Learn Better Habits To Avoid Financial Problems
Spend some time identifying what forced you into bankruptcy. Did you spend too much money on housing? Did you take lavish trips? Did you simply spend more than you could afford eating at restaurants?
If you havent already made a budget, create one now. It should include every dollar you earn, spend, and save. Count everything so you have an accurate picture of how you use your money.
Correcting Misreported Discharged Debt
Disputing errors is relatively straightforward. You’ll do so by using the online procedure provided by each of the three major credit reporting agencies.
A creditor who repeatedly refuses to report your discharged debt properly might be in violation of the bankruptcy discharge injunction prohibiting creditors from trying to collect on discharged debts. If you take steps to remedy the misreporting, and the creditor refuses to fix the error, talk to a bankruptcy attorney.
If You Discharged Debts In Bankruptcy Here’s How They Should Be Listed On Your Credit Report
Updated By Cara O’Neill, Attorney
In short, yes. Not only will a bankruptcy filing remain on your credit report for seven to ten years, but you can expect information about the debts discharged in bankruptcy to continue to appear on your credit report, too. In this article, you’ll learn what shouldand should notshow up on your credit report after you receive a bankruptcy discharge, and what to do if your credit report contains incorrect information.
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Dispute Inaccurate Bankruptcy Entries With A Credit Dispute Letter
If you were able to find some inaccurate information within the credit report, then your next step will be to dispute the inaccurate entries with each of the credit bureaus using a .
The best-case scenario is that theyll be unable to verify the bankruptcy and remove it from your credit report. This is unlikely if its a recent bankruptcy. The older the bankruptcy, the better chances you have of getting it removed from your credit report this way. Nonetheless, if it happens, then great, you can skip the other steps.
If the bankruptcy is verified by the credit bureaus, continue to the next step.
Difficulties You May Face Before A Bankruptcy Falls Off Your Credit Report
Before a bakruptcy is removed from your credit report, you may face the following problems:
- Unsecured credit card applications will not be approved
- Loan applications will not be approved
- Payment of higher interest rates
- Payment of higher insurance premiums
- More difficult time finding a job
- More difficult time getting approved to rent an apartment
- Difficulty taking out a loan to buy a home
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Send The Courts Response To The Credit Bureaus
Send the statement from the court to the credit bureaus with a letter asking to have the bankruptcy removed. Mention that the bureau knowingly provided false information and has violated the Fair Credit Reporting Act.
If all goes well, removal of bankruptcy should occur.
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How Can You Rebuild Credit After Bankruptcy
Declaring bankruptcy is a major decision, and it can have a big impact on your credit profile. But, its effects wont last forever. To learn more about how you can improve your credit health, one step at a time, check out this blog on how to rebuild your credit history.
Disclaimer: The information posted to this blog was accurate at the time it was initially published. We do not guarantee the accuracy or completeness of the information provided. The information contained in the TransUnion blog is provided for educational purposes only and does not constitute legal or financial advice. You should consult your own attorney or financial adviser regarding your particular situation. For complete details of any product mentioned, visit transunion.com. This site is governed by the TransUnion Interactive privacy policy located here.
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Can I Rebuild My Credit After Bankruptcy
You can rebuild your credit after bankruptcy, but its a long process. Your options will be limited at the start, but it is key to not get discouraged. As time goes on, if you consistently pursue a credit rebuilding strategy, your reports and scores can improve.
Here are some recommendations to start with:
- Understand the cause: Identify, accept, and learn from the root causes of your bankruptcy so you wont find yourself in the same position down the road.
- Stick to a budget: Re-evaluate your finances and see where you can cut expenses and save more money if you can.
- Start establishing a new credit history: No, this does not mean using an alias . It means starting fresh with whatever credit you can obtain.
This may mean settling for an extremely high-interest rate, taking on a co-signer, depositing cash into a secured credit card, or other options that have been designed specifically to help you re-establish a positive credit record.
Use these credit options sparingly and never put more on a card than you can pay off by the end of the month so your credit improves over time.
Professional Help From A Credit Repair Company
Any time you try to dispute a negative item on your credit report, whether its a bankruptcy or a credit card late payment, its bound to be a long, arduous journey.
To save yourself a major headache, consider hiring a professional credit repair company. Theyll not only review your bankruptcy entries, but everything else on your credit report as well, so you can benefit from a holistic strategy for repairing your credit.
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Clean Up Your Financial Act
There are a number of reasons why you may have been forced to file for bankruptcy. But whats most important when rebuilding your credit is not the culprit, per se, but making sure that history doesnt repeat itself. In other words, you want to establish a solid plan for your finances to make your money work for you. In your list of objectives should be creating a realistic budget that keeps your spending in check, safety net, and plans to eradicate debt that wasnt included in the filing.
Can A Bankruptcy Come Off My Credit Report Early
A legitimate bankruptcy record cannot be removed from your credit report, but a bankruptcy can come off your report if it is inaccurately entered or otherwise incorrect.
The FCRA makes provisions for challenging anything on your credit report that is incorrect, has remained on your credit report beyond the maximum time allowed, or cannot be substantiated by the creditor who reported it.
In the case of bankruptcies especially because they remain on the credit report for so many years its not uncommon for errors to creep in.Some of the most common errors we find include:
- Debts that were discharged in the bankruptcy are still showing a balance.
- Individual accounts included in the bankruptcy are still appearing on the report after seven years. In both Chapter 7 and Chapter 13 bankruptcies, the individual affected accounts can only impact your report for seven years starting from original delinquency date, not the filing date of the bankruptcy in which they were discharged.
- The bankruptcy is still showing up on a report more than 10 years after the filing date.
- Any sort of material error in how the bankruptcy was reported, from the spelling of names to accurate addresses, phone numbers, dates, etc.
If any of these or other errors appear on your credit report, you have the right to challenge those errors. The reporting agency must remove them if the reporting agency cannot substantiate the item.
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What Is Credit Reporting And How Does It Affect Me
In Canada there are two major credit reporting agencies Equifax and TransUnion. Most people commonly refer to these agencies as the credit bureaus. Credit reporting agencies do exactly that: they report credit history. They can also be referred to as an information service as they provide copies of your credit report to potential lenders. This allows the banks and other lenders to determine how much risk they are taking when they loan you money. Whenever anyone lends money they are taking a risk that it will not be repaid.
To get any significant credit, you need a good borrowing history.
Approximately once each month every major lender in Canada sends a report about their borrowers to the credit bureaus. Also, the federal Superintendent of Bankruptcy reports a list of everyone who filed a consumer proposal or bankruptcy to the credit bureaus, as well as a list of everyone who has been discharged. The credit bureaus collect this information, summarize it, and sell it to their members, the lenders.
When you apply for credit you normally sign an application that provides the lender consent to access your credit history. Generally this consent allows then access not only the first time you apply, but anytime afterwards as well, as long as your account is open. It is also this consent that allows the lender to provide the bureau information on your payments etc. once you have been approved.
How Long Does Information Stay On My Equifax Credit Report
Reading time: 3 minutes
Highlights:
- Most negative information generally stays on credit reports for 7 years
- Bankruptcy stays on your Equifax credit report for 7 to 10 years, depending on the bankruptcy type
- Closed accounts paid as agreed stay on your Equifax credit report for up to 10 years
When it comes to credit reports, one of the most frequently asked questions is: How long does information stay on my Equifax ? The answer is that it depends on the type of information and whether its considered positive or negative.
Generally speaking, negative information such as late or missed payments, accounts that have been sent to collection agencies, accounts not being paid as agreed, or bankruptcies stays on credit reports for approximately seven years. Here is a breakdown of some the different types of negative information and how long you can expect the information to be on your Equifax credit report:
Here are some examples of “positive” information and how long it stays on your Equifax credit report :
- Active accounts paid as agreed. Active credit accounts that are paid as agreed remain on your Equifax credit report as long as the account is open and the lender is reporting it.
- Closed accounts paid as agreed. If the last status of the account is reported by the lender as paid as agreed, the account can stay on your Equifax credit report for up to 10 years from the date it was reported by the lender to Equifax.
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How Does Bankruptcy Impact My Credit Report
A bankruptcy will affect your credit report in two ways.
The bankruptcy stays on seven or ten years after filing.
So the agency will typically remove the accounts the bankruptcy includes from your credit report first.
Their delinquency dates will pretty much always precede the bankruptcy filing date.
Bankruptcies will always negatively impact your credit report. However, the severity of the impact will vary case by case.
If you have several accounts included in your bankruptcy, its going to have a more significant impact than if you only have a single car loan or credit card.
Public court records are always accessible via the Public Access to Court Electronic Records system.
If you have a fraudulent bankruptcy on your record, due to identity theft or perhaps a clerical error, it shouldnt be hard to track down.
Will A High Credit Score Help You During A Bankruptcy
Myth: A clean credit historyone with no late payments or other issuesand a high credit score means youll be less impacted by a bankruptcy.
The truth: Bankruptcy will have a huge negative impact on your credit, and a previously positive payment history doesnt change that. In fact, if you have a higher score, you could stand to lose more than if you already have a low score.
A bankruptcy also temporarily wipes out all the goodwill you might have developed with your timely payments. Some lenders may have rules about offering credit when a recent bankruptcy shows up on your credit historyno matter how good your score used to be.
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How Long Does A Bankruptcy Or Consumer Proposal Stay On My Credit Report
How long bankruptcy stays on your credit report in Canada will depend on the credit bureau that is reporting.
The largest credit bureau in Canada, Equifax, maintains this record on your credit report for a period from the date of your discharge or last payment:
- A first bankruptcy for six years from the date of your discharge.
- A second bankruptcy for 14 years.
The TransUnion web site states that they keep a bankruptcy on your credit file for six to seven years from the date of discharge or fourteen years from the filing date .
At this point the bankruptcy will leave the credit report and you will need to start to rebuild your credit.
How long a consumer proposal stays on your credit report again depends on the credit bureau that is reporting.
With Equifax, a consumer proposal is reported for three years after your last payment.
Talk To A Bankruptcy Lawyer
Need professional help? Start here.
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When Exactly Will The Information Be Removed
Regardless of your discharge date, the time frame for removal is seven years from the date you filed Chapter 13.
If you want to make sure the information is removed, you can pull and review all three of your credit reports . For each report, check under the public records section to make sure that the bankruptcy case is no longer listed.
Ask The Courts How The Bankruptcy Was Verified
Next, you will need to contact the courts that were specified by the credit bureaus.
Ask them how they went about verifying the bankruptcy. If they tell you they didnt verify anything, ask for that statement in writing.
After you receive the letter, mail it to the credit bureaus and demand that they immediately remove the bankruptcy as they knowingly provided false information and therefore are in violation of the Fair Credit Reporting Act.
If all goes well, the bankruptcy will be removed.
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How Can I Rebuild My Credit After Bankruptcy
The most important thing you can do to improve your credit score after a bankruptcy is remove the bankruptcy from your credit report.
Equally important is learning and changing your personal finance habits so that it doesnt happen again. This might involve reviewing your income and expenses or building your emergency fund to prevent future financial hardships.
The most important ongoing habit you can begin is to pay all of your bills on time because your payment history accounts for the largest portion of your credit score. Even a single 30-day late payment can cause a significant dip, so imagine how bad it could be if you regularly miss a payment.
Your other best bet for rebuilding your credit after bankruptcy is to avoid accruing new debt.
Depending on the type of bankruptcy filing, you probably had much of your debt discharged. So even though the bankruptcy itself is a major negative item on your credit report, consider the rest a blank slate.
Avoid racking up additional debt because that also has a significant impact on your credit score.
You may also want to get a secured credit card. Its a credit card designed for people who want to rebuild their credit. The credit card issuer will give you a credit limit based on the security deposit you pay upfront. By making monthly payments on time, you can start to rebuild your credit immediately.
Will Bankruptcy Automatically Fall Off My Credit Report Or Do I Need To Tell The Credit Bureaus
Just like other negative records, Chapter 13 bankruptcy is scheduled to be automatically removed, or purged, from your credit reports after a specific time period.
For a Chapter 13 bankruptcy case, the time frame is seven years after you file for bankruptcy. That means you can expect the record to be removed from your credit reports at the seven-year mark without any effort on your part.
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