Ask John: Dismissed Bankruptcy

John,
I filed a Chapter 7 bankruptcy, but before it was discharged I came into some money and I was able to pay off all of my debts. The bankruptcy was dismissed. I thought that it would be removed from my credit reports, but it was not. Is this going to stay on my credit report and will it hurt my credit scores?

What should I do?

Al Moore
Charlotte, NC

Hello Al — The bad news is that once you file for bankruptcy, it is picked up by a service called PACER (Pubic Access to Court Electronic Records), which allows the bankruptcy filing to be automatically reported to the three credit reporting agencies. In fact, when you file for bankruptcy, it will likely end up on your credit reports within a few days.

Unfortunately, the news isn't good. The dismissed bankruptcy will be removed from your credit report ten years from the date filed. The bankruptcy is not removed early simply because it has been dismissed. And it will have the same impact on your credit scores as a discharged bankruptcy.

Here's what I suggest you do. I think you should jump right back into the game and establish a new credit card account, specifically a secured card. Your credit scores will recover more quickly if you can get positive accounts on your credit reports. Be sure to open an account that is reported to all three of the credit reporting agencies; otherwise, all of your scores won't be rewarded for your good management.

You have to make sure that you always make the payments on time. After about 30 days the account will show up on your credit reports and will start being included in your credit scores. Credit scores love to see good information, especially after something negative such as a bankruptcy. This will help your scores improve more quickly than if you simply did nothing until the bankruptcy drops off of your credit reports.

As always, if you have any questions or comments please feel free to drop me a line at AskJohn@credit.com

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