How Discharged Debts in Bankruptcy Appear on Your Credit Report

For many people, going through bankruptcy is the most practical decision to deal with unmanageable debts. Medical bills, vehicle accidents, and financial emergencies in your family can all cause the need to file bankruptcy rather than be held to debts that are impractical, maybe impossible, to pay at your level of income. When you file for bankruptcy, those debts are discharged and your creditors can no longer hound you, sell your debt to collectors, or claim your debt on their registers. But those discharged debts can still appear on your credit report.

The fact of the matter is that debts on a credit report are hard to get rid of for anyone. Just one defaulted credit card can follow a credit report for years, to the point of illegal reselling and renewing with debt collection services. Going through bankruptcy, in many ways, can protect you from the kind of semi-legal and fully illegal debt-chasing that many people with lingering debts are subject to. Or at least it should.

This article will help you understand how discharged debts from bankruptcy should appear on your credit report, and how they shouldn’t.  

Debts with Zero Balance

Your creditors are still allowed to list discharged debts on your credit report, but not as active or having any amount owed. Your bankruptcy-related debts can be listed as existing, but with zero balance. This is a way to make it clear that there are debts in your past, but you are not required to pay them and the debts hold no value to be resold to debt collectors.  

Debts Marked as Discharged and Included in Bankruptcy

The debts may also have a flag that makes it clear that they have been discharged as part of your bankruptcy. Look for debts listed as “Discharged”, “Included in Bankruptcy” and similar language that indicates that the debt existed, but is no longer active or owed.

What Your Bankruptcy-discharged Debts Can’t Appear as

Of course, not all creditors update their information and many purposefully leave the debts listed in their previous “owed” type listing. This might be negligence, but it is often an underhanded way to pressure those in bankruptcy to pay even though their debts have been legally discharged. If you check your credit report and see these debts listed as active, you will need to take steps to clean and correct your report. 

Examples of incorrectly “active” discharged debts include

• “Currently Owed”
• “Active”
• “Late”
• “Delinquent”
• “Outstanding”
• “Charged Off”
• Having a balance due
• Converted to a new type of debt, re-aged, or given a new account number.

Watch out, in particular, for the last category. This means your creditor has illegally sold your debt to a new creditor (or renewed it internally) which is only semi-legal even if your debts were not discharged by bankruptcy. 

How Long Discharged Debts can Appear on Your Credit Report

A discharged debt can appear, as discharged or closed, for up to seven years after the debt has been waived. This is true of most debts, even those paid in full. A Chapter 13 Bankruptcy also remains on your credit report for seven years, while a Chapter 7 bankruptcy remains for up to 10 years.4

If you see debts, even marked as empty or discharged, for longer than seven years, you’ll need to take measures to have these debts removed or discover who illegally sold your debt to renew and lengthen the time limit.

Ensuring Your Credit Report Accuracy After Bankruptcy

If you have gone through bankruptcy but debts are still listed as active, delinquent, owed, or with an amount attached, this is a form of fraud and financial bullying. Contact us today for legal assistance clearing your credit report and ensuring that going through bankruptcy legitimately frees you from unmanageable debts the way it is legally designed to do.