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Wondering if you can remove bankruptcy from your credit report? Perhaps you bit off more than you could chew—whether it be with an unsecured card or an unexpected turn of life events. Regardless of the reason, most of the time, the answer is no—it usually sticks with you for a long time. However, there are a few scenarios in which you will be able to wipe bankruptcy on your credit report clean off. If you need to improve your financial standing in order to achieve your future goals, you have come to the right place.
This article will teach you everything you need to know regarding Chapter 7 and 13 filings. By the end of it, you will know what they are and how they impact you. You will also learn how long these declarations can follow you around, and what your best chance is of getting rid of them. So, if you need to get bankruptcy off your credit report, read on!
- How to Remove Bankruptcy from a Credit Report?
- How Long Does a Bankruptcy Stay on Your Credit Report?
- How Does Bankruptcy Affect Credit Scores?
- Don’t Give Up!
How to Remove Bankruptcy from a Credit Report?
Roughly half a million people had to declare bankruptcy in 2020. Most people who go through this process are stuck dealing with its consequences. However, if you’re lucky, you’ll be able to skate through without the major cons.
1. Obtain Copies of Your Credit Report
The first step in this long process is to get your hands on a copy of your report. Everyone is entitled to a free copy from the major credit bureaus each year, which totals to at least three. Plus, depending on who you have financial relations with, some companies can offer you even more free copies.
In addition to getting copies of your reports from the bureaus, you may also want to get a copy of your financial information from LexisNexis. And, you will want to head to the courthouse to get your public records from your hearing. Both of these things are public records, so you should not have to pay anything to access them. You may, however, have to pay to make or order copies of them. Once you have all of these copies, sit down and get ready for some reading. Next up is the key to how to get bankruptcies removed from a credit report.
2. Identify Potential Errors
The Fair Credit Reporting Act was put in place to protect citizens like you. Part of it essentially says that in order for something to appear on your report, it has to be 100% correct (not 99.99%) and complete. Business entities do their best to make sure that all of their data and paperwork reads as it is supposed to. However, when you are dealing with thousands of peoples’ reports each day, things are bound to slip through the cracks. That’s where you come in.
You can only remove bankruptcy from a credit report if it is incorrect. Therefore, if you want something removed that you do not believe should be there, it is up to you to prove that it is inaccurate. Start scanning the documents that you have collected in step one for any inconsistencies. These might include the dates that events took place, amounts owed, the type of chapter filed, etc.
Then, make sure that it is truly a mistake on behalf of the entity and not a mistake that you made. Once you have identified as many mistakes as possible, you can head to step three to challenge the errors and begin your credit repair. If you were not able to find any mistakes, skip to step four.
3. Send a Dispute Letter
Now that you have identified the mistakes that you would like to dispute, you need to place them into a letter for bankruptcy removal and send them to the entity that made the error. This is also called a “challenge”. Your letter should contain the following information:
- Your contact information and a polite header;
- All of the mistakes you believe you have found;
- Solid evidence that the mistakes are indeed incorrect; and
- Any necessary attachments.
If you do not submit enough evidence of the inaccuracies, you risk your challenge being denied. So, make sure that you provide solid enough proof that supports whatever statements you make. Also, be sure to be respectful and kind in your letter, as the person reading it is not the one who made the mistake. They are the ones, however, who stand between you and removing a bankruptcy from your credit report.
After sending your challenge, it could take as little as one week to hear back about the answer. Or, you may wait up to a month. Exercise patience. If your challenge is accepted, then your credit reports will all be cleared of the error, and you should see a rise in your score.
4. Request a Verification
Perhaps you were not able to find any errors on the reports you pulled. Or, maybe you thought you did, but your bankruptcy removal letter ended up getting denied. Fortunately, your journey to monetary freedom doesn’t stop there. Next, you can try reaching out to the courthouse that processed your case for verification. You can do this by calling the courthouse directly or stopping by the court records office in person if your courthouse volunteers assistance for these purposes.
Courthouses do not generally report anything to bureaus. It is the bureaus who come seeking, and they do it in the same public records that you were discussed above in step one. These records include documents such as:
If your courthouse tells you that they cannot or do not verify bankruptcy on credit reports, then ask for a signed statement saying this. Then, reach out and ask the credit bureau to verify your report. While they are supposed to always be doing this, you can have them intentionally take a close look at your profile to make sure all is right.
5. Consult a Professional
If you have not been successful during any of the above steps, don’t be too hard on yourself. Getting bankruptcy removed from a credit report is no easy task. Thankfully, there are people who basically do it for a living. Some of the best include:
All of the above companies know how to remove bankruptcy from credit reports. While they cannot guarantee removal, they can give you the best chance of doing so. They might pick out things you have missed, and most offer a free credit consultation. Even if you would have been fine on your own, they can take care of this frustrating task so that you don’t have to deal with it, but can still rebuild your credit.
Different professionals have different plans, so you’re guaranteed to find one that works for you. If you need a lot of help, you can pay for comprehensive services that will give your whole financial account a spring cleaning. Or, if you only need to remove bankruptcy from a credit report, you can just pay for that.
How Long Does a Bankruptcy Stay on Your Credit Report?
There are a lot of aspects that affect how long something may stay on your profile. Depending on the type of declaration you make though, there are rough timeframes you should expect. Almost always, declaring the 13th Chapter will get you out of the woods sooner than a seventh.
Chapter 7 Bankruptcy
Can you remove Chapter 7 from a credit report before 10 years? Chapter 7 declarations are for those who are not able to pay any of what they owe. The option is available to everyone—individuals and entities alike. If you were eligible and successful in filing this version, then consider yourself lucky. It is definitely the better of the two options. Though your case does not officially end after the Chapter 7 discharge, relief comes shortly after. Expect forgiveness within months, as those who declare Chapter 7 essentially get their payment histories and other debts swept off the table. However, all of this comes at a price.
If you are fortunate enough to file with this chapter, then it will take longer for you to get it off of your profile. It is one of the most stubborn negative marks. If you are not able to remove bankruptcy from your credit report early by finding an error in your report, you are stuck with it for 10 years.
Chapter 13 Bankruptcy
Some people prefer to file Chapter 13 instead of 7. For one thing, it is less of a headache and may benefit your credit report after bankruptcy. And, it requires less starting over. Others simply do not have a choice, because they do not qualify for seven. Regardless of the reason, declaring the big thirteen has its own unique set of pros. For example, you get to hold onto the few assets that you do have in your possession. You also may be able to secure deductions in what you owe.
Additionally, this form of bankruptcy, after 7 years, will leave you for good, unlike its cousin seven, which can linger for a full decade. Note that the clock generally begins ticking after the bankruptcy filing date.
How Does Bankruptcy Affect Credit Scores?
If you’ve incurred this nasty line item, you might be wondering—how does bankruptcy affect your credit? Well—it depends. No entity is 100% transparent about how it calculates your magic number. They collect your data and use unique algorithms to determine your trust based on what the lender values. However, in general, you should anticipate the average credit score after chapter 7 to be underwhelming. Even if you have incurred a 13, your score will still take a hit.
If you are currently well in the green, then you may well see a plummet of nearly 200 points. If you’re already in the yellow, mathematically, it follows that a negative mark won’t drag down your average as much. No matter what though, your drop will be around 120-160 points unless your score was horrendous, to begin with. When bankruptcy does come off your credit report though, it will be as though it had never happened—a clean slate. This is true whether you are able to pull it off yourself, or if you just let it fall off naturally.
Don’t Give Up!
Having a poor score can weigh heavy on your shoulders and disrupt future plans. Fortunately, you are now equipped with the skills and knowledge to fight back against the effects of bankruptcy on your credit score. By implementing the five steps above, you will get one step closer to achieving economic freedom. And if you can’t get there alone? No worries. There are always helpful professionals waiting nearby to guide you through the process.
So, what are you waiting for? Get started on wiping your slate clean today on your own or with the assistance of a credit repair company!