One of the worst effects of declaring bankruptcy for the filer is the damage it does to his credit score. After having the majority of his debts written off, a person will usually see his credit score heavily damaged. Fortunately, according to U.S. law, the record of a bankruptcy can only appear on an individual's credit report for a maximum of 10 years. Yet, in some cases, a credit reporting company will inadvertently keep the bankruptcy on the report.
Types of Bankruptcy
Personal bankruptcies come in two types---Chapter 7 and Chapter 13. Chapter 7 bankruptcies are sometimes referred to as liquidation bankruptcies. These will generally result in the seizure of a large number of the filer's assets and writing off of most of his debts. This bankruptcy can appear on a credit report for up to 10 years. Under a Chapter 13 bankruptcy, a debtor has his debts reorganized. This type of bankruptcy can appear on a report for a maximum of seven years.
Correct Information
While a credit reporting agency can only keep a bankruptcy on an individual's credit report for seven to 10 years, depending on the type, it may choose to remove the record sooner. However, if the record of the bankruptcy is accurate and date of expiration has not yet been reached, a credit reporting company is under no obligation to remove the record. Petitions to do so will nearly always be fruitless.
Incorrect Information
If a bankruptcy remains on a person's credit report after it should legally have been removed, the individual has the right to instruct the credit reporting agency to remove the item. Under the Fair Credit Reporting Act, a credit reporting agency is legally required to verify all information if challenged. Otherwise, the information must be removed. If a credit reporting agency refuses to comply, it can be sued in civil court.
Considerations
According to the Moran Law Group, if a person files for bankruptcy and then, before the bankruptcy has been discharged, decides to dismiss it, the credit reporting agency is obligated to report both the bankruptcy and the dismissal on a credit report. Also, after a bankruptcy has been successfully discharged, all discharged debt should have their balances reduced to $0, so that it is clear that the filer no longer owes money on these debts.
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