How Long Does a Dismissed Chapter 13 Stay on a Credit Report?
Understand the lasting impact of a dismissed Chapter 13 bankruptcy on your credit report, its timeline, and how to address reported details.
A Chapter 13 bankruptcy allows individuals with a consistent income to establish a court-supervised plan for repaying all or a portion of their debts. This process provides a structured approach to financial obligations. Credit reports record an individual’s debt management history, providing insight into financial behaviors. Lenders, landlords, and potential employers consult these reports to assess financial responsibility.
Understanding Chapter 13 Dismissal
A Chapter 13 bankruptcy is a legal process where a debtor proposes a repayment plan to their creditors. This plan consolidates debts and outlines monthly payments to a court-appointed trustee. The objective of Chapter 13 is to achieve a “discharge,” which eliminates eligible debts upon successful completion of the repayment plan.
In contrast, a “dismissal” of a Chapter 13 case means the bankruptcy court closes the case without granting a discharge, leaving the debtor legally responsible for their outstanding debts. This outcome occurs if the debtor fails to meet specific obligations. Common reasons for dismissal include failing to make required plan payments to the trustee or not submitting necessary documentation. Other grounds for dismissal involve missing court-imposed deadlines, not attending mandatory hearings, or neglecting to file required tax returns.
Credit Reporting Period for Dismissed Chapter 13
A dismissed Chapter 13 bankruptcy remains on an individual’s credit report for seven years. This reporting period is governed by the Fair Credit Reporting Act (FCRA), a federal law that regulates how long various types of financial information can appear on consumer credit reports. The seven-year timeframe for a Chapter 13 case, whether dismissed or successfully completed, begins from the original date the bankruptcy petition was filed with the court.
Even if a Chapter 13 case is dismissed, the initial bankruptcy filing will still be reported by credit bureaus. Credit bureaus obtain this information from public court records. The reporting of a dismissed Chapter 13 serves as a record of the attempted reorganization and its subsequent termination.
Information on Your Credit Report
When a Chapter 13 bankruptcy case is dismissed, specific details related to the filing will appear on your credit report. This includes the public record of the bankruptcy, indicating the filing date and case number. Your credit report will also explicitly note that the Chapter 13 case was “dismissed,” rather than “discharged.”
Individual accounts that were part of the bankruptcy filing may also reflect their status in relation to the dismissed case. If the case is dismissed, creditors can resume reporting derogatory information and collection efforts on those debts. The three major credit bureaus responsible for collecting and reporting this financial information are Equifax, Experian, and TransUnion.
Disputing Inaccurate Credit Report Information
Consumers have the right to dispute any information on their credit report that they believe is inaccurate or outdated, including details related to a dismissed Chapter 13 bankruptcy. The first step involves obtaining a free copy of your credit report from each of the three major credit bureaus through AnnualCreditReport.com. Carefully review each report to identify errors such as incorrect personal details, accounts that do not belong to you, duplicate entries, or negative information that should have been removed due to age.
To initiate a dispute, you can contact the credit bureaus directly online, by mail, or by phone. It is advisable to provide a clear explanation of the inaccuracy and include copies of any supporting documentation, rather than sending original documents. If mailing, consider sending the dispute by certified mail with a return receipt requested to maintain a record of your communication. You should also consider disputing the inaccuracy directly with the creditor or entity that reported the information to the credit bureau.
Upon receiving a dispute, credit bureaus are generally required to investigate the matter within 30 days. They must notify you in writing of the investigation’s outcome. If the information is found to be inaccurate or cannot be verified, it must be corrected or removed from your report. If you are not satisfied with the resolution, you can file a complaint with the Consumer Financial Protection Bureau (CFPB) or add a brief statement to your credit report explaining your side of the dispute.