Filing for bankruptcy eliminates the majority of your existing debt and gives you a new beginning. While your credit score might take a dive at first, bankruptcy helps you establish a stable financial situation for a more financially secure future.
Credit History Reporting
It is important to understand that once you file bankruptcy, it will not make all of your existing debt disappear from your credit report. You should be prepared for the bankruptcy to show up on your credit report for the next seven to ten years. While this may sound disheartening, it is not as bad as it seems. DIscharging debts with a bankruptcy is often a much faster process than trying to clean it up on your own.
For example, once you have filed bankruptcy, the status of debts included in the bankruptcy will be updated to show that they have been discharged, rather than continuing to show up on your credit report as unpaid for an unlimited amount of years. In fact, after your bankruptcy has been filed, creditors must refrain from specific actions that could affect your credit negatively. They cannot show the debt as:
- Currently active or owed
- Outstanding, delinquent, or outstanding
- Charged off
- Reflecting a balance due
Creditors are also not allowed to present a debt that is included in your bankruptcy as a new type of debt. In other words, they cannot give the debt a new account number or re-age it. Credit reports are not automatically updated, however. It is up to each creditor to properly update your credit report. If you notice that one of the debts included in your bankruptcy is not reflected accurately, you will need to dispute the entry on your credit report.
Your Credit Score
It is a common misconception that bankruptcy will increase your credit score. Be prepared for your credit to take a negative hit at first, but once you start making payments toward your bankruptcy, you should see your credit start to improve. You can also obtain a secured credit card to help bump your credit score, little by little. Make responsible, timely payments on all of your bills, your bankruptcy, and your secured credit card. It will take time, but you can rebuild your credit now that the bankruptcy is processed.
When is Bankruptcy Deleted From The Credit Report?
If you filed Chapter 13, you can expect it to be deleted from the public record seven years after your filing date. Chapter 13 is the type of bankruptcy that requires you to repay at least part of the debt that you owe. It takes ten years for a Chapter 7 bankruptcy to be deleted from your credit report. Filers are not required to repay any debts for Chapter 7, therefore, it remains on the record for a few years longer.
Disputing Discharged Debts & Errors
As mentioned earlier, if you find any discrepancies on your credit report after your bankruptcy has been filed, you should take the necessary steps to fix them. There are three credit reporting agencies, Experian, Equifax, and TransUnion. You can request a free credit report from each of the three credit reporting agencies once per year. It is in your best interest to ensure all of your debts are indicated correctly after your bankruptcy finalizes.
Dispute any debts that are listed inaccurately. If the credit reporting agency is unable to properly verify the information on their report, they are required to remove the entry. It is best to provide the credit reporting agency with your dispute in writing. Include the information that you believe is incorrect and provide them with your bankruptcy case number and order of discharge.
Are You Considering Filing For Bankruptcy?
If you feel bankruptcy is the best option for your financial situation you need to speak with an experienced bankruptcy lawyer as soon as possible. Please contact us online or call our office directly at 888.348.2616 to schedule your free consultation.