Yes, we get asked this question a lot. As a credit repair business owner, you should know the answer to this credit repair FAQ.
First off, please remember that we’re a software company only and not allowed to give legal advice, and you should always consult with an attorney for legal advice. That being said, here’s some general information about how to help a client who has a bankruptcy.
How Bankruptcies Get on Credit Reports
Bankruptcies are court records that stay on the credit report for 10 years. They generally don’t appear out of nowhere by themselves.
If there is a bankruptcy on your client’s report, chances are it is because your client requested that bankruptcy and he paid an attorney a lot of money to file it for him — most likely to wipe out his giant bills.
If your client does not know how the bankruptcy got onto his report, and if it’s truly an error, you would simply dispute it to the bureau just like any other error.
But if the bankruptcy is real, it’s not very likely that you can remove real court records. So it’s important to be honest with your clients so they will have realistic expectations, and to never promise things that are not possible (like removing court records that are real).
How to Help Clients With a Bankruptcy
However, since you don’t have a magic wand to make court records disappear, here are awesome ways that you CAN help a client who has a bankruptcy:
- Look on the report for creditors who are still showing a balance that should have been wiped to zero in the bankruptcy. It’s very common to find them still on the report.
- You can dispute those items to the bureau using the wizard dropdown reasons that say “this item was included in a bankruptcy, balance should be zero.” That will help your client and improve the credit report. It will look like this in your Credit Repair Cloud portal:
But, in the case of a very old bankruptcy:
- The creditors should have already fallen off the credit report after 7 years
- A old bankruptcy that is about to fall off by itself won’t carry as much weight on the score as a new bankruptcy
- It’s going to fall off the report by itself after 10 years
Credit repair specialists usually can't remove all effects of a bankruptcy, but you can learn how to to help bankruptcy clients soften the impact on their credit score. In fact, most people can improve their score to 640 or above within five years of the bankruptcy.
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Editor's note: Updated April 13, 2018