How to Remove a Bankruptcy From Your Record
Learn the true nature of bankruptcy records and the legitimate paths available for managing their presence on your financial history.
Bankruptcy is a legal process for individuals or businesses who are unable to repay their outstanding debts. While the term “removal” often suggests a complete erasure of this financial event from all records, true removal of a bankruptcy filing is uncommon and occurs only under specific, limited circumstances. This article explores the duration bankruptcy remains on financial records, how to dispute inaccuracies related to a bankruptcy entry on credit reports, and the rare process of seeking to vacate a bankruptcy filing.
Understanding Bankruptcy Reporting Durations
Bankruptcy filings remain on credit reports and public records for specified periods, which vary depending on the type of bankruptcy filed. A Chapter 7 bankruptcy, which involves the liquidation of assets to pay off debts, remains on a consumer’s credit report for up to 10 years from the date of filing. In contrast, a Chapter 13 bankruptcy, which involves a repayment plan for debts over a three to five-year period, appears on a credit report for up to 7 years from the date of filing or discharge. These reporting periods are governed by the Fair Credit Reporting Act (FCRA), which establishes how long negative information can remain on credit reports.
Distinguish between the bankruptcy appearing on a credit report and its presence in public court records. While a bankruptcy eventually “falls off” credit reports after the statutory period, the court record of the filing is generally permanent and accessible through federal court archives. The FCRA dictates the duration of reporting on credit bureau files, not the permanent public record maintained by the courts. Therefore, even after it no longer appears on a credit report, the underlying court case remains a matter of public record unless it has been legally vacated by a court order.
Disputing Inaccuracies on Credit Reports
If a bankruptcy entry on a credit report contains errors, consumers can dispute these inaccuracies. An inaccuracy might include an incorrect filing date, the wrong chapter of bankruptcy, a bankruptcy not belonging to the consumer (e.g., due to identity theft), or errors regarding the discharge status or associated debt details. Consumers should obtain their credit reports from each of the three major credit bureaus: Experian, Equifax, and TransUnion. These reports can be accessed annually at no cost through AnnualCreditReport.com.
After reviewing the reports and identifying any erroneous bankruptcy information, gather supporting documentation. This might include official court documents showing the correct filing or discharge dates, personal identification if the bankruptcy was mistakenly attributed, or proof that certain debts were handled differently than reported. Once the necessary evidence is compiled, a dispute can be initiated directly with each credit bureau online, by mail, or by phone. State the specific inaccuracy and provide all supporting documents.
When a dispute is received, credit bureaus are required by the FCRA to investigate it within 30 to 45 days. During investigation, they contact the creditor or court that provided the information to verify its accuracy. If the information is found to be inaccurate or cannot be verified, the credit bureau must correct or remove the entry from the credit report. If the credit bureau fails to correct the inaccuracy, consumers can dispute the information directly with the original creditor or file a complaint with the Consumer Financial Protection Bureau (CFPB).
Seeking to Vacate a Bankruptcy Filing
Vacating a bankruptcy filing involves a complex legal process to nullify the case from court records. This is a rare and difficult undertaking, as bankruptcy courts grant requests only under specific, limited circumstances. It is not a common or easy method for “removing” a bankruptcy from one’s record.
The grounds for vacating a bankruptcy case are narrow and involve fundamental legal errors or issues with the original filing. Examples include situations where the bankruptcy petition was filed fraudulently, without the debtor’s knowledge or authorization, or if there was a fundamental legal error in the initial proceedings that rendered the filing invalid. Another ground is if the debtor was ineligible to file for bankruptcy under the specific chapter chosen.
To vacate a bankruptcy, a debtor must file a motion with the bankruptcy court. This motion must state the specific legal grounds for vacating the filing and be supported by substantial evidence. The procedural steps often include providing notice to all creditors involved in the original case, potentially attending court hearings, and presenting arguments before a bankruptcy judge. Given the complexity and the high burden of proof required, legal counsel experienced in bankruptcy law is almost always necessary.