Does Bankruptcy Remove Charge-Offs From Credit Report?

Bankruptcy can be a good option when paying your debt on your own becomes unfeasible, but it is not a magic wand for getting your finances in order. Your credit report reflects your entire financial history after bankruptcy, including charged-off accounts.

Charge-Offs

A "charge-off" is an accounting term for a debt the creditor believes won't be collected. The creditor writes the debt off as a loss for tax purposes, although the debtor still owes the debt, and the creditor can pursue the debtor in court for repayment.

Bankruptcy

Bankruptcy is a legal process that protects debtors from creditors in two ways: First, it halts collection activity by creditors. Second, it either eliminates debt or provides debtors with a long-term, supervised repayment plan.

Credit Balances After Bankruptcy

In the United States, many creditors report your financial behavior, such as paying your bills on time, to credit bureaus. These credit bureaus (Experian, Equifax, and TransUnion) compile this information into credit reports. Employers, landlords, insurance companies and creditors often check your credit report to before making decisions about offering you a job, a place to live or more credit.

While bankruptcy eliminates many types of debt, it doesn't erase the history of the debt. Creditors can still place accurate information, including the fact that it had to charge off one or more of your debts, on your credit report. Both charge-offs and bankruptcy have a negative impact on your credit score.

Time Frame

Creditors can report your charged-off accounts to the credit bureaus for seven years after you default on the account. Bankruptcies are a matter of public record and remain on your credit report for 10 years. Debts that could not be discharged in bankruptcy, such as an unpaid judgment for child support or damages resulting from a drunk driving accident will stay on your credit report for seven years or until the statute of limitations on judgment collection in your state runs out.

Check Your Credit Report

While creditors can still report your debts to credit bureaus, they must report your balances as "zero" after the bankruptcy discharge. Be sure to check your credit reports after bankruptcy ensure that creditors update your balances. You can get a free credit report from each of the major credit bureaus by visiting AnnualCreditReport.com. If creditors have not yet updated your balances, dispute the information with the credit bureaus. Federal law requires credit bureaus to investigate your claim and to delete or change inaccurate information.