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Credit Repair

Debts Discharged In Bankruptcy: Do They Show Up On Your Credit Report?


By Guest Contributor

Credit Knocks guest contributor. See guidelines.


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Both Chapter 7 and Chapter 13 bankruptcy help you to discharge debts.

The first one helps you to discharge your debts within 3-4 months.

The second one helps you to release your debt burden within years.

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Okay. So, your debts get discharged, and you're relieved. But, what happens to the discharged debts?

How do they get reported on your credit report?

Are they removed from your credit report?

Let’s find out in this post.

How Are Discharged Debts Reported On Your Credit Report?

A bankruptcy filing appears on your credit report for 7 to 10 years. Chapter 13 shines on your credit report for 7 years.

Chapter 7 glitters on your credit report for 10 years from the date of the bankruptcy filing.

Chapter 13 (also known as reorganization bankruptcy) stays on your credit report for a comparatively shorter time as you try to pay off debts through an affordable repayment plan.

As far as discharged debts are concerned, they stay on your credit report for 7 years from the date of first default.

The bankruptcy filing has nothing to do with it.

Usually, when people are filing bankruptcy, they are already delinquent on their accounts.

The bankruptcy filing doesn’t change the delinquency date or stretch the time of the debt that appears on the credit report.

Negative items on your credit file?  Our 609 credit dispute letters may be able to help get them removed.

What if the debts included in bankruptcy were never delinquent?

They will still be there on your credit report for 7 years.

You can’t escape it.

The discharged debt remains on the credit report for 7 years just like any other paid off debts.

After 7 years, the discharged debts will be automatically removed from your credit report.

There is no need to take any steps to delete it from your credit report.

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The debts discharged in bankruptcy are reported in the following ways:

  1. Discharged in bankruptcy
  2. Debts have a 0 balance

Initially, when you file bankruptcy, debts included in bankruptcy are reported as “accounts included in bankruptcy.”

The status of the accounts doesn’t change until the bankruptcy plan is completed successfully.

Once, you have completed the payment plan, the accounts are updated as “discharged in bankruptcy” or “accounts having 0 balance.”

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Is It Too Bad For Your Financial Life?

You shouldn’t be upset just because the discharged debts stay on your credit report.

Look at the positive side.

The ways your debts are reported is better than how your creditors report unpaid debts.

Creditors often report unpaid debts as:

  1. Charged-off accounts
  2. Balance due
  3. Delinquent accounts

Sometimes, creditors re-age the accounts and give a new account number.

These accounts will appear as unpaid on your credit report.

The bottom line is that filing a bankruptcy is going to hurt your credit score

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48% of credit repair customers saw a 100 point or more credit score increase after 6 months. 

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Potential lenders may refuse to give you a credit card or a loan when they see too many unpaid debts on your credit report.

At least, when your accounts are updated as ‘debts discharged in bankruptcy’, creditors understand that you don’t have unpaid accounts anymore.

So, this is way better than having unpaid debts on your credit report.

Who Reports Bankruptcy Details On The Credit Report?

Usually, creditors report discharged debts on your credit report.

Now, the onus is on you to check your credit report and find out if the creditors have reported correctly.

So, after you have received your bankruptcy discharge, you should order a copy of your credit report after 3 months.

It is sufficient time for the creditors to update your credit report.

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Low Credit Score?

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You can get a free copy of your Equifax, Experian, and TransUnion credit report from the creditannualcreditreport.com.

Look at your credit report and find out if there is an error.

What if creditors have not updated your credit report?

Well, that’s a possibility. Some creditors intentionally don’t change the status of your discharged accounts.

They do that to make collection attempts on the discharged debts.

This is a violation of the bankruptcy injunction. Creditors can’t try to collect discharged debts.

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How To Ensure Discharged Debts Are Accurately Reported

You have to dispute the accounts with the credit bureaus. You can do it online. There is no need to go anywhere.

Check your credit report after 3 months again to see if the errors have been corrected.

If you find the same errors on your credit report, then you have to dispute them again and request credit bureaus to update the accurate information.

Usually, you don’t have to pay money when you order credit reports as part of the cleaning process.

Final Notes

If a creditor is not giving the correct information to credit bureaus and reporting accounts as unpaid, then it’s better to consult your bankruptcy attorney.

The creditor is willfully violating the bankruptcy laws. As such, you can take legal steps against him.

The bankruptcy attorney can show you the right path.

The credit reporting agencies can’t shed their responsibilities either. As per the FCRA (Fair Credit Reporting Act), credit bureaus should update correct information on your credit report.

Both creditors and credit bureaus should be honest. If they are not honest or misrepresent facts willfully, you can seek legal help.

*Study found 48% of professional credit repair clients who stuck with their service for 6+ months saw an average of 100+ points to their credit score.  Source.

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