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  Dear
Dr. Don,
My husband and I filed for bankruptcy in 1998.
We recently checked our credit report from Equifax, Experian and
TransUnion. We discovered that there are past creditors that listed
our "past balances due" as charge off or seriously past
due or assigned to collection agency accounts, even though those
accounts were included in the bankruptcy.
We understand that the bankruptcy will stay
in our record for seven to 10 years. Is it better to correct the
mistakes on our credit report? If yes, how do we make these mistakes
disappear? Since the bankruptcy, we have managed to re-establish
credit, made all payments on time and put aside some money for a
house down payment. What is our chance of purchasing a new home
within the next two years?
-- Frustrated Frances
 Dear
Frances,
Debts discharged in bankruptcy don't have to be repaid, but the credit
history that got you to that point doesn't disappear just because
you no longer owe the debt. Negative information about a credit account
stays on your credit report for seven years from the date that it
was first reported on your account. The clock starts with the initial
reporting. So with a missed payment that turned into a delinquent
account that was charged off and went to collections, it's the initial
missed payment that starts the clock on the seven years that the negative
information can remain on your credit report.
The bankruptcy will stay on your
credit report for seven years if it's a Chapter 13 filing, ten years
if it's a Chapter 7 filing. The time period starts from the date
of the bankruptcy filing date. Accounts included in the bankruptcy
remain on your credit report for seven years from the time that
they were included in the bankruptcy.
Since it has been six to seven years since you filed
for bankruptcy, some of this negative information should be dropping
off your credit report. The credit bureaus should be doing this
automatically. You could start by contacting them and discussing
your situation without going through a formal dispute process. Bankrate
provides the contact
information for the credit bureaus. Filing a dispute shouldn't
be necessary since it's just a matter of timing, but that avenue
remains open to you as well. Bankrate's feature
on the dispute resolution process offers more information.
With a strong payment history in
the six to seven years since the bankruptcy, you shouldn't have
a problem getting a mortgage, assuming you have the income to justify
that mortgage. In fact, I hope you're not waiting around for your
bankruptcy to drop off your credit report before applying for a
mortgage. If you're in a financial position to do so, test the market
now. Get a credit score to go with your cleaned up credit reports,
just to see where you stand. You could face more risk from rising
interest rates over the next two years than you do by going with
your current credit situation. Good luck.
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