My Bankruptcy Has Been Discharged but it is Still on My Credit Report

Despite some assumptions, bankruptcies aren’t removed from your credit report immediately after they are discharged.  Discharged 7 and 11 bankruptcies remain on your credit report for ten years from the filing date and discharged chapter 13 bankruptcies remain seven years from the date filed. For example, if a chapter 7 bankruptcy was placed on our credit report on 12/ 7/2012, but was filed on 11/09/2012, it will be removed from your credit report on 11/09/2022.  Bankruptcy and any payment information that occurred in the past are considered historical information.

Bankruptcies are not being singled out; most negative information is removed from credit reports within 7 to 10 years.  Charged off accounts are removed seven years from the date they were originally charged off. Late payment history is removed from an account that is still active, seven years from the first date the account was reported 30 days late.  In fact, closed accounts or accounts paid in full, such as mortgages and vehicle loans remain on your credit report for ten years from the date it was closed.

Bankruptcy impact on credit

Even though the bankruptcy will be updated on your credit report to indicate that it was discharged and the balance owed is zero, it remains on your credit report and is treated as a severe delinquency.  A bankruptcy has the most negative impact on your credit score than anything else on your credit report. It can impact your score from 130 to 240 points, depending upon your score prior to the bankruptcy being reported on your credit report.  Since it remains on your credit report for up to 10 years, it will have the most impact on your credit for up to five years.   You will be able to begin rebuilding your credit within three years or sooner and the bankruptcy will have less impact as time goes by.

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Building credit

One way to begin building your credit is to start with a secured credit card.  You put an amount equal to the credit limit of the account in a savings account to back up the credit limit on your card.  If you don’t or can’t pay your bills on the account, the credit card issuer can take the amount in the savings to cover the bill. You should use the secured card only to charge a small amount and pay it in full each month.  This is only to establish credit and show that you can pay your bills on time.  Make sure that this card can be upgraded to an unsecured credit card after 18 months.

You can rebuild your credit after a bankruptcy, but it takes time. A satisfied judgment is not removed from your credit report at the time it is reported; neither is closing an account or paying off an installment account.

JRU on 60 Mins SetCredit Reporting Expert, John Ulzheimer, is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.  Follow him on Twitter here.