Can a Voluntarily Dismissed Chapter 13 be Removed from Credit Reports?
Many are asking in bankruptcy forums, “Can a voluntarily dismissed Chapter 13 be removed from credit reports?”
When you file for bankruptcy, the action is reported to all the credit reporting agencies. The Fair Credit Reporting Act governs how credit reporting agencies and creditors can legally behave in their dealings with your credit history. The law states that a reporting agency can report a bankruptcy filing for up to 10 years, but there are not many rules which govern the removal of the reporting before the end of the 10 years. It is a matter of public record.
There are two types of dismissals in a Chapter 13 bankruptcy- voluntary and involuntary.
A Chapter 13 bankruptcy, commonly called a wage earner’s plan, enables individuals with regular income to develop a plan to repay all or part of their debts over three or five years.
A voluntary dismissal in a Chapter 13 might occur when you as an individual filer decides filing for bankruptcy was a mistake.
You may wish to request a voluntary dismissal if you find out one of the major debts in your bankruptcy cannot be discharged, you have come into a lump sum of money allowing you to pay all your debts, or you now have found employment permitting you to pay off your debts in full.
The voluntary dismissal may be achieved in a Chapter 13 by merely filing a petition for dismissal with the bankruptcy court. Stopping your monthly payments to the bankruptcy trustee can have the same results as filing a petition.
Unlike the stricter Chapter 7 bankruptcy, a Chapter 13 can easily be voluntarily dismissed.
To remove a voluntarily dismissed Chapter 13 from your credit reports is a different challenge within itself. It is not impossible, but it is not easy by any stretch of the imagination.
The removal, if possible, might take a legal action to obtain a court order to remove the information. Here, you would most likely have to prove to a court the dismissal was, indeed, voluntary, the debts have been paid, and reporting the filing under such circumstances has done you irrefutable harm.
No small task to prove, the court filing may or may not be cost prohibitive. Sometimes, credit reporting agencies might remove the bankruptcy report if a reasonable and persuasive appeal has been made in writing by you, or even better, a bankruptcy lawyer.