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Can I Remove a Bankruptcy Filing From My Credit Report?
When you file a bankruptcy petition, it remains on your credit report for a decade. However, mention of the bankruptcy filing on the credit report takes on less significance as the filing becomes older. Auto financiers, banks, mortgage companies, and credit card companies all know this to be true. In fact, they know another truth, as well: A bankruptcy debtor is likely a better credit risk for them post-bankruptcy filing than prior to filing the bankruptcy petition when credit, finances, bank accounts, debts, and everything about money is a mess.
Is a Debtor's Financial Future Over After Filing Bankruptcy?
Absolutely not. First, banks offer secured credit cards to bankruptcy debtors. The debtor deposits a few hundred dollars and gets a secured credit card with a credit limit equal to that deposit. Over time, the credit limit gradually grows past the level of deposited funds, as the debtor is able to prove his or her ability to repay the funds. But, the options do not end with secured credit cards.
There are also mortgage loans. Approximately, two years after a debtor receives his or her discharge in bankruptcy, he or she is usually able to obtain a mortgage loan. And that mortgage loan has terms equal to those of a person who has never filed for bankruptcy protection. Income stability and the size of the debtor's down payment on the residence purchase are far more important to the mortgage lender underwriting the loan than the fact that a bankruptcy was filed years prior.
Can a Debtor Get Credit Bureaus to Remove Mention of Bankruptcy From Credit Reports?
A Chapter 7 bankruptcy filing is like any other negative reported item on a credit report. It is something a consumer wants to purge as soon as possible. The goal is to order the credit report, check it for accuracy at least once a year, write bureaus with explanations of unclear or confusing items, dispute inaccuracies, insist the bureau verify the bankruptcy's filing, and remove any unverified information.
The important thing to realize about credit reporting bureaus is they must take the verification process very seriously. Especially in today's consumer protection-oriented culture and litigious society, bureaus are required to verify disputed and contested information on credit reports, and savvy, educated consumers know this.
Further, the verification process is difficult to do remotely. Credit reporting bureaus cannot expend resources to personally visit courthouses and review records face to face. Often, courts will not release information for privacy and public policy reasons over the phone, fax, or email. As such, bureaus are at a loss to verify information, including bankruptcy filings, especially in subsequent years after the initial year of a petition's filing.
Persistent, nagging consumers who vigilantly order, monitor, and review their credit reports are likely to be able to remove negative mention of a bankruptcy filing sometime before expiration of the usual 10-year waiting period. This is not a guarantee by any means. However, as a practical matter, challenges of the verification process will present enough of a hurdle to the credit reporting bureaus that a fortunate consumer just may receive premature removal of the mention of a bankruptcy petition's filing from his or her credit report.