When you file for bankruptcy to get back on your feet financially, you begin the process of cleaning up your credit, too. However, filing for bankruptcy does not automatically erase your past credit history. Under the federal Fair Credit Reporting Act, items can stay on your credit report for seven years under Chapter 13 bankruptcy or 10 years under Chapter 7 bankruptcy.
Fair Credit Reporting Act
The federal Fair Credit Reporting Act applies in every state, governing the way your debt history can be reported to the three major credit bureaus: Equifax, Trans Union and Experian. The regulations established under the Act cover creditors who use consumer reports, furnish information to consumer reporting agencies and loan money to consumers. Thus, when you owe a debt to a business, like a utility company, credit card issuer or mortgage lender, that company typically can report your payment activity to a credit bureau. If you fall behind in your bills prior to your bankruptcy, your late payments will likely show up as negative information on your credit report.
The Act and its regulations also determine how your creditors can report your bankruptcy to the credit bureaus. Accounts involved in a bankruptcy will not be automatically deleted from your credit report. Instead, closed accounts typically remain on your credit reports for 10 years if there is no delinquency. Delinquent accounts are deleted seven years from the original delinquency date. Bankruptcy itself can remain on your credit report for up to seven years if you declare Chapter 13 bankruptcy, which requires you to pay at least some portion of most of your debts, and up to 10 years from the date you file Chapter 7 bankruptcy, which does not require a repayment plan.
Credit Report Monitoring
The Fair Credit Reporting Act gives every consumer the right to request a free copy of his credit report from each of the three credit bureaus once every 12 months. This allows you to see what has been reported to the credit bureaus -- you can request these reports regardless of whether you filed bankruptcy. Once you know what is on your credit report, you can determine whether each item has been correctly reported and, if not, take steps to fix the report.
Repairing Your Credit
After bankruptcy, it can be difficult for you to obtain credit. The bankruptcy and debts that led up to it can wreak havoc on your credit score. You can begin repairing your credit by combing through your credit report to make sure everything is properly recorded and disputing improperly recorded items directly with each credit bureau. For example, debt collectors may try to justify inaccurate reports by claiming they were not included in your bankruptcy, but debt collectors who look at your credit report have notice of your bankruptcy filing and must correct their entries accordingly. Though the bankruptcy case itself does not come off your credit report until the seven- or 10-year period expires, you may be able to qualify for loans prior to that time by properly managing your credit after your bankruptcy proceeding is complete.