Can Credit Repair Companies Remove Bankruptcies from Your Credit Report?

Filing for bankruptcy can negatively impact your credit scores and report for years. A bankruptcy can remain on your credit report for up to 10 years from the date you initially filed. This can make it difficult to get approved for new credit loans mortgages, apartments, and more. However, credit repair companies advertise that they can help remove bankruptcies from your credit reports before the 10 years is up. Is this really possible?

How Bankruptcies Impact Your Credit

You can file for personal bankruptcy in two main ways: Chapter 7 and Chapter 13. When you file for Chapter 7 bankruptcy, most of your debts are forgiven, and you no longer have to pay them back. Any property that isn’t exempt can be sold to pay off debts. When you file for Chapter 13 bankruptcy, you agree to pay back some of your debts over the next three to five years.

Both types of bankruptcies can heavily damage your credit. When you file, the bankruptcy will appear in the public records section of your credit reports at all three major credit bureaus – Equifax, Experian, and TransUnion. Bankruptcies are one of the most detrimental items that can appear on a credit report. They will cause your credit scores to plummet because they represent a high risk of non-payment to lenders.

Bankruptcies can stay on your credit reports for up to 10 years. A Chapter 13 bankruptcy will remain for 7 years from the date you complete the repayment plan. A Chapter 7 bankruptcy will remain for 10 years from the file date. The bankruptcy public record cannot be removed until the full 10 years has elapsed.

Do Credit Repair Companies Actually Remove Bankruptcies?

A lot of companies that fix credit say they can get bankruptcy and other bad things off of your credit report. Legally, though, they can’t get correct information taken off your reports before it’s due to be taken off. Credit repair firms can’t force credit bureaus to remove real bankruptcies before the required reporting periods.

Under the Fair Credit Reporting Act (FCRA), credit bureaus have to follow strict guidelines regarding reporting and removal of credit information. They can only report 100% factual, verifiable information. If an item is inaccurate or unverifiable, the bureaus must remove or correct it – but this does not apply to factual public records like bankruptcies.

So how do some credit repair firms falsely advertise that they remove bankruptcies? Here are some of their tactics:

• Disputing and trying to verify outdated information related to the bankruptcy – hoping the bureaus will just remove the entire public record due to missing information
• Alleging the bankruptcy reporting is inaccurate – for example, wrong filing date or mistaken identity
• Flooding the bureaus with so many disputes and requests, that some items accidentally get removed or fall through cracks

But none of these methods can force the credit bureaus to erase a real bankruptcy before it’s due. At most, the bureaus may take off the bankruptcy and then add it back later, which doesn’t really change anything. The Fair Credit Reporting Act keeps the bureaus from having to get rid of factual bad information before the time limit for reporting is up.

Are There Any Legal Ways to Remove a Bankruptcy Early?

While credit repair companies cannot legally remove real bankruptcies, there are some cases where a bankruptcy can be taken off your credit reports early:

• Inaccurate information: If the bankruptcy record shows the wrong filing type, date, amounts owed, or contains other errors, you can dispute it and potentially have it removed until the creditor provides updated, verifiable information.

• Early discharge: If you finish your Chapter 13 repayment plan early, the court may let you go without having to file for bankruptcy. This means that it might be taken off your credit report before the 7 years are up.

• Settlement: For a Chapter 7 bankruptcy, you may be able to settle with your creditors to pay a portion of the debts owed. If all creditors remove their claims, the bankruptcy could potentially be dismissed and taken off your reports. This is very rare and difficult to achieve.

• Expungement: You can request to have a bankruptcy expunged from public records if it was filed due to identity theft or if you have evidence you did not qualify to file in the first place. If approved, it could be removed from your credit reports.

As you can see, early removal is only possible in special cases when the bankruptcy record is inaccurate or can be eliminated from public records. A true, discharged bankruptcy will remain on your credit for the full 7-10 years mandated by law.

Improving Your Credit With a Legitimate Bankruptcy Still Listed

Since most legitimate bankruptcies cannot be removed early, the best approach is to focus on rebuilding and improving your credit even with the bankruptcy still listed. Here are some tips:

• Keep existing credit accounts open and in good standing. Having long, positive payment history helps offset the bankruptcy.

• Pay all bills on time going forward. Your payment history makes up a large chunk of your credit scores.

• Limit new credit applications. Too many new accounts can hurt scores and show high risk after bankruptcy.

• Become an authorized user on someone else’s account. This builds positive history with no debt obligation.

• Add secured cards – these require a refundable deposit and are easier to get after bankruptcy.

• Include both secured and unsecured cards for a mix of accounts.

• Maintain low credit utilization by keeping balances low compared to limits.

• Consider credit-builder loans to add positive repayment history.

• Wait at least 6 months after discharge to apply for any major new credit like an auto loan.

Focusing on responsible credit behaviors will help your scores slowly improve over time. And maintaining a strong credit profile in the years after bankruptcy will make it much easier to get approved for credit again once the bankruptcy falls off your reports.