How will Filing for Bankruptcy Affect my Credit?
Bankruptcy is a life changing event in any person's life, with long lasting consequence. For example, a record of the bankruptcy will appear in the Public Records section of your consumer credit report for the next ten years. Having said that, however, consumers can and do seek and obtain credit after going through bankruptcy.
What Information will be on my Credit Reports?
In addition to the public record of the bankruptcy, each of your creditors that were included in the bankruptcy will update your account to reflect the bankruptcy. The exact information reported will vary based upon the history of the account at the time the bankruptcy is filed. In general, most accounts should be reported as "Included in Bankruptcy." Some may refer to the specific type of bankruptcy with remarks such as "Chapter 7" or "Wage earner repayment plan."
After bankruptcy, the balance, current payment, and amount past due should all reflect zero dollars. However, if you were late on your bills before your bankruptcy was filed, those notations may or may not appear on your credit reports. The last part of this article discusses how to dispute false information on your credit reports after bankruptcy.
Will I be Able to Get Credit after Bankruptcy?
For the majority of consumers that file for bankruptcy and either obtain a discharge (Chapter 7) or complete their repayment plan (Chapter 13), the answer is "Yes". It is likely that credit will be more costly than prior to bankruptcy, which may be reflected in higher interest rates, security deposits, or lower amounts of credit offered. The two most important factors in being able to obtain credit after bankruptcy are 1) paying all of your bills on time after bankruptcy; and 2) the length of time that passes after your bankruptcy. Obviously, you have control over the former, but not the latter. Consumers can rebuild their credit after bankruptcy by using low limit or secured credit card accounts, and conscientiously paying them off each and every month.
How to Dispute False Credit Reports after Bankruptcy
As noted above, post-bankruptcy credit reports should show discharged accounts as "Included in Bankruptcy" with a zero balance and zero past due. Often these accounts are reported inaccurately, or have not been updated with the correct information. Under the Fair Credit Reporting Act, consumers have the right to dispute false or incomplete information in their credit reports.
First, get a copy of your credit report. Consumers can request their free annual credit report by writing to Annual Credit Report Request Service, PO Box 105281, Atlanta, GA 30348-5281. The request form is available at the annualcreditreport.com website.
Next, send a written dispute letter to the credit reporting agencies. Tell them that you filed for bankruptcy, and give them the bankruptcy court case number. List the specific accounts and account numbers which were discharged. Send your letter via certified mail, with a return receipt requested. Keep a copy of your signed, dated letter, along with copies of enclosures.
If you cannot get false information deleted from your credit report, you may want to talk to a consumer protection attorney about your rights under the Fair Credit Reporting Act.