How Can Bankruptcy Be Removed From Credit?

Statistically, nothing is worse for a credit score than a bankruptcy, but if you have a bankruptcy on your record, you are in luck -- you can remove it. Unfortunately, it may take a decade to do so. The only way to escape this long wait is if you can prove that the credit reporting agencies made an error.

Reporting Time Limit

Chapter 7 bankruptcy has a federal reporting time limit of 10 years from the date you file for bankruptcy and Chapter 13 a limit of 10 years from the time you finish the repayment plan. Should the credit reporting bureaus list a bankruptcy any longer, you can initiate a dispute and request they remove the item. Few problems should occur with this method, because the bureaus only need to look at the date of the bankruptcy.

Is It an Error?

The bankruptcy could be an error. This can happen when the agencies mix up another person's file with your own -- more likely when you and the other party have the same name or a similar Social Security number. Persuading the agency to correct such a serious mistake may not be such an easy proposition. The credit bureaus rarely investigate cases personally and instead rely on an automated system to handle most cases. Thus, you should send the bureaus as much evidence as possible to prove the erroneous bankruptcy belongs to someone else.

Misconception

Some companies, often calling themselves credit repair clinics, claim they can remove a bankruptcy even if you legally own it. This is either an outright lie or an attempt to get you to do something illegal. If the tactic works at all, it will be for only a short while. The company usually tells you to create a new credit profile by using a fake Social Security number -- thereby "hiding" your bankruptcy. This sort of "file segregation" is illegal and rarely works, because the credit bureaus also track consumers by address and other demographic info.

Tip

Bankruptcy may not affect your credit as much as you think. It might bring down your score only a bit since your accounts were no doubt already delinquent by the time you filed. By wiping out unsecured debt, you get a fresh start. Some lenders may see you as more creditworthy, because you must wait several years to declare bankruptcy again.