04 May Can I remove bankruptcy from credit report?

Q. Would it work to write a letter to a credit bureau to have a bankruptcy removed before 10 years? I was told it can be removed between 7 to 10 years.
— Borrower

A. It will depend on what kind of bankruptcy we’re talking about.

Under the federal Fair Credit Reporting Act, bankruptcies can be reported by credit agencies for 10 years from the filing date, said Jody D’Agostini, a certified financial planner with AXA Advisors/The Falcon Financial Group in Morristown.

She said the three major credit reporting agencies will remove Chapter 13 bankruptcies seven years from the date the case was filed, and Chapter 7 bankruptcies 10 years from the date the case was filed.

D’Agostini said a Chapter 13 bankruptcy is a “reorganization bankruptcy” for debtors who have some regular income. They set up a payment plan to pay back some or all of what they owe.

Chapter 7 bankruptcies do not have a plan of repayment filed and typically, the debtor has property and nonexempt items sold to cover the debt to the extent possible, and remaining debt is discharged, she said.

“You can still improve or build your credit while a bankruptcy is on your credit report by paying all your bills on time or early, as this accounts for the largest part of your credit score,” she said. “You should also try not to assume any new debt during this period.”

D’Agostini said you can attempt to remove the bankruptcy from your credit report sooner than 10 years, and this would help improve your credit rating.

She recommends you check the accuracy of all the bankruptcy entries with all three credit reporting agencies.

“If there is an inaccuracy, you can dispute it with the credit rating agencies,” she said. “If the credit agencies cannot verify the bankruptcy entry, then they will likely remove it.”

If this fails, you can contact the courthouse where the bankruptcy was filed and ask if and how they verified the bankruptcy entry to the credit agency, D’Agostini said.

“If the court didn’t verify it, then you should ask for a statement of this in writing, which you can then send to all three credit agencies,” she said.

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