Understanding Bankruptcy and Its Impact on Your Credit Report

Bankruptcy can be a daunting experience, but understanding its implications on your credit report can help you navigate the process more effectively. At O1ne Mortgage, we are committed to providing you with the information and support you need to manage your financial health. If you have any questions or need assistance with mortgage services, please call us at 213-732-3074.

Can You Remove Bankruptcy From Your Credit Report?

One of the most common questions we receive is whether it’s possible to remove a bankruptcy from a credit report. The short answer is no, you cannot remove a bankruptcy if the information is accurate. However, if you find any inaccuracies, you have the right to dispute them with the credit reporting agencies.

There is an exception to this rule: if a creditor has improperly filed an involuntary bankruptcy petition against you, the bankruptcy court may prohibit reporting to the credit bureaus. In such cases, you may have the right to dispute the filing date.

How Long Does Bankruptcy Stay on Your Credit Report?

Bankruptcy can remain on your credit report for a significant amount of time, depending on the type of bankruptcy you filed:

Chapter 7 Bankruptcy

Also known as liquidation bankruptcy, Chapter 7 can stay on your credit report for up to 10 years from the filing date. This type of bankruptcy typically discharges more of your debt, which is why it remains on your report for a longer period.

Chapter 13 Bankruptcy

Known as reorganization bankruptcy, Chapter 13 remains on your credit report for seven years from the filing date. This type involves restructuring your debts to make affordable payments over three to five years, usually resulting in a lower discharged amount compared to Chapter 7.

While it takes several years for a bankruptcy to fall off your credit report, its negative effects can diminish over time, especially if you take proactive steps to rebuild your credit history.

How Long Do Accounts Included in Bankruptcy Stay on Your Credit Report?

If you’ve filed for bankruptcy, you likely already have derogatory marks on your credit report, such as late payments, defaults, charge-offs, or collection accounts. Accurate negative items are removed from your credit report seven years from the date of the original delinquency—the date of your first late payment, after which the account remained delinquent. The only exception to this rule is if the negative information was reported inaccurately.

How to Check Your Credit Report

Whether you’re still in the bankruptcy process or your case has been discharged, it’s a good idea to regularly review your credit reports. With Experian, you can check your credit report for free anytime. You’ll also get free access to your FICO® Score, allowing you to track your progress as you work to recover from bankruptcy.

To access your credit reports from Equifax and TransUnion, visit AnnualCreditReport.com. You can get free access to each report on a weekly basis.

As you review your credit reports, look for inaccurate information, such as an incorrect bankruptcy filing date and other negative items you don’t recognize. If you find something, you have the right to file a dispute with the credit bureaus.

The Bottom Line

Filing for bankruptcy may be a necessary step in restarting your financial life, but the process can have a dramatic impact on your credit score. While it can take time for a legitimate bankruptcy record to be removed from your credit reports, you don’t have to wait until that point to start the rebuilding process.

As you work to improve your credit, monitor your credit regularly to learn more about how your actions impact your score and to track your progress. Regularly monitoring your credit can also help you spot potential issues as they arise, as well as inaccurate information that can further damage your score.

At O1ne Mortgage, we understand the challenges that come with bankruptcy and are here to help you every step of the way. For any mortgage service needs, don’t hesitate to call us at 213-732-3074. Our team of experts is ready to assist you in achieving your financial goals.