5 Tips to Help You Remove Bankruptcy from Credit Report

| December 30, 2016

bankruptcyBankruptcy is a dreaded proposition for the commoners, but not so much for business minded people because they know how to use it to unburden themselves. If someone could stop an imminent foreclosure using bankruptcy, his debts would disappear.

I have discussed various aspects of bankruptcy in one of my previous articles. You can give that article a read. In this article, I discuss how you can remove a bankruptcy from your credit report.

Chapter 7 bankruptcy

Chapter 7 and 13 are two bankruptcy types. Removing chapter 13 bankruptcy is easier than removing chapter 7 bankruptcy. The first thing you need to do is select a credit monitoring service and signing up. Such services are free, and the signup process is very easy.

Look for factual errors

The credit monitoring service is to spot errors on your report. After you select a service and sign up, get your score report from all three credit bureaus. You can monitor the credit report and look for questionable activities.

Check the bankruptcy entry. Are all data accurate? If not, then take it to the credit bureaus. In case of old bankruptcies, bureaus often remove them for not being able to verify them.

Request for an update

If the bureaus have verified the bankruptcy, you can send them a letter asking them to explain why they verified it. The most likely answer you are gonna get is they didn’t know the bankruptcy is already discharged.

If you get this answer, get a photocopy of the schedule “A” of the bankruptcy record. The schedule lists down all debts including your bankruptcy filing.

Next, get all the documents, which establish that the bankruptcy has been discharged already. Mail all documents to the bureaus along with a statement requesting them to update the bankruptcy status.

Such letters are called procedural request letters. The purpose of sending them  is to inform the credit bureaus about the discharge of bankruptcy, and also to tell them that they can contact the court if they want to dispute the information.

Ask the court

Here’s the crux. The credit bureaus might contact the court and find out that you have supplied them wrong information. It is bound to happen if you don’t separately contact the court.

bankruptcyWhy is it essential? Sometimes, credit bureaus respond to the consumer saying they have verified the information with the court. They may not be telling you the truth because courts don’t always verify bankruptcy for the bureaus.

If the court replies you that it didn’t verify anything, tell it to issue you a written statement declaring the same.

You’d be lucky if you get such a reply from the court because then you can simply send a mail to the credit bureaus requesting them to immediately remove the bankruptcy.

Don’t forget to inform them that they have violated the FCRA by providing you with false information.

What if the court replies you that it did verify the information? Then you have to update the court about the discharge of the bankruptcy from your credit report.

The timeline

It’s essential for you to know the bankruptcy timeline. The removal of bankruptcy records from your credit report takes time. If it’s a chapter 7 bankruptcy, then it takes ten years time.

If it’s a chapter 13 bankruptcy instead, then it takes seven years time. The date of discharge has nothing to do with the deletion of bankruptcy records.

What this means is you need to wait patiently for 7 years before you could proactively insist the bureaus and the court to update your bankruptcy details.

Nevertheless, the accounts that are included in the bankruptcy filing, can be updated to inform that they are included. The deletion of those accounts should be shown on your credit report. If not, then you can take it to the bureaus.

The tracks

The individual accounts that are included in the bankruptcy listing are called tracks. More often than not, the tracks create the problems. The removal of bankruptcy from your credit report is automatic after the timeline described in the previous paragraph.

But if you want to dispute the bankruptcy before the timeline, you need to remove the tracks.

The best way to do that is compare all three copies of your credit report from all three bureaus. If one report registers a track, and another doesn’t, then you can dispute the listing.

This way, when you successfully remove all the tracks, you dispute the bankruptcy.

However, it’s easier said than done. The process is time consuming. Besides, you need the help from experienced financial advisors.

What do you think of the article? Do you have a bankruptcy? How do you want to remove it from your credit report? Let us know in the comment section.

Tina Roth is a finance blogger who writes about frugal living and money management. You can visit her personal finance blog to know more about her.

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