You have the right to dispute items on your credit report at any time. However, since bankruptcy changes your credit report, it might make more sense to wait until your case is over before you file any disputes. In addition to adding the notation of your bankruptcy filing, your credit report should reflect changes with each of your individual accounts. The important thing is that each of your accounts reflects correct information after your discharge.
How to Dispute
According to the Federal Trade Commission, the first step in disputing information on your credit report is to inform the credit reporting agencies, in writing, about the information you think is inaccurate. Whether or not you are awaiting a bankruptcy discharge is irrelevant to your complaint. Unless your dispute is frivolous, the agencies will usually respond to you within 30 days with the results of their investigation. If your request is denied, the next step is to contact your creditor directly in writing. If the creditor agrees with your complaint, it will stop reporting the erroneous information. If not, your creditor must report your dispute along with your other credit information.
Credit Report Notations
If your finances are at the point where you must file bankruptcy, chances are your credit report is already pretty damaged. However, not all creditors report delinquent account information properly. Sometimes, creditors neglect to indicate that you paid off a settled debt, for example, and instead report the account as still in default. After you receive a bankruptcy discharge, all included creditors must list your account as "included in bankruptcy," with a zero balance owed. Before your discharge, your creditors can continue to list your accounts as delinquent, with balances still due.
Benefits of Waiting Until Discharge
After your bankruptcy discharge, your creditors generally have 30 days to update the status and balance of your delinquent accounts. A bankruptcy discharge helps clean up your credit report by dropping the amount of your outstanding balances to $0. This can actually help your credit score, as the amount of debt you have and the percentage of your credit you use are large components of your FICO score. If creditors continue to list a balance on your account after your discharge, you can rightfully dispute these errors and have them corrected.
Pre-Discharge Dispute Benefits
The sooner you can remove a negative item from your credit report, the faster your credit score can recover. If something in your credit report is totally inaccurate, getting it removed before your bankruptcy discharge can possibly speed up the process of improving your credit. However, in the case of legitimately negative accounts, only time can remove them from your report. Since your bankruptcy discharge will actually help out with your negative accounts better than any dispute could, pre-discharge disputes should generally be limited to completely inaccurate information, such as fraudulently opened accounts.
- Federal Trade Commission: How to Dispute Credit Report Errors
- Bankruptcy Law Network: Credit Reports After Discharge, What Should Be Reported?
- Bankruptcy Law Network: Discharge and Credit Reports
- JenLeeLaw.com: Your Legal Rights During and After Bankruptcy, Making the Most of Your Bankruptcy Discharge
- MyFICO.com: What's in Your FICO Score
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