I filed Chapter 7 in 2004 and understand the bankruptcy will remain on my credit report until 2014. After that, when asked if I filed bankruptcy, can I honestly say “no” because it will no longer be on the credit report (or should not be) and I've served my time so to speak?
There is difference between an omission of facts and a flat-out lie. For example, let's say you were speaking with a
potential landlord and he asked if you had ever filed for bankruptcy protection. If you respond with an astonished, “Oh my goodness, never!” you'd definitely be fibbing. While he may not be able to find out that fact from your credit report, you did get a discharge, so your answer would be false.
Certainly if that person didn't ask at all, though, you'd be under no legal or ethical obligation to volunteer that information. You'd even be silly to bring it up, as it might hurt your chances of securing that rental property.
Whether you really need to be forthright about a bankruptcy or any other negative data that's no longer listed on a credit report is a fascinating moral question. As you explained, as of next year you'll have fulfilled
10 long years behind credit damage bars. When the notation drops off, no one will be the wiser, and your reports will look better than they do now. Your credit scores will also rise because the bankruptcy will no longer be included in the mathematical models used to calculate them.
I do not believe that you should have to discuss or reveal the bankruptcy after it disappears from your records. At that point it will be old news. Besides, what you've done recently is more relevant to a lender or other business than whatever led you to walk away from your debts a decade ago.
It's unlikely that a bank will ask for more credit information than what's listed on your reports, but I suppose that hypothetical landlord or perhaps a particularly fastidious
employer may dig a little deeper in the interview process. So practice a response, with a copy of your fresh and clean credit report at the ready. Then, if someone does ask if you've ever in your lifetime discharged debt, point to your report and deflect. Start talking about how wonderful your credit is, about how you only borrow what you can repay quickly and about how you always pay on time. Essentially, highlight all of your fabulous qualities and sidestep conversations about what happened long ago.
In the event that the person still pressures you for an answer about whether you have ever filed for bankruptcy protection, and dancing around the subject isn't dissuading them, you can either say “yes” or “no.” While “no” will be a lie, an affirmative response may hamper your desired or necessary opportunities. If it's not on the credit reports, I don't think it's any of their beeswax, but just how honestly you respond will be up to you and your comfort level about fudging the past.
As for me, I'd simply smile and keep on talking about my financial attributes. “I pay my debts and manage my money well and have done so for many years,” I'd respond. “I'm proud of my accomplishments. Now about that apartment…”
Got a question for Erica? Send her an email.