While bankruptcy can help you rid yourself of debts, it doesn’t come without its disadvantages. Bankruptcy filing is a public record and easily accessible to major credit reporting agencies. This can have a considerable impact on your credit score and make potential lenders wary of dealing with you.
Bankruptcy can make it difficult for you to get credit for a long period of time; and if you do get credit, the interest rates will be exorbitant.
A legitimate bankruptcy can never be removed from your credit report before time, which varies from 7 to 10 years depending on the chapter.
How to remove bankruptcy filing from credit report?
According to Federal Trade Commission (FTC), removal of accurate negative information from a credit report isn’t possible.
However, it is possible to reduce the duration that a filing is reported. Bankruptcy filing can be removed in case of an error or identity theft also.
As per Fair Credit Reporting Act, an individual’s credit report can have bankruptcy filing for 10 years, and it is important that the debtor gets it done timely by following up with credit reporting agencies.
Under Chapter 13, bankruptcy filing can be removed from the credit report in 7 years.
This is to encourage Chapter 13 bankruptcy filing, since repayment of debts by the debtors is done within a period of 3 to 5 years.
Read More about Bankruptcy Chapters
Vacation of bankruptcy takes place when a debtor, after filing, feels that he can find a solution to his problems. This bankruptcy appears on his credit report and can be removed by asking the bankruptcy court to do so.
Any errors in the bankruptcy filing should be removed immediately. These can be clerical errors or cases of mistaken identity or identity theft. In the latter, an additional fraud alert must also be placed.