stay on your credit report for between seven and ten years. This timeline is similar to how long negative information generally stays on your credit (about seven years).
To remove the bankruptcy before the seven or ten years elapse, you’ll have to prove that the bankruptcy was placed on your report by mistake or that the bankruptcy has remained on your credit report past the statutory timeline as defined by the Fair Credit Reporting Act (FCRA).
How to remove a bankruptcy from your credit report
Bankruptcies appear in the public records section of your credit report. In times past, this section also included data regarding civil judgments and tax liens, but starting around 2018, credit bureaus began reporting bankruptcies in this section as well.
Essentially, there are only two circumstances under which you can remove a bankruptcy record from your credit report:
- The bankruptcy information is incorrect (i.e., mistaken identity, already discharged, etc.); or
- The bankruptcy is old enough to be removed
Just as you can remove items from your credit report that contain inaccurate information about late payments, credit balances and closed accounts, you can also get false reports of bankruptcy expunged from your record. To do so, you must file a dispute with the credit bureau or bureaus that report a bankruptcy on your credit history.
You can file your dispute by phone, online, or by mailing a letter to the credit bureau. In most cases, the credit bureaus have 30 days to respond to your dispute. If you dispute a record after receiving your free annual credit report, they have up to 45 days to respond. In the case that the credit bureau finds that the bankruptcy information is incorrect, it must correct the information. If for some other reason, the information cannot be verified, the credit bureau must also remove it.
If you’ve got negative information on your credit report that was part of a bankruptcy proceeding, you also have the option to dispute the accounts in question. In fact, on the Experian dispute form, there is a section that allows you to dispute a negative item that is part of a bankruptcy proceeding. On this form, you can note the type of bankruptcy case along with the date the bankruptcy was filed.
Even if the credit reporting agencies don’t accept your dispute and remove your bankruptcy information, you can always file another dispute. You may succeed by trying another dispute reason or providing more evidence to support your dispute on another try.
How long does bankruptcy stay on your credit report?
There are two types of bankruptcies: Chapter 7 and Chapter 13. With a Chapter 7 bankruptcy, you are not responsible for the repayment of your debts, and it remains on your credit report for up to 10 years. With a Chapter 13 bankruptcy, you still have to pay some of your debt obligations, and the record stays on your credit report for seven years.
Does removing a bankruptcy increase your credit score?
It’s generally accepted that removing a bankruptcy from your credit report will increase your credit score, but there’s no way to know by exactly how much. If filing for bankruptcy removed some delinquent accounts and improved your debt-to-income ratio initially, you may have already started to see an increase in your score.
If you’ve invested in credit repair services or have spent time building a positive credit history by the time the bankruptcy record is removed from your credit, you may experience a nominal, or even significant, increase in your credit score. If your credit score stayed lower during the seven to ten years the bankruptcy was on your credit, it could take more time for your score to rebound — especially if some time has elapsed since you’ve had tradelines reporting positive information to the credit bureaus.
There’s really no way to determine just how much removing a bankruptcy can improve your credit score, but that shouldn’t stop you from making good money decisions and being proactive with your credit health, even with an active bankruptcy record on your credit profile.
How to rebuild your credit after filing for bankruptcy
Reestablishing your credit history after a bankruptcy filing or foreclosure may take some work, but it is possible. There are things you can do to build your credit score right after your bankruptcy is discharged.
You can start by getting a copy of your credit report. This will help you grasp where you stand credit-wise, but you also need to make sure it is free of inaccuracies. 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. Keep in mind that it could be more difficult to get approved after bankruptcy. This is why secured credit cards make a good option. Given that they require upfront security deposits and their credit limits are equal to the deposits, lenders are protected and might be more inclined to approve you.
Another alternative is to get a credit-builder loan. As the name suggests, these loans are intended for people with low credit scores or no credit history at all. With this type of loan, borrowers generally pay the loan amount plus interests upfront and receive the funds once they have completed their monthly payments. Making your payments on time can help you get a good credit score.
Other options include getting someone to cosign a loan or credit card, or becoming an authorized user on one of their accounts. Being an authorized user on a credit card account provides you with the benefit of not holding the lion’s share of the responsibility for making payments. Having a cosigner on a loan or credit card could help increase your chances of being approved. These could be more suited for you if qualifying for new credit proves to be more difficult than you anticipated.
How to remove a bankruptcy from your credit report FAQs
When can you remove bankruptcies from your credit report?
Depending on the type of bankruptcy you filed for, it can stay on your credit report for 7 or 10 years. Though you can't remove a bankruptcy from your report until it is discharged, you can dispute the error if it remains on your credit report after the discharge.
Can you rebuild your credit score after bankruptcy?
Yes, you can rebuild your credit score after bankruptcy. It will take some time and might be more complicated than usual, but it can be done. You will need to make sure your credit file is up-to-date, look into all of your available options to establish new credit history, and commit to making payments on time.
How much will my credit score go up after a bankruptcy is removed?
There's no way to determine exactly how much your credit score will improve once a bankruptcy is removed from your credit report. How much your score improves will depend on multiple factors, such as your credit utilization ratio, payment history, credit mix, length of credit history and new credit.
How much does it cost to remove a bankruptcy from your credit report?
You can dispute incorrect information on your credit report for free. There are services that you can pay for if you need help, but it is something you could also do on your own.
What is the average time for a bankruptcy to be removed from a credit report?
A Chapter 7 bankruptcy drops off your credit after ten years, while a Chapter 13 bankruptcy drops off your credit report after seven years.
How do you get a bankruptcy removed from your credit report?
A bankruptcy will drop off your credit after ten years under Chapter 7 or seven years under Chapter 13. If the bankruptcy stays on your credit report beyond that time, you can file a dispute with the credit bureaus, Experian, Equifax and TransUnion, to get it removed.
What is the difference between Chapter 7 and Chapter 13 bankruptcy?
In a Chapter 7 bankruptcy, you don't have to pay back any debt included in the bankruptcy, and it will stay on your credit report for up to ten years. A Chapter 13 bankruptcy stays on your credit for seven years and allows you to keep some assets like your home and vehicle, but you will be responsible for paying some creditors back.
Summary of our guide on how to remove bankruptcy from your credit report
Removing a bankruptcy from your credit report is possible but only works for very specific circumstances. As long as you can prove the information is incorrect on your credit report, then you should be able to dispute it so the credit bureaus can remove it. If you are unsuccessful with a dispute, your only choice may be to wait for it to drop off within the seven or ten-year timeline.
Aja McClanahan is a writer that covers personal finance and a number of related topics. Her work and personal story of paying down over $120,000 in debt have been featured in publications around the web including sites like Money, CreditCards.com, Business Insider, Inc., Experian and many others.