What will my credit report look like after bankruptcy?

Here's what to expect to see on your credit report after bankruptcy, and what to watch out for.
Stephen Dunne, Esq.

Stephen Dunne, Esq.

Philadelphia bankruptcy, credit report, and debt collection abuse attorney

Here's what to expect to see on your credit report after bankruptcy, and what to watch out for.
Stephen Dunne, Esq.

Stephen Dunne, Esq.

Philadelphia bankruptcy, credit report, and debt collection abuse attorney

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You probably grew up under the impression that your credit report, much like your public school “permanent record,” equals how “worthy” you are to creditors.

In fact, your credit report might show that you’ve never made a payment late in your whole life – but you still aren’t “worthy” of having more credit extended because it’s clear you can’t pay off the debt you currently have.

By contrast, you may have a checkered payment history but be considered a good credit risk because your financial situation is more solid now than it was a few years ago.

What is a credit report, really?

A credit report is a financial history. While federal law prevents the credit bureaus from keeping false information on your credit report, it doesn’t entitle you to a rewrite of the facts, no matter how embarrassing they may be. Your history will show any reported late payments or past bankruptcies.

Because of that, delinquent debts that have been discharged in bankruptcy don’t vanish from your credit report – the history remains that they existed.

If you see that a debt was “charged off,” it means that the creditor doesn’t expect to be able to collect the debt, so they get to write it off as a loss on their taxes. However, it does not mean that you are no longer liable for the debt. The charge-off date also starts the countdown for how long old debts can appear on your credit report.

Your credit report rarely contains 100% of your financial history, because not all creditors report to credit bureaus.

How does my credit report change after bankruptcy?

Your credit report from Experian, Equifax, and Trans Union is required to be updated within sixty days of a Chapter 7 bankruptcy discharge pursuant to the White Settlement Order.

In 2008, Terri White filed a class action lawsuit against Experian, Equifax, and TransUnion alleging improper credit reporting post-bankruptcy, which resulted in a $45,000,000.00 settlement fund and an express agreement by all credit bureaus that they would comply with the “Agreed Bankruptcy Coding.” 

Within sixty days of notice of a Chapter 7 bankruptcy discharge, credit bureaus must update all pre-bankruptcy accounts with the notation “Included In Bankruptcy” and “$0.00 balance” to indicate that no debt is due or owed by the consumer after the discharge date.

It’s very important to review your credit reports 60 days after receiving a bankruptcy discharge to ensure each tradeline on your credit report states “Included In Bankruptcy” and “$0.00 balance. ”

Any mention of “Charged-off,” without also mentioning the bankruptcy filing is cause for alarm as a Charge Off in the credit reporting industry guidelines means that a debt may be owed.

Experian, Equifax, and Trans Union can be held liable for violating the White Settlement Order and failing to comply with the “Agreed Bankruptcy Coding.”

What happens to my creditworthiness after bankruptcy?

As long as you have a steady income, you may find that it’s easier to get credit than it was before your bankruptcy, now that you don’t have all those old debts dragging on your disposable income.

A negative credit history does not mean you will forever be rejected. It does encourage you to make your current financial situation as strong as possible, by keeping cash in reserve and using credit responsibly.

Is “credit repair” a real thing?

You don’t need to hire anyone to “fix” your credit report. Many credit repair offers are scams, trying to get your money to do things you can easily do yourself.

The Fair Credit Reporting Act (FCRA) allows you to challenge information on your credit report that you believe is inaccurate. If the credit bureau can’t prove the information is accurate, they have to remove it.

It’s good to make sure your bankruptcy discharge appears on your credit report because it proves that you are no longer liable for the debts included in the bankruptcy case.

You’re entitled to one free credit report per year from each of the three major reporting agencies – Experian, Equifax, and Trans Union. Avoid sites that advertise “free credit reports,” as they try to trick you into a monthly subscription scam. The one website that is guaranteed to be legitimate and authorized by federal law for accessing your free credit reports is annualcreditreport.com.

Sometimes it’s not easy to get the credit reporting agencies to give proper attention to consumer challenges to the accuracy of their report. If you have trouble getting them to remove what you truly believe to be inaccurate information, then you may need an attorney familiar with the Fair Credit Reporting Act to help you get satisfaction.

Keep an eye on your credit report in the years after bankruptcy – occasionally debts that were discharged years ago show back up in the hands of a new creditor. In that instance, you should definitely contact an attorney.

Where can I get help with credit report issues?

I am an attorney experienced in helping clients with credit reporting issues. It’s free to chat with me about your options – you can call or text me at 215.551.7109, or drop me a line.

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