Does Chapter 7 Bankruptcy Fall Off A Credit Report?
Find out how long Chapter 7 and Chapter 13 bankruptcy will be reported on your credit record.
Most people commence a bankruptcy case when they need to start over and get their finances under control. Improved credit scores are frequently a part of that fresh start, and filers can take proactive measures by making on-time payments and maintaining modest credit balances. Nevertheless, depending on the bankruptcy chapter you file, it may take up to ten years for the bankruptcy to disappear from your credit report.
What is included in your credit report?
The quantity of personal information in your report may surprise you. You’ll notice three different types of information in particular:
identifiable information, such as your name, address history (including accounts marked paid as agreed or charged off), employer information, credit card information, payment history, and public records like court decisions, tax liens, and bankruptcies.
Reporting of Bankruptcy on a Credit Report
After seven years, the majority of bad entries, such as late payments and charge-offs, will be removed from your report. For bankruptcy filings, it operates somewhat differently and is dependent on the specific chapter.
Chapter 7 insolvency. Your Chapter 7 bankruptcy filing will be noted on your credit report for a maximum of ten years. The credit bureaus should stop recording the bankruptcy after ten years.
Chapter 13 insolvency. The filer contributes to a repayment plan in this chapter for a period of three to five years. Only two years longer than the longest repayment plan, seven years from the filing date, the Chapter 13 bankruptcy filing is visible on a credit record. This benefit encourages filers to select the repayment option and to gradually pay back creditors.
Whether you have a high or low initial score will determine the immediate impact of bankruptcy on your credit score, and in most circumstances, a higher initial score will suffer more damage. Because scoring businesses keep the formulae used to generate scores relatively hidden, it is difficult to predict the exact outcome. But if you work hard, it’s not impossible for you to raise your credit score to the extremely high 700s in as little as two or three years after filing for Chapter 7.
Checking the Accuracy of a Credit Report
Even if you aren’t thinking about declaring bankruptcy, it’s a good idea to periodically evaluate your credit report. One way to verify is to use the free copy you’re entitled to once a year from each of the three major credit bureaus—Experian, TransUnion, and Equifax. Visit www.annualcreditreport.com to purchase your credit reports.
Because not all creditors submit reports to all three agencies, it is crucial to carefully analyze all three. Each of your creditors should note that the account was included in bankruptcy a few months after you filed for bankruptcy. If not, it would be wise to have that fixed since any line item that shows as open but unpaid could give the impression that you are still liable for that obligation to a potential lender.
The status of your Chapter 7 bankruptcy case—whether it was dismissed or your qualifying debts were erased—should also be noted on your credit report. An effective bankruptcy that results in a discharge affects a prospective lender’s choice to extend credit differently than if the bankruptcy had been unsuccessful, leaving your account liability unaffected.
It’s a good idea to fix any mistakes you see as quickly as you can. You can do this by immediately mailing a letter to the credit bureau or by disputing the item on the credit bureau’s website.