Rebuilding Credit After a Bankruptcy Discharge in Pennsylvania: What Reports Show, Your Rights, and Scams to Avoid

Short answer: After a discharge, rebuilding credit is mostly a matter of knowing what the credit reports are allowed to say, correcting what is wrong, and adding new on-time payment history carefully. Federal law limits how long a consumer reporting agency may report a bankruptcy case, gives you a dispute right, and restricts credit repair companies. No page can tell you how your own reports or scores will look; an attorney can confirm how these rules apply to your case.

This page covers the period after the case ends. For how a filing first affects reports and scores, see how long bankruptcy stays on your credit report, Chapter 7 and your credit score, and Chapter 13 and your credit score.

How long a bankruptcy can be reported: 15 U.S.C. § 1681c

The Fair Credit Reporting Act says that, except as authorized in subsection (b), no consumer reporting agency may make a consumer report containing "[c]ases under title 11 or under the Bankruptcy Act that, from the date of entry of the order for relief or the date of adjudication, as the case may be, antedate the report by more than 10 years" (§ 1681c(a)(1)). Title 11 is the Bankruptcy Code, so the rule reaches both Chapter 7 and Chapter 13 cases. The clock is measured from the order for relief, not from the discharge date; an attorney can confirm which date that is in your case. The FTC's consumer guide says the same thing in plain terms: "Most negative information will stay on your report for seven years, and bankruptcy information will stay on for 10 years."

There are exceptions. Under § 1681c(b), the time limits do not apply to a consumer credit report used in connection with a credit transaction of $150,000 or more, life insurance underwriting of $150,000 or more, or employment at an annual salary of $75,000 or more. That is a limit on the reporting period, not a statement about whether any particular lender or employer will care.

What should appear on your reports after discharge

A discharge operates, under 11 U.S.C. § 524(a)(2), "as an injunction against the commencement or continuation of an action" to collect a discharged debt as a personal liability of the debtor. The legal result is that you are no longer personally liable on those debts. How each creditor then reports the account is a separate question, and it is a common source of mistakes.

Two FCRA provisions frame what you can expect. A reporting agency must "follow reasonable procedures to assure maximum possible accuracy" (§ 1681e(b)). A company that furnishes information to the agencies "shall not furnish any information relating to a consumer to any consumer reporting agency if the person knows or has reasonable cause to believe that the information is inaccurate" (§ 1681s-2(a)(1)(A)). In practice, people often review their reports for accounts that were included in the bankruptcy and ask whether those entries still show a balance owed, a past-due status, or a collection after the discharge. Federal law does not prescribe the exact wording a lender must use for a discharged account, so whether a particular entry is inaccurate depends on the entry and your case. An attorney can review it with you.

Checking and disputing: 15 U.S.C. § 1681i

The FTC says you can get a free copy of each of your credit reports from the three nationwide reporting companies at annualcreditreport.com. Review each one, because the agencies do not always hold the same information. If you find an error, the dispute process is in § 1681i:

• Reinvestigation window. The agency must reinvestigate "before the end of the 30-day period beginning on the date" it receives your dispute notice, and that period can be extended by up to 15 additional days in some circumstances (§ 1681i(a)(1)).
• Notice to the furnisher. The agency must notify the company that supplied the information within 5 business days (§ 1681i(a)(2)), and that company must then investigate and report the results back (§ 1681s-2(b)(1)).
• Deletion or correction. Information found inaccurate or that cannot be verified must be promptly deleted or modified (§ 1681i(a)(5)(A)).
• Written results. The agency must give written notice of the results no later than 5 business days after the reinvestigation is completed (§ 1681i(a)(6)(A)).
• Your statement. If a dispute is not resolved to your satisfaction, you may file a brief statement of the dispute; the agency may limit it to not more than 100 words if it provides you with assistance in writing a clear summary of the dispute (§ 1681i(b)).

The FTC notes that "[d]isputing mistakes or outdated things on your credit report is free," and recommends writing to both the credit bureau and the business that reported the information. Keep copies. If a creditor keeps collecting on a discharged debt, that is a separate issue under the discharge injunction, and you should talk to a bankruptcy attorney promptly.

Building new history: secured cards, credit-builder loans, and the basics

The factors scoring models draw on are described by the FTC: payment history (which the FTC describes as an important factor), the amount of debt compared with your credit limits, the length of your credit track record, new credit applications, and the number and types of accounts. The same FTC publication says scoring systems differ among creditors, so no single formula applies to every lender. The FTC's tips for building history are to pay bills by the due date, pay down debt, and avoid new debt, and the CFPB's rebuilding guide advises that "on time" means the payment reached the company by the due date.

• Secured credit cards. The CFPB describes a secured card as one where you "put an amount equal to your credit limit in an account as a deposit." Before you apply, ask whether the issuer reports to all three nationwide agencies, what the fees are, and how the deposit is returned. A card that does not report does nothing for your credit history.
• Credit-builder loans. In the CFPB's description, the lender places the loan amount in a locked account, you make payments, and the lender "reports the borrower's payment history to the three major credit reporting agencies." A CFPB practitioner guide notes that the lender releases the payments back to the borrower "minus any interest or fees," and reports that in the CFPB's study of one credit union's program, about 40 percent of people who opened a credit-builder loan made at least one late payment on it. Read the terms before signing.
• Balances. The CFPB guide says experts advise "using no more than 30 percent of your total credit limit," with some suggesting less.

We do not predict scores or timelines. Results depend on your full reports and the model a lender uses. For credit counseling resources, see our article on counseling and the debtor education course.

Reaffirmed debts

Some debtors choose to reaffirm a debt, often a car loan or a mortgage, so they can keep the collateral under an agreement with the lender. Under 11 U.S.C. § 524(c), a reaffirmation agreement is enforceable only if it "was made before the granting of the discharge," the required disclosures were made at or before signing, and it is filed with the court with the required declaration. You may rescind within the period set by § 524(c)(4), which runs until discharge or 60 days after the agreement is filed, whichever is later. Section 524(f) says nothing in § 524(c) or (d) "prevents a debtor from voluntarily repaying any debt." Because a reaffirmed debt remains a debt you are personally liable for, on-time payments and any missed payments matter in a different way than for discharged accounts. Reporting practices on reaffirmed and voluntarily paid accounts vary by lender; an attorney can confirm how this applies to your case. See also keeping a car in Chapter 7 and debts that survive discharge.

Discrimination after bankruptcy: 11 U.S.C. § 525

Section 525(a) provides that a governmental unit "may not deny, revoke, suspend, or refuse to renew a license, permit, charter, franchise" or similar grant solely because a person is or has been a debtor under the Bankruptcy Code or has not paid a discharged debt. Section 525(b) says that "[n]o private employer may terminate the employment of, or discriminate with respect to employment against," a person solely because of bankruptcy status. Section 525(c) addresses student grants and loans. Notice the word "solely" in (a) and (b): the statute is limited to actions based on bankruptcy status. It does not require a private lender to extend you credit, and it does not stop an ordinary credit decision based on your credit report. If you think a government agency or employer acted because of your bankruptcy, an attorney can confirm whether § 525 applies.

Credit repair scams and the Credit Repair Organizations Act

Credit repair offers tend to arrive after a bankruptcy. The Credit Repair Organizations Act, 15 U.S.C. § 1679 et seq., defines a credit repair organization as a person who sells or performs a service "for the express or implied purpose of" improving a consumer's credit record, history or rating (§ 1679a(3)(A)). Among its protections:

• No one may "make any statement, or counsel or advise any consumer to make any statement, which is untrue or misleading" to a reporting agency or creditor about credit standing (§ 1679b(a)(1)).
• No one may advise you to alter your identity to prevent the display of your credit record "for the purpose of concealing adverse information that is accurate and not obsolete" (§ 1679b(a)(2)).
• A credit repair organization may not "charge or receive any money or other valuable consideration" for a service "before such service is fully performed" (§ 1679b(b)).
• You may cancel a contract without penalty before midnight of the third business day after it is signed (§ 1679e(a)).

The FTC says "[c]ompanies that promise to repair your credit can't remove true information" and "[a]nything a credit repair company can do legally, you'll be able to do for yourself for little or no cost." Treat as warning signs a demand for payment up front, a promise to erase accurate bankruptcy information, or advice to change your identifying information or file a false dispute. See also debt relief scams and how to spot a legitimate company.

Post-discharge credit offers can also be a problem even when they are legal. Read interest rates, fees, and whether the account is reported; a high-cost product that never reports gives you the cost without the history.

Common fears and misconceptions

• "The bankruptcy disappears when the case closes." Not under § 1681c(a)(1), which runs from the order for relief, up to 10 years.
• "A credit repair company can delete accurate entries." The FTC says they cannot remove true information.
• "Nobody will lend to me." We cannot predict that. Section 525 does not guarantee credit, but credit decisions vary by lender and by your overall report.
• "I must pay a discharged debt if a collector calls." The discharge injunction in § 524(a)(2) addresses collection of discharged debts as personal liabilities; tell your attorney if collection continues.

Mistakes to avoid after discharge

1. Not pulling all three reports. Entries can differ between agencies.
2. Disputing accurate information. It wastes time, and statements to a reporting agency that you know are untrue can create problems of their own.
3. Paying a credit repair company in advance. § 1679b(b) prohibits it.
4. Signing a reaffirmation or a new loan without reading the terms. See § 524(c) and the disclosure requirements.
5. Opening a card or loan that does not report to the agencies. Ask before applying.
6. Ignoring collection after discharge. Keep letters and call records.

Where this fits for Pennsylvania residents

These federal rules apply the same way whether your case was filed in the Eastern, Middle, or Western District of Pennsylvania. County pages such as Dauphin County and Cumberland County explain local practice, and our locations page lists other areas. If you are thinking about a home purchase, read how soon you can buy a house after Chapter 7, and for what a discharge covers, see what debts are discharged. To compare chapters, see Chapter 13 vs. Chapter 7.

What to expect at the consultation

If you have already received a discharge, a consultation usually involves reviewing your discharge order, your three credit reports, and any collection letters you received afterward, to see whether entries match what the discharge covered. Bring those documents and any reaffirmation agreements. If you are still deciding whether to file, we can discuss what the process involves, and how the rules above fit your facts.

Call (717) 724-7503 or schedule a consultation to talk through your situation.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

Sean P. Quinlan, Esq., Quinlan Law Group, Camp Hill and Harrisburg, Pennsylvania.

This page is general information about Pennsylvania and federal bankruptcy law, not legal advice for your situation, and reading it does not create an attorney-client relationship. This is attorney advertising. Deadlines and outcomes depend on your facts; talk to a licensed attorney before relying on anything here.