manage your credit | credit score on a billiard ball

Remove Bankruptcy and Charge Off From Credit Reports

Bankruptcy Petition

Updated: Oct 20, 2014

Highlights

  • A bankruptcy filing will appear on your credit reports.
  • Review your credit reports to make sure your bankruptcy was reported accurately.
  • Get no-cost copies of your credit reports at AnnualCreditReport.com
4.0
/5.0
(6 Votes)

How To Remove Charge-offs and Bankruptcy From Credit Reports

Charge-off (sometimes called “write-off”) is an accounting term used by creditors when they move a delinquent account from its accounts receivable books to its bad debt ledger. This usually occurs between 180 and 240 days from the date of the last payment. The fact that an account is charged-off does not mean the debt may not be collected later. The charge-off date also does not correspond to the statute of limitations on collecting a debt, or the date that an entry on a credit record must be removed. All three dates or deadlines are independent of each other and have different meanings.

Because an account is charged off does not mean the creditor lacks a legal right to collect the debt. To the contrary, the creditor may move the account to its own internal collections department, or sell the debt to a third-party collection agency.

Bankruptcy and Credit Reports

Generally speaking, any account included in a bankruptcy filing will appear on credit reports as “included in bankruptcy,” and reflect a $0 balance. It should not appear as open and past due. To correct this problem, you should first pull a copy of your credit report from each of the three major credit bureaus (Equifax, TransUnion, and Experian), then carefully review the reports to identify which discharged accounts are being reported inaccurately.

Get free copies of your credit reports at AnnualCreditReport.com, a Web site sponsored by the credit bureaus in compliance with federal law allowing all consumers to obtain a no-cost copy of each bureau’s credit report once every 12 months. Next, dispute the incorrect listings with the credit bureaus. See the Federal Trade Commission document FTC Facts for Consumers: How to Dispute Credit Report Errors for more information.

When disputing an account discharged in bankruptcy, include a copy of your credit report showing the inaccurate listing, as well as a copy of the order of discharge from the bankruptcy court, to show that the same account appearing on your report as delinquent was discharged in your bankruptcy filing. Once the credit bureaus receive your dispute letter, they should forward the documents to the creditors in question so the creditors can either challenge the disputes or correct the inaccurate listings. Given the fact that these debts were discharged in bankruptcy, there is no reason that the accounts should not be updated to reflect an accurate status. Having these accounts correctly listed on your credit reports should reduce their negative impact on your credit score, helping you rebuild a credit score after a bankruptcy filing. Although an account discharged in bankruptcy is not good for your credit score, having both a bankruptcy and delinquent balances on your credit report is usually worse.

Credit reports can be inaccurate, so it is important to review your credit profile regularly to verify all of the information reported by your creditors is correct. Carefully monitoring your credit history and disputing inaccurate items can increase your credit score significantly, which could save you thousands of dollars in interest on a mortgage, auto loans, and other forms of credit. To learn more about credit scoring and credit reports, visit the Credit Solutions section of Bills.com.

4.0
/5.0
(6 Votes)

28 Comments

Recent Best
1500 characters remaining
  • AM
    May, 2012
    ann marie
    My husband filed for bankruptcy due to unemployment (now back to work) and was discharged this spring 2012. We had two joint card cards. Both cards are shown as being included in the banruptcy on his credit report but my credit report shows both as being charged off. We have a letter stating that all debts were included and discharged including those two credit cards. I don't work & stay home with kids and my credit score is now ruined. How will this affect me? Will those companies come after me?
    0 Votes

    • BA
      May, 2012
      Bill
      I will assume the credit card accounts were joint accounts, and that you were not just an authorized user. In theory, it is possible for the creditor to pursue all joint account holders for a debt, even if one of the joint account holders had the debt discharged in bankruptcy. In practice, however, it is not common for creditors to do so.

      You asked about your credit score. See the Bills.com article Short Sale, Foreclosure & Your Credit Score to learn what Fair Isaac & Co., the creator of the FICO score, says about the time to recovery on common negative events.

      If you were an authorized user, and not a joint account holder, then the derogatory will appear on your credit report but the credit card issuer has no legal claim against you.
      0 Votes

  • JB
    Mar, 2012
    Judy
    I filed a BK in 2009 and included my mortgage in it. The lender has been sending me notices and statements telling me how much I owe. They are also still reporting the mortgage last to FHA even though it has been more than two years. Can I sue them for damages under the BK law
    0 Votes

    • BA
      Mar, 2012
      Bill
      Review your discharge order that was issued by the bankruptcy court. If the home loan was discharged, you have no personal liability for the debt. It should appear on your credit report as a zero balance and discharged by bankruptcy. Is the lender or mortgage servicer attempting to collect the debt? If the debt was discharged, the lender/mortgage servicer is violating federal bankruptcy law, and you almost certainly have a cause of action (a legal reason to file a lawsuit) against the lender. Consult with your bankruptcy lawyer, and bring all of the documents the lender has been sending you. You may have won the lottery, so to speak.
      0 Votes

    • JB
      Mar, 2012
      Judy
      all I want is about 27k so I can leave my home....is this amt possible...I have to get a conv loan because the lender still reporting my loan to FHA as deliq.
      0 Votes

    • JB
      Mar, 2012
      Judy
      What damages can I receive for their violation?
      0 Votes

    • BA
      Mar, 2012
      Bill
      Under the FDCPA, a consumer can receive "any actual damage sustained by such person as a result of such failure;" plus "... in the case of any action by an individual, such additional damages as the court may allow, but not exceeding $1,000;" plus reasonable attorney's fees.
      0 Votes

    • JB
      Mar, 2012
      Judy
      this would be under a contempt of court through the bankruptcy court....I am looking for punitive damages. They have been sending me notices for over 2 years and keeping me from getting another FHA mortgage.
      0 Votes

    • BA
      Mar, 2012
      Bill
      You can file an action in your local state court or in federal court. Consult with a lawyer who has bankruptcy experience to learn exactly how to begin an action against a creditor who is, as you mentioned, reporting a discharged debt as current on your credit report, and is attempting to collect this discharged debt. Start with the lawyer who guided you through the bankruptcy process.
      0 Votes

  • LB
    Feb, 2012
    Lauren
    I have a bit of an unusual question. Is it legal for a creditor to remove a debt after its been in discharged in your bankruptcy? The reason I ask is because I had debt my attorney was supposed to reaffirm on but didn't (didn't send the paperwork in). I've kept paying on it since but the company removed it from my credit all together. It looks like I've never even had a car loan. I was hoping to just update the record for that company when it was paid off now that's not a option. Anything I can do?
    0 Votes

    • BA
      Feb, 2012
      Bill
      When a debt is discharged in bankruptcy, creditors may no longer report that debt to the credit reporting agencies because the consumer no longer has personal liability for the debt. The consumer's credit report will contain a notation that reads something like, "Discharged in bankruptcy" and then there will be no additional reporting on that debt.

      Reaffirmation is when a debtor tells the creditor in writing he or she voluntarily agrees to restore personal liability for a debt. A reaffirmation is a new contract. The debtor's bankruptcy lawyer must also agree to a reaffirmation. A reaffirmed debt may show a payment gap in the consumer's credit report, or may not.

      I imagine you wanted the vehicle loan reaffirmed so that you would have positive history on your credit report. However, had you run into financial difficulty after your bankruptcy, you would have thanked your lawyer for not reaffirming this debt because you could have returned the vehicle with no financial repercussions. Not reaffirming the vehicle loan was a conservative course of action.

      You have two options. First, send the credit reporting agencies letters indicating you want a consumer notation added to your credit report. The notation should be brief -- a sentence at the most. Second, focus on building more positive account information on your credit file.
      0 Votes

    • LB
      Feb, 2012
      Lauren
      Thank you for your response. The odd thing about it is that it doesn't show anything about the car loan on my credit report, it's like the loan never even happened. I would understand them to stop reporting after my bankruptcy but to completely remove that is beyond my understanding. I talk to a lawyer about it and he had never heard of them removing an item completely.
      0 Votes

    • BA
      Feb, 2012
      Bill
      Your message is further evidence the credit reporting agencies make mistakes. In this case, the effect of the mistake is neither positive nor negative but is perplexing.
      0 Votes

  • DJ
    Jan, 2012
    Doug
    There are a couple of things showing on my credit report that show twice (one showing past due amount and one showing bankruptcy) with the same company and that had happened 6 years ago during my bankruptcy, which was discharged. Is there anything I can do to get this off of my report?
    0 Votes

    • BA
      Jan, 2012
      Bill
      A derogatory item will appear on the credit report for 7 ½ years from the time of your first deinquency. The bankruptcy will remain for 10 years. Generally speaking, any account included in a bankruptcy filing will appear on a credit report as "included in bankruptcy," and reflect a $0 balance. It should not appear as open and past due, though previous delinquencies may remain even after a bankruptcy filing.

      For more information and tips on how to dispute the items see the Bills.com page derogatory item on credit report after bankruptcy.
      0 Votes

  • IS
    Jan, 2012
    Irene
    I tried to get a modification on my mortgage loan, after a year I was turn down. In the meantime, I filed Chapter 13 bankruptcy which I later changed to a Chapter 7. As soon as I changed to a Chapter 7 a paid the mortgage the past due amount and became current on my loan. The mortgage company has done a charge off on my loan and I am not in foreclosure. I am still cover under Chapter 7 and have not informed me on anything. What is going on?
    0 Votes

    • BA
      Jan, 2012
      Bill
      I assume you are referring to what you see on your credit report.

      Once a debt is discharged in chapter 7 bankruptcy the debtor no longer has personal liability for the debt. The debt is extinguished. However, mortgages and deeds in trust are secured by property. This means the lender still has the right to foreclose if the debtor stops making payments. You do not mention where you are in the chapter 7. Did the bankruptcy court issue the discharge order yet? If no, then the mortgage lender is stayed — frozen from acting until the court issues its final discharge order. If the bankruptcy discharge was published, what did it say?

      Regarding your credit report, the mortgage lender will cease to report any new information on your mortgage to the credit reporting agencies. Consult with your bankruptcy lawyer for a more detailed response to your question, which will be based on your exact circumstances.
      0 Votes