Debt Showing in Your Credit Report After Bankruptcy
One of the factors that may make you reluctant to file bankruptcy is the state of your credit report afterward. While the credit reporting agencies can report information such as your bankruptcy for many years, they have an obligation to report correct information. As you will usually have no debt after your bankruptcy discharge, you shouldn't have to worry about debt showing in your credit report after bankruptcy.
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Delinquent Accounts
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As soon as you miss your first payment, your account with a creditor becomes delinquent. Although there are levels as to how serious a delinquency can become, even a payment late by only 30 days will show as a delinquency in your credit report. The credit reporting agencies typically show negative account information such as a 30-day late payment for a full seven years. This is true even after you file bankruptcy.
Account Balances
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One of the benefits of filing bankruptcy is that it should zero out your account balances as shown on your credit report. Since you no longer owe your outstanding debt balances once you receive your bankruptcy discharge, your creditors should report your existing balances as zero. This may actually help your credit score, as you no longer owe money to any creditors.
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Effect of Bankruptcy
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Bankruptcy has the potential to remove your outstanding credit balances, but it will not delete your prior negative information from your credit report. While the agencies should make a notation that your negative accounts were included in bankruptcy, the fact that you were delinquent in the first place is relevant information and will stay on your credit report for seven years.
Correcting a Credit Report
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While the credit reporting agencies are under obligation to provide true and updated information, sometimes mistakes are made. If you have an account that was included in bankruptcy showing an outstanding balance, you can write to the credit reporting agency and have that information corrected. Most agencies have a form you can fill out and send via email or regular mail to correct your credit report. You may have to provide supplemental information such as a copy of your bankruptcy discharge.
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