FAQ About How Your Credit Report Should Show Discharged Accounts After Completing a Chapter Seven Bankruptcy

Bankruptcy FAQ

FAQ About How Your Credit Report Should Show Discharged Accounts After Completing a Chapter Seven Bankruptcy

I am thinking about filing bankruptcy – what does a discharge mean?

First, a discharge is where you no longer owe the debts that are included in bankruptcy.

The creditor cannot ever try and collect the debt from you.

You can imagine a wall has come up between you and the creditor and the creditor cannot climb over, around, or under the wall to get to you in order to get you to pay this “discharged” debt.

OK, once I get a discharge, what does this mean for my credit reports?

Assuming the creditor (or collection agency) received notice of the bankruptcy, then the creditor must show the account (or tradeline) on your reports as having a zero balance and “included in bankruptcy” or “discharged in bankruptcy”.

Do creditors and collectors always follow this law?

No. In fact some reports indicate approximately 70% of discharged accounts are being reported falsely by the credit reporting agencies (Equifax, Experian, and Trans Union) and the creditors or the collectors.

Why do these companies violate the law?

To collect the discharged debts. As simple as that.

They don’t like the discharge order so they ignore it.

Or more accurately they try to subtly violate the law so they won’t get caught.

How do the companies violate the law?

There are many ways they violate the law – some of the more popular ones are:
1. Parking accounts;
2. Changing account numbers; and
3. Blatantly updating the accounts.

Explain “parking” accounts?

Parking accounts refers to leaving an account on your credit reports with a balance but not updating the account.

This is done so when the creditor is sued the creditor claims “We didn’t do anything! We just left it there after the bankruptcy.”

This is a bogus argument because the creditor knows that the credit report shows the “current balance” as more than zero.

It also knows the account or tradeline does not show “discharged in bankruptcy” or “included in bankruptcy.”

The theory (and it works) is that one day you will refinance your house or you will need a car loan and this balance on your report will prevent you from getting the loan.

Then you will call the creditor and they will “generously” offer to delete the tradeline if you pay the discharged debt.

Oftentimes you will feel like you have no choice and so will pay this extortion money.

How do companies justify this type of illegal extortion?

They claim you are paying this debt off out of a “moral obligation” and that they did nothing to ask you to pay it off – after all you called them. This is the ultimate form over substance argument – they know and planned to force you to call them to remove this false item from your credit report.

How does changing the account numbers help the creditors?

The original account number will often be deleted when you receive a discharge.

Then the creditor will send in the identical account but with a slightly different account number.  So now the “old” debt shows up with the full balance, making it look like you still owe money to the creditor or collector.

The credit reporting agencies will claim they didn’t know this was the same account.  

This has a tremendous amount of leverage to force you to pay off the debt.

If the creditor gets sued (as we have sued Bank of America, for example, on this) then the creditor will claim it was just a simple “book-keeping” error.

What these creditors never want to reveal is how much money they collect from discharged debts by these supposedly accidental mistakes that just so happen to leave balances on your credit reports.

Do companies really just update the balance of my accounts after a discharge?

Yes.  They will show you owing a balance and will conveniently leave out the fact that the debt has been discharged.

How do they justify doing this?

So few people check their credit reports after bankruptcy.

Those who do check, often don’t know what you now know.

And then when that small number of people complain to the creditor, the creditor will normally fix it.

This means they get away with breaking the law and then only when they are caught do they do the right thing.

I’ve heard sometimes companies sell debts that have been discharged. Is this true?


How and why do companies sell discharged debt?

The only reason someone would ever buy a discharged debt is because it has value.

It only has value if you can get the consumer to pay the discharged debt.

The easiest and sneakiest way to do this is to leave (park) accounts on the credit reports and force consumers to illegally pay discharged debts.

What should I do to see if this has happened to me?

Pull your credit reports a few months after you get your discharge.

If more time has passed that is ok – just pull them now.

The easiest way is to go to AnnualCreditReport.com and fill out the online request for Equifax, Experian, and Trans Union.

Or you can call the toll free number of 1-877-322-8228.

You can also pull your reports from Sagestream.com and Innovis.com which are two other credit reporting agencies.

What am I looking for in the reports?

To see if accounts that were listed in your bankruptcy petition show up on your credit reports with a zero balance and a notation that they were “included in bankruptcy” or “discharged in bankruptcy”.

What are my options if I find this type of illegal credit reporting?

You can take action which includes:
1.) Sue the creditor under state law;
2.) Sue the creditor for violating bankruptcy law;
3.) Sue the debt collector (collection agency or debt buyer) for violating the Fair Debt Collection Practices Act;
4.) Dispute the false reporting under the Fair Credit Reporting Act by sending a certified letter (return receipt requested) to the credit reporting agencies;
5.) Contact the creditor directly and ask them to correct the reporting; or
6.) Do some combination of the above.

Which is the best option?

It depends.

We would need to sit down with you and go over your credit reports, your bankruptcy petition, and then evaluate with you all of the options listed above.  Normally we either sue or dispute but all of the options listed above can be useful.

Have you handled these types of cases before?

Yes – we have filed dozens and dozens of these cases in state and federal court against debt collectors and original creditors.

What do you charge to meet with me to go over all of my paperwork and help me understand my options?

We don’t charge to meet with you.

What do you charge to file a lawsuit against creditors or debt collectors who are breaking the law?

We charge a contingency fee which means we only get paid if we are successful.

How do I set up a meeting to discuss this with you?

Its very simple. Call us at 1-205-879-2447 or contact us through our website and we will be glad to set up a free confidential meeting to go over your situation with you.

We look forward to meeting with you.

Have a great day!

-John Watts


  1. christine says:

    I filed chapter 7 in 2008 it was closed Sept 2 2008,my credit report says debt discharged through bankruptcy,0 balance,however i have been sued for the amount that i did owe by a another company for this debt,now i received a letter from the sheriffs dept saying i have to send money to them? or my wages will be garnished,i only make 120.00 a week and i am on disability. what do i do about this,i send letters telling them about the bankruptcy and i get no response.
    thank you Christine

    • JohnGWatts says:

      If this debt was discharged, you should not have been sued for it by anyone.

      I can’t tell if there is a judgment against you or not.

      Where did this happen and who are the companies involved?

      Sorry you are dealing with this….

      John Watts

  2. Sherrell Price says:

    I filed chapter 13 BK in Sept 2008. I have noticed that one of my accounts that is being paid thru BK is now listed a a tradeline BK Petition. It is Wells Fargo and the $4000.00 was included . What does Tradeline BK mean?


    • JohnGWatts says:


      The tradeline BK or “included in bankruptcy” just means this account was listed — and included — in your bankruptcy petition. Are you still in the Chapter 13?

      If you are “discharged” then the balance should be zero if the account was paid off or discharged.

      The bottom line is the accounts or tradelines must be accurate and truthful and often when dealing with bankruptcies we find that the accounts are not being reported accurately.

      Good idea to check your reports pretty frequently after bankruptcy to make sure it is accurate.

      Let me know if you have any questions.


      John Watts
      Birmingham, Alabama

  3. Lynn Frantz says:

    My father in law co-signed a loan for my husband using our house as collateral (I was never on the loan with them and never signed off on the house as collateral). My father in law filed bankruptcy and now our credit now shows this debt as having been discharged but the bank is pursuing us for the loan. We have been unemployed off and on for the last four years and have made only a few payments in these four years. They have not tried legal action but the loan officer drops subtle hints they could foreclose. We have tax liens worth more than the house is worth and the bank is aware they stand to lose money in legal fees and nothing in the forced sale.
    Are we still liable for this debt?

    • Lynn Frantz says:

      Also, we live in Iowa.

    • JohnGWatts says:


      Generally the only folks who get protection from bankruptcy are the ones that file for bankruptcy and get a discharge under bankruptcy.

      So as I understand it, only your father in law filed and received a bankruptcy discharge.

      So I think your husband still owes the debt — now the practical issue of whether the bank will do anything depends on a bunch of factors. I see you are in Iowa and I don’t know the laws there but you need to assume it is possible. I suggest getting with a foreclosure defense lawyer in Iowa to see what your options are but keep in mind banks sometimes do things even when it seems they would lose money doing them.

      Unfortunately common sense is somewhat uncommon with mortgage companies at times….

      Best wishes and thanks for your question!

      John Watts
      Birmingham, Alabama

  4. vanessa says:

    I filed chapter 7 and received a discharge. Everything on my credit report states it was discharged except one thing. It states “petitioned for chapter 7 bankruptcy”. It’s listed under negative accounts just as all the other accounts that were discharged. What does this mean. The balance does say $0 however. Just curious as it was a equity line of credit (2nd mortgage). Which brings up another question. I still live in my house and wondering if they can put a lien on my house. How do I find out if there is one on there?

    • John Watts says:


      Without seeing all of your credit reports I can’t tell you if this is right or wrong. But it sounds like it is ok how it is reporting — zero balance and bankruptcy. Your public records section will say “Chapter 7 bankruptcy” so it should be clear to anyone looking at your credit report this debt was discharged.

      As far as a lien, let me answer it this way.

      When you receive a discharge, the debt goes away. But the property is still the collateral for the loan so normally a mortgage company can foreclose on the house after a bankruptcy unless you “re-affirmed” the loan. https://alabamaconsumer.com/2013/01/i-am-financing-a-house-can-i-file-a-chapter-7-bankruptcy-and-keep-my-house/

      Without a re-affirmation (agreement to be bound by the loan after the bankruptcy) then the house is at risk.

      Contact your bankruptcy lawyer to figure out your exact situation and I wish you the best of success.

      John Watts
      Birmingham, Alabama

  5. Julia says:

    I filed for a Ch. 7, and it was discharged in March 2013. I’m just now noticing that most of the credit cards are filed as closed accounts, and under remarks it says filed for Bk ch. 7 and dishcharged. However, there are a few accounts that are listed as “open”, and under remarks it says BK ch. 7, bankruptcy petition. What does it mean that the accounts are open? Balance shows “–“, not zero, and BK petition? Does that mean the credit card company’s can still collect from me?

    • John Watts says:


      I’m not sure how much difference it makes (depends on what you need credit for, etc.) but if the accounts are closed and not being used, then I would ask the credit reporting agencies to update your report to show them as closed. Whether it shows “-” or “0” balance doesn’t concern me but if it does you, then ask them to update that as well.

      Make sure you dispute by certified mail and keep a signed copy of your dispute letter to each credit reporting agency.

      NO discharged debt can be collected against you ever again unless you “re-affirmed” the debt.

      If anyone comes after you for discharged debt, you should get with your lawyer or get with a consumer protection attorney to look at suing whoever is coming after you. Discharged debt means no one should ever collect it against you again.

      Hope this helps and thanks for your comment!

      John Watts

  6. John says:

    I filed for chapter 7 and it was discharged in Dec 2013. I’ve cleaned my reports up however I’m having trouble with one medical collection. I’ve disputed it several times with the bureaus with no change to the reporting. The collection report continues to report as “open” next to status. It reports with a $0 balance and the remarks “medical bankruptcy chapter 7”. If it is still reporting as “open” even with a $0 balance I feel as though it could still be affecting my FICO scores. Is it okay for them to report this as “open” if they are notating bankruptcy or should the status be “discharged” or something similar? I can’t find a clear answer on what creditors are required to put in status.

    • John Watts says:


      Great question. I have not had this come up in a case so I don’t know for certain but my gut feeling is the account should NOT show “open”. What collection agency is it?

      You have disputed this account, specifically the “open” description, with the credit bureaus?

      If you are in Alabama give us a call at 205-879-2447 and we’ll be glad to look at the report and your disputes and see what your options are….


      John Watts

  7. Kina butler says:

    Why do accounts after bankruptcy say closed instead of discharged?

    • John Watts says:


      Thanks for your comment. Usually they do say discharged or “included in bankruptcy”. If they are only showing as closed, then I would look carefully at the amount. The “current balance” to see if that is zero or has a number.

      Also I would look at the status dated — in other words, when was the account updated. Is that date before or after the discharge?

      Sometimes it might be good to leave as closed but normally folks will want it to say “discharged” or “included in bankruptcy”.

      Hope this helps — let me know if any other questions. Thanks for your comment!

      John Watts

  8. Peaches says:

    Hi I filed bankruptcy in 08/15/2014, but on my credit report it shows last reported date was 06/28/2016. so why are the dates different? So when someone looks at my credit report the filing will they assume my discharge was starting from the filing date of 08/15/2014 or my reported date of 06/28/2016.


    • John Watts says:


      Thanks for your comment.

      Are you saying on a particular account it is showing the 2016 date or the bankruptcy itself (normally under public records) is showing 2016?

      The bankruptcy should show whatever date you filed.

      Now the accounts would normally not be updated 2 years after the discharge.

      Give us a call and we can look at your reports and give you our thoughts — 205-879-2447. If you are outside of Alabama, get with a FCRA attorney in your state and they can help you.


      John Watts

  9. Sue says:

    I filed Chapter 13 BK in November 2009, completed my last payment in October 2014, and it was discharged in January 2014. All of my creditors accounts, including the actually Chapter 13 filing, has been removed from my credit report, except one. I had a HELOC that was lien stripped and deemed unsecured by the court.

    I’m trying to refinance, but this one last account is still being reported and causing me headaches. The creditor is saying that they will report for 7 years following the Discharge, rather than the Filing date, of my 13. That’s not accurate, right? I feel like I’m being held hostage after nearly 8 years – I’m so frustrated!

    I appreciate your help!

    • John Watts says:


      Thanks for your excellent question.

      Normally the bankruptcy is removed ten years from filing date in a Chapter Seven.

      But a Chapter 13 normally comes off seven years from filing date.

      So if you filed your Chapter 13 in November 2009, it should be off.

      Have you disputed it with the credit reporting agencies (Equifax, Experian, Sagestream, TransUnion, Innovis, etc)?

      If you are in Alabama give us a call at 205-879-2447. We can help you dispute it and if it doesn’t come off, then we can talk about options to sue under the Fair Credit Reporting Act.


      John Watts

      • Sue says:

        The bankruptcy has fallen off my credit report, but the HELOC that was included in the Chapter 13, which was lien-stripped unsecuritized, is still being reported. Shouldn’t that also be removed after 7 year of filing date, if it was included in the Plan?

        Again, I appreciate your help!

        • John Watts says:


          Good on the bankruptcy falling off.

          On the HELOC, it will depend on some factors.

          1. When was the loan accelerated (all due right now)?

          2. When did you go into default on it? (Typically reporting is 7.5 years from date of first major delinquency which is normally 6 months of missed payments. Charge off is normally 6 months of no payments so you can often think of 7 years from date of charge off. Gets a bit more complicated in context of bankruptcy but this can give some guidance…..)

          3. Was the HELOC discharged — i.e. no more personal responsibility on the debt?

          When is the credit reporting agency saying it will fall off?

          Feel free to call us at 205-879-2447 if you are in Alabama thanks!

          John Watts

  10. Mosstafa says:

    I have filled for BK chapter 13 in June 10, 2010. I included a house in my BK that was joint LOAN with my ex wife. The BK was discharged in September, 2015. However, the loan bank still reporting the house loan as a liability on my Equifax credit report as I still owe the money. My ex wife still living in the house and making payments but sometimes she is late and it is getting reported on my credit report. They said I am still liable for the loan since I did not surrender the house.

    • John Watts says:

      Credit reporting after bankruptcy can be very frustrating.

      If the debt was discharged as to you then it should not be currently reporting that you owe money and are late now, etc.

      The question is were you discharged from the Wells Fargo loan? Or did you use the Chapter 13 to catch up the back payments (“arrears”)?

      Sometimes it is confusing which was done but ask your bankruptcy lawyer and they should be able to tell you.

      In a chapter 7 when you complete the case, the debts are discharged unless you “re-affirm” them.

      But a chapter 13 can go several ways — it could be to literally discharge the loans/debts or it could be just to “catch your breath” and then get back to making the payments.

      Hope these suggestions help and definitely get with your bankruptcy attorney. If you live in Alabama and your bankruptcy attorney can’t help you with this, get with us at 205-879-2447 and we’ll be glad to look at this for you.


  11. Erin says:

    We filed Chapter 7 in March 2011. Our car loan on our credit report says discharged in bankruptcy. Never receiving statements or payment coupons after the bankruptcy, I continued to pay the loan and I believe that I fully paid the loan. We recently got a collection agency sending us a letter with request for payment with a reduced amount? If the credit report is reporting discharged in bankruptcy, can the collection agency request payment legally?

    • John Watts says:


      It gets a bit complicated when dealing with discharged secured loans. A car loan is a secured loan as the car is the security or the collateral for the loan.

      If the loan was discharged, then no one can collect the debt.


      The owner of the loan can take the car.

      So if the loan was not reaffirmed (agree to the loan again), then you are in a bit of “no man’s land” — no one can collect the loan but if you don’t pay the loan (which is discharged) then they can get the car.

      As a practical matter when loans are not reaffirmed, the company let’s you continue to pay (on a loan you don’t have to pay) and the company does not repo the car (when they have the right to repo it).

      I say all of that to say, you need to get with your bankruptcy lawyer to figure out was the loan discharged? Was it reaffirmed?

      Have you paid off the loan?

      I would want to know from the collection agency, what are they collecting? How much do they say you owe? Do they acknowledge the payments you made?

      As I mentioned — it gets a bit complicated at times.

      If you live in Alabama, feel free to get with us and we can walk you through your options here. If you live anywhere else, check with a lawyer in your state as the rules can be different from one court to the next.

      Sorry, you are having to deal with this….

      John Watts

  12. Charlie Baker says:

    I filed chapter 7 bankruptcy and it has been discharged for about a year. I recently looked at my credit report and the majority ofnrhe companies I have included removed the remarks: included in bankruptcy. The accts say closed and zero balance. Why would they remove the included in bankruptcy remarks on the credit report a year after discharge?

    • John Watts says:


      That’s an interesting question.

      Short answer is I don’t know why they did that.

      Are they showing any activity AFTER you filed for bankruptcy? Showing you late etc?

      Or does everything stop when you filed and they show zero balance?

      Every situation is different but in general terms this would not concern me very much as long as the creditors were not making it look like I still owe the money. The bankruptcy should be on there under “public filings” so it should be clear that’s what happened.

      Now if you are applying for credit and this causes you a problem, then it may need to be “fixed” but right now it seems this is not a negative. If anything, it is at least neutral or positive.

      I would still have a consumer protection lawyer in your state look at it to see if there is anything improper with it.

      Hope that helps!

      John Watts

  13. Mark says:

    My Chap 7 was discharged 10/15 and only have two accounts left on my report that were IIB. My concern is while the information is correct the 2 accounts are being reported on a monthly basis and this action lowers my score. Does the permanent injunction allow this type of reporting since it seems punitive in nature? Thank You so much.

    • John Watts says:


      So every month they are being updated as “included in bankruptcy” or similar language?

      I’m not sure I have seen that before.

      Consider shooting a dispute (in writing — certified mail) to the credit reporting agencies and the two furnishers (ones providing the information to the reporting agencies) and ask them to stop. Ask why updating as IIB after 10/15? Please delete this or explain why.

      Probably they will delete that information — if not, they may explain it.

      Think of this as a process — it may not just be this first letter that gets it done but if you want to, give this a shot and let me know what happens. I’m curious as I’ve not seen this before.

      Thanks for reaching out.

      John Watts

      • Mark says:

        Thx for the reply. Yes every month it is reported with the current month and though it states IIB with a 0 balance it does shows the report date as 01/2018 and so on..

        I have been fighting this for 2 years and the bureaus tell me to contact the creditors and the creditors just either ignore my request to stop updating or state it’s perfectly legal according to the FCRA. I always get conflicting accounts if these actions are playing by the rules (including my BK attorney who tells me it’s not allowed) yet others say it is.

        Clearly it’s just to punish me which I would think goes against the spirit of bankruptcy.

        BTW the 2 creditors are well known for doing this to others on boards I’ve read.

        Any other advice would be greatly appreciated. ThankYou so much for fast reply.

        • John Watts says:


          You are welcome my friend.

          A couple of thoughts:

          First — if your bankruptcy lawyer is helping you then definitely follow his advice. I am sure you just want to have a plan of action from him.

          Second — make sure you are actually disputing in writing through the bureaus. Not just calling but literally doing disputes.

          Third — either with your bankruptcy lawyer or a consumer protection lawyer, sit down with the documents, disputes, and results of investigations and either decide it is OK or sue.

          That’s my suggestion — either specifically what they are doing to you is right or it is wrong.

          Best wishes and let us know how it turns out. (If you are in Alabama, and your bankruptcy lawyer is NOT representing you then call us at 205-879-2447).

          John Watts

          • Mark says:

            I used to live in Dothan but now in Fla so unfortunately I can’t use your services but I still have many contacts in Ala. so you would be my recommendation in ever needed.

            From what I understand after extensive research as long as the furnisher clearly states IIB and a 0 balance there is nothing in the FRCA that bars the monthly updating so I suppose I’m stuck.

            Thank you so much for your time and answers and all the best!


          • John Watts says:


            Thank you for the kind words. I appreciate them!

            When you did your bankruptcy were you still in Alabama or had you moved to FL by then?



  14. Mark says:

    I filed in Fla. Thx

    • John Watts says:

      Gotcha. Yes you will need to get with a FL lawyer then to help you.

      Sorry I can’t help you but do keep us posted — I’m very interested what you do. And if we run across someone in a similar position here in Alabama we’ll let you know how that turns out.

      Best wishes!


  15. Shane says:


    I filed CH 7 here in MI back in 2013 I noticed that almost all creditors show a 0 balance with verbiage of the chapter 7….I have 2 creditors that have the CH 7 verbiage but they still show “open” instead of closed like the others do, is that normal/ok? or should I dispute with the credit bureaus to update the acct status as closed on Credit Karma it says “needs attention”

    Thank you in advance

    • John Watts says:


      Thanks for your comment.

      Are you still using the accounts or are they closed? Sometimes debts are included in a chapter 7 bankruptcy but then re-affirmed so they really are open.

      If they are closed, you may want to dispute and have them updated to show closed.

      I would check with a lawyer in Michigan (I assume it is Michigan) to see what they advise you. There may be something unique about bankruptcy there or state law that impacts this.

      Hope that helps and best wishes!

      John Watts

  16. Taylor says:

    Hi, I recently filed chapter 7 and was discharged on 10/22/18. My mortgage was listed along with my auto loan and an unsecured loan to be exempt. I did sign and file the reaffirmation form for the auto loan and unsecure loan (I did not sign one for the mortgage as I was told per my attorney I did not need to as it is protected), but on my credit report it shows all three account are closed, paid, and included in the ch. 7 bankruptcy. Is it reported correctly or do I need to dispute? It does show on my husband’s credit report as open so I’m not sure if I should worry about it. It would be great if I could get some clarification. I would just follow up with my attorney, but unfortunately he is very bad at communicating back.

    • John Watts says:


      It does depend on exactly what happened at Bankruptcy court but here are some general thoughts for you.

      1. If NOT reaffirmed, then it should show a zero balance and discharged/included in bankruptcy.
      2. IF reaffirmed, then it should be reporting as a normal account. It should have a balance — whatever you reaffirmed minus what paid — and can show monthly status on whether current or behind etc.

      Hope that helps!

      John Watts

  17. David says:

    I filed for ch7 and it was discharched. Are the only things acts are supposed to say is: discharged in bankruptcy and 0 balance?
    What if it says that in remarks but status says: derogatory?
    Just trying to see if the ONLY thing it’s supposed to report is 0 balance and discharged in bankruptcy. Nothing else, is that correct? Thank you!

    • John Watts says:


      The deal on credit reporting is it needs to be accurate.

      So if in the past you were late or charged off etc then that’s fine to put. But the current balance needs to be ZERO and it should say “included in bankruptcy” or “discharged in bankruptcy”.

      If you have questions about how it should show up — definitely ask a consumer lawyer in your state. While it should be the same everywhere, there are differences in how the courts interpret the law so you need to know how that is in your state.

      Best wishes!!

      John Watts

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