BANKRUPTCY AND CREDIT REPORT

MICHIGAN CREDIT LAWYERS QUESTION DOES BANKRUPTCY AFFECT CREDIT REPORTS?

Bankruptcy can impact your credit report in ways you may not understand. When you file for bankruptcy, it is reflected on your credit report and can stay there for up to ten years.  Some people believe bankruptcy credit reporting is a bad mark.  However, what bankruptcy does is eliminate debt when debts are discharged in bankruptcy. This means that the accounts discharged in bankruptcy should be reported with a zero balance making you a potentially more attractive candidate for credit in the future since your outstanding debt is reduced by the bankruptcy discharge.  While true that some lenders may view you as a higher risk borrower due to the bankruptcy on your record, other lenders will see you as less of a risk if you have income since you cannot file for bankruptcy again without waiting a certain number of years, and since there would not appear to be a line of creditors  in a race to the courthouse to sue you for old, discharged debts.

REBUILDING YOUR CREDIT AFTER BANKRUPTCY​

There are several things you can do to help re-establish and rebuild credit after bankruptcy, such as opening a secured credit account, paying new and future credit obligations on time,  ​or being added as an authorized used to a credit account that is in good standing. While bankruptcy can have a negative impact on your credit report in the short term, you can rebuild your credit if you take the right steps. 

THE LONG-TERM EFFECTS OF BANKRUPTCY ON YOUR CREDIT REPORT

As mentioned, bankruptcy can stay on your credit report for up to ten years. However, the impact of bankruptcy on your credit score can be minimized over time, especially if you take proactive steps to improve your credit. By demonstrating responsible financial behavior, you can show lenders that you are a reliable borrower.

CREDIT LAWYERS IN MICHIGAN CAN HELP REVIEW YOUR CREDIT REPORT AFTER BANKRUPTCY FOR CREDIT REPORT ERRORS

One of the first steps you can take after filing bankruptcy to rebuild your credit is to review your credit report to ensure that all discharged debts are reported accurately.  If there are credit report errors on your credit report after filing bankruptcy, these can cause you to be denied credit.  Lenders may assume that you either engaged in fraud that prevented you from obtaining a discharge of that debt, or that you became delinquent on a new or existing debt after your bankruptcy discharge. 

TYPES OF CREDIT REPORT ERRORS AFTER BANKRUPTCY

There are several types of post-bankruptcy credit report errors to look out for such as:​

1. Discharged debts not reporting as discharged in bankruptcy or with a $0 balance: Debts that are discharged in bankruptcy should be reported on your credit report as “Discharged in Bankruptcy” (or similar language), and with a balance of $0. 
   
2. New collection accounts being reported for discharged debts: sometimes debts that are discharged in bankruptcy will be sold or assigned either before, during, or after the bankruptcy. This type of credit report error can occur when a collector reports the collection account as having been "opened" after the bankruptcy even though other reported account information reveals that the collection account pertains to a discharged debt.  
   
3. Charge-offs Reported After the Bankruptcy Filing or Bankruptcy Discharge: Sometimes creditors will report a charge-off after your bankruptcy.  Charge-offs typically occur when an account is 90-120 days or more delinquent and are more derogatory than an account that is merely delinquent, but not charged-off. This is another type of credit report error after bankruptcy.
   
4. Failure to Accurately Report Reaffirmed Accounts. When you reaffirm a debt during bankruptcy, you remain liable for the debt after the bankruptcy. Therefore, the reaffirmed debt should not be reported as discharged in bankruptcy and  payments made after the bankruptcy should be reflected on your credit report. 

SPEAK TO A MICHIGAN CREDIT LAWYER AFTER BANKRUPTCY

If you recently filed for bankruptcy or are planning to file for bankruptcy, you may wish to speak to a credit lawyer to help review your credit reports for errors after bankruptcy.  We can help you dispute credit report errors after bankruptcy if needed, and also pursue available remedies if you have been harmed by credit report errors after bankruptcy.  Our consumer attorneys have helped numerous consumers recover damages under the Fair Credit Reporting Act (FCRA) for inaccurate credit reporting and credit report errors after bankruptcy.  We offer reasonable fees that are contingent on the outcome of a credit lawsuit, meaning you will not owe us any attorneys' fees if we do not recover damages on your behalf.  Attorney Nick Hadous is an accomplished litigator and serves on the Litigation Advisory Board for the Institute of Continuing Legal Education (ICLE) where he is a content contributor and author in consumer protection litigation including the FCRA and disputing credit reports under the FCRA.  You may contact us for a free phone or Zoom consultation by calling today or using the contact form below.