How to Remove Discharged Debt from Your Credit Report

Last Updated:
April 4, 2023

When you file for bankruptcy, you’re supposed to get a fresh start and see your FICO score improve. That doesn’t always happen if discharged debt isn’t removed from or negated on your credit report.

Fortunately, there are options if you don’t see your credit score improve after finalizing your bankruptcy. Read on for more information about how to remove discharged debt from your credit report.

What is Discharged Debt?

In a nutshell, discharged debt is any debt that gets canceled or negated because of bankruptcy. For example, imagine that you have a mortgage, a car payment, and a credit card bill that all contribute to your bankruptcy. Whether you file for Chapter 7 or Chapter 13 bankruptcy, those debts should be wiped away or discharged upon bankruptcy completion.

When a debt is “discharged,” it can no longer legally be collected by lenders or creditors. Debtors or borrowers aren’t responsible for paying debt back once it’s discharged.

Why Do Discharged Debts Stick Around on Your Credit Report?

Discharged debt still shows up on your credit report, just like bankruptcy. But any discharged debt should have two key elements:

  • A status of "discharged." This informs a creditor that the debt no longer counts and the debtor is no longer responsible for it
  • A balance of $0

In essence, discharged debt might still show up on your credit report, but it shouldn’t have any impact on your credit score going forward. Eventually, discharged debts disappear alongside any bankruptcy you file.

If you file a Chapter 13 bankruptcy, that bankruptcy gets removed from your credit report seven years from the filing date (since you have to partially repay any debts you owe). If you file a Chapter 7 bankruptcy, it’s removed 10 years from the filing date since you don’t have to repay any of the associated debts.

But what happens if a discharged debt continues to hold a balance or doesn’t have the “discharged” status next to it? Unfortunately, this can and does happen to many Americans looking to restart their financial histories and begin anew.

Why is This a Problem?

Discharged debts that aren’t accurately marked or that retain balances can have negative and long-lasting impacts on your credit score. Since you aren’t obligated to repay any discharged debts, you could inadvertently allow those debts to weigh down your credit score for years before you notice the damage.

Say that you have a car loan discharged due to bankruptcy with a remaining balance of $4000. For two years, you work hard to rebuild your financial responsibility, pay your utility bills online, and use credit responsibly. Despite your best efforts, your credit score never gets any higher than 600.

When you look at your credit report, you notice that your previously discharged debt still has a $4000 balance, even though it should no longer affect your FICO score. In this example and others like it, the “discharged” debt needs to be corrected and/or removed from your credit report so your new credit score can thrive.

Removing a Discharged Debt from Your Credit Report

While noticing discharged debt dragging down your credit score is disheartening and frustrating, don’t give up. There are ways to remove discharged debt from your credit report if it’s causing problems.

Review Your Credit Report

First, review your credit report from each of the three credit bureaus thoroughly. The three credit bureaus – Experian, Equifax, and TransUnion – all make different credit reports, so you’ll need to secure a copy from each bureau.

Why bother? Discharged debt might be present on one bureau's credit report but not on another. Review each credit report so you know which bureaus you need to contact about the discharged debt.

Make Sure the Item is Inaccurate

Next, make sure that the discharged debt in question is inaccurate. This is only really necessary if you previously filed for Chapter 13 bankruptcy. If you filed for Chapter 13 bankruptcy, you might be on the hook for some of your debts or partial repayments. Double-check with a financial advisor or legal representative; you might think that one of your debts or prior loans should be discharged, but actually need to repay it ASAP.

File a Dispute via a Letter of Dispute with the Credit Bureau

Once you’ve confirmed that your discharged debt is inaccurate and harming your credit score, it’s time to file a dispute letter with the credit bureau(s) in question. 

Say that you find an inaccurate discharged debt for $1000 with your Equifax credit report. In that case, you should download a credit dispute letter template online and fill out the appropriate information. Remember to write down your credit report’s unique number – each credit bureau’s report should have a different one.

Wait for Results

Once you mail or email your letter to your credit bureau, be prepared to wait anywhere between 15 and 45 days for a response. The credit bureau's financial investigators will need to double-check your claim and come to a decision. Then they'll respond positively or negatively.

If they respond positively, you should see the discharged debt disappear or see it edited to accurately reflect its discharged status or a balance of $0. If they respond negatively, proceed to the next step.

Contact Legal Representatives if Needed

Sometimes, credit bureaus refuse to fix credit report errors or don’t believe you when you claim that your debt should be discharged under bankruptcy rules. If this happens, you still have options. Contact knowledgeable legal representatives who can walk you through your options and provide sound legal counsel, including advice on what to do next.

The laws and complexities surrounding discharged debt and credit disputes can be tough to tackle alone. Hire attorneys who know what to do and what to say to the credit bureaus to help you resolve this issue once and for all.

Wrap Up

Ultimately, removing discharged debt from your credit report follows the same process as filing any dispute with a credit bureau. Remember, you have a right to a fresh financial start when you file for bankruptcy. If a credit bureau refuses to abide by this law, it may be in violation of the Fair Credit Reporting Act and you may be entitled to compensation.

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