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Justin Harelik, the Bankrate.com Bankruptcy AdviserClearing bankruptcy from credit record

Dear Bankruptcy Adviser,
Relief was granted in March, 1997 on my Chapter 7 bankruptcy filing and my credit has been clean ever since. As I approach the 10th anniversary, what steps are necessary to clear this from my record? Should I still declare past bankruptcy on applications?
-- Bill

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Dear Bill,
Congratulations! That's great news. I know that many people who read this column are wondering if there is light at the end of the tunnel, and letters such as yours prove that there is life after bankruptcy.

It is important, however, for you to become proactive in this process. The credit reporting agencies have no obligation to remove information. You need to make requests that legally require them to take action.

There are four steps to take.


Steps to take
Step 1: Pull your credit report. This will ensure that you are using the correct account numbers.
Step 2: Make copies. Photocopy your discharge notification, the list of accounts from your original bankruptcy petition, your driver's license, Social Security card and a piece of mail (such as a bill from a utility) that verifies your address.
Step 3: Send notifications. Send letters to all three agencies: Experian, TransUnion and Equifax. Keep the letters short. State that you filed 10 years ago and therefore all record of the bankruptcy must be removed. Include the copies you made in Step 2. Remember, never send original documentation. It's the only real insurance you have.
Step 4: Wait patiently. Wait at least one month before taking any action that would make someone look at your credit report. Once you've completed these steps, the bureaus will update your credit report within 30 days. Then, you're free and clear.

If you cannot find your original records, you can go to the Public Access to Court Electronic Records, or PACER, to find the information.

As far as applications go, you need to answer questions truthfully -- but you do not need to include any extra information. Some employers ask, "Have you ever filed bankruptcy before?" You would need to answer truthfully and state, "Yes." Make sure you list the date so the employer knows that it was 10 years ago. Other applications ask, "Have you filed bankruptcy in the past seven years or the past 10 years?" For those applications, you can truthfully answer, "No."

Regardless, make sure that if you must report a previous bankruptcy that you have prepared a short, 30-word explanation as to why you originally filed. You want to make the prospective employer understand what caused your bankruptcy -- otherwise, the employer may assume your bankruptcy was sourced in shady behavior. Most bankruptcies are due to illness, divorce or loss of employment and there's nothing wrong with saying that. Have a short explanation ready that reflects the facts.

Remember, Bill, even though you've made it to the other side, you must continue to restore your credit. Establish and maintain new trade lines. Pay your balances. Check your report annually. And keep up the good work. You're an inspiration to lots of other people who are in seemingly impossible situations.

Justin Harelik is a practicing attorney in Los Angeles. To ask a question of the Bankruptcy Adviser go to the "Ask the Experts" page and select "bankruptcy" as the topic.

Bankrate.com's corrections policy-- Posted: Jan. 16, 2007
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