I saw your column
about bankruptcy and credit reports and have to tell you I just
got off the phone with Equifax and they will not remove my dismissed
Chapter 13 even though it was filed in June of 1995. They say it
will come off next June. They also said that if I had a discharge,
it would have fallen off after seven years. Doesn't that seem kind
of backward? The way it came down, no creditors lost money. I have
spent almost 10 years rebuilding my credit and am going to try to
refinance my house early next year. What is your advice?
My earlier reply erroneously stated that a dismissed Chapter 13 bankruptcy,
like a discharged Chapter 13 bankruptcy, drops off the debtor's credit
report after seven years. Equifax states on its FAQ page (excerpt
shown below) that it keeps dismissed Chapter 13 bankruptcies on the
consumer's credit report for 10 years.
- Chapters 7, 11, and non-discharged or dismissed chapters 12
and 13 remain on file for 10 years from the date filed;
- Discharged chapters 12 and 13 remain on file for seven years
from the date filed.
I understand your point that, since you made your
creditors whole, waiting 10 years to have the dismissed bankruptcy
off your credit report seems excessive, but bankruptcies can be
dismissed for a host of reasons, from voluntary dismissals by the
petitioner to dismissals with prejudice by the bankruptcy court.
If you haven't done so already, get copies of your
credit report and credit score and see where you stand before refinancing
your home. You may find that your credit score is high enough to
qualify for a mortgage loan at competitive rates without waiting
for the dismissal to drop off your credit report.
The Fair and Accurate Credit Transactions Act mandates
that you have free access to your credit report, but the act just
became effective and the mandated access won't be available nationwide
until next fall. A Bankrate feature
explains the act and shows when free reports must be available in
your state. You'll still have to pay for a credit score.
Since credit scores are based on the information in
your credit report, you should see a bump once the bankruptcy dismissal
falls off your credit report. For that reason, if you're choosing
between refinancing in spring 2005 and refinancing in July 2005,
you should consider waiting until after the dismissal drops off
your credit report. The risk, of course, is that rates increase
while you're waiting and you wind up worse off for having waited
despite the improved credit score.