The CRAs have interpreted the exclusion of Chapter 7 and 13 bankruptcies as being different, notwithstanding the fact that the governing exclusion period of 10 years max provided under FCRA 605(a) applies broadly to all title 11 bankruptcies.
FCRA 605(a)(1) permits credit reporting agencies to keep any BK under any section of title 11, USC, on an individual’s credit report for up to ten years. The FCRA does not mandate that CRAs must list the bankruptcy for ten years, it only requires that bankruptcy information must be removed from the individual’s credit report at that time.
The CRAs have established separate exclusion dates for Chapter 7 and 13 BKs. In general, Chapter 7 cases are reported for ten years and Chapter 13 cases are reported for 7 years. However, the FCRA does not distinguish between Chapter 7 and Chapter 13 cases and a bankruptcy case under either chapter may be reported for up to ten years.
Chapter 13 involves reorganization of debt as opposed to complete discharge, and as such the underlying accounts can continue to have updating negative information reporting. The underlying accounts are generally subject to exclusion of any adverse items no later than 7 years from their dates of occurrence under FCRA 605(a)(5), The CRAs have thus chosen, based on the exclusion of the accounts at 7 years, to also remove the Chapter 13 public record reporting at 7 years. Thus, the CRAs routinely continue to include the public record reporting of a Chapter 7 BK for the full 10 years permitted under the FCRA, but choose to exclude the Chapter 13 reorganization of debt BK reporting after 7 years.
