I have a dismissed Chapter 13 from 1998 and I've
been unable to obtain a car loan. I get the same answer for denial
from dealers: Because it was dismissed, creditors can still come
after me. I contacted the credit bureaus; they said that's not true.
So, whom do I believe? Explain dismissed vs. discharged bankruptcy?
Will this come off of my credit in June 2005, seven years later?
-- Robyn Redress
In a Chapter 13 bankruptcy filing, the court discharge of any remaining
eligible debts takes place after completion of the three- to five-year
court-approved repayment plan. The discharge removes the debtor's
obligation to repay the discharged debt.
The court can dismiss a bankruptcy case with prejudice,
a trustee can request dismissal or you can request a dismissal.
Regardless of how you got there, a bankruptcy dismissal derails
the bankruptcy petition and takes away the automatic stay provision
of bankruptcy where creditors are forced to the sideline while the
bankruptcy court sorts things out. Without the protection of the
bankruptcy court, creditors are able to once again resume collection
procedures against you.
Bankruptcy dismissals can stay on your credit report
for seven to 10 years. As you'll see below, the credit bureaus aren't
consistent in how they treat bankruptcy dismissals. That said, most
other negative information on your credit report does drop off after
seven years from when it was placed on the report.
TransUnion states on its Web site that, "Chapter 13
bankruptcies that have been dismissed or discharged remain on file
for seven years." Equifax says, " ... 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."
Experian doesn't discuss dismissals as a separate
reporting item on its FAQ page stating, "Missed payments and most
public record items remain on the credit report for seven years,
with the exception of Chapter 7, 11 and 12 bankruptcies, which remain
for 10 years, and unpaid tax liens, which remain for 15 years."
Looking beyond the credit report to whether your creditors
can still look to you for payment, it depends. A creditor's ability
to collect on a credit agreement will depend on the statute of limitations
applicable to that agreement. The laws vary by state, but in most
states creditors would not be able to continue to pursue payment
after three to six years.
It sounds like your best bet is to have a friend or
family member co-sign the loan with you. That would allow you to
get the car while your credit history is on the mend.