Repair your credit record after bankruptcy, IVA or a DRO

Time for a clean up? Bankruptcy will badly affect your credit record for six years. This article looks at what should happen, how you can repair any problems, and ways to improve your credit rating when you are discharged. Even if you have no intention of accumulating debt again, a good credit record makes it easier to rent a house, get a mobile contract or a full current account and it’s essential if you want a mortgage.

The information here also applies to the other two forms of insolvency in England and Wales: IVAs and Debt Relief Orders (DRO). The equivalent of the bankruptcy petition date is the date your IVA or DRO started. The equivalent of discharge from bankruptcy for an IVA is the date your IVA completes; for a DRO it is the date the DRO ends, usually 12 months after the start.

How insolvency should be recorded

After you go bankrupt:

  • Bankruptcy will be shown in the Public Record section of your credit record (for an explanation of the different parts of your credit record, see this Experian page ). It can sometimes take a few weeks for the entry to appear, but when it does, the date on it will be the date of your bankruptcy petition.
  • Debts which have not so far been defaulted should be marked as defaulted by the creditor with a default date of your bankruptcy petition. This can take quite a while to happen as the Insolvency Service has to inform the creditor who then informs the Credit Reference Agencies (CRAs).
  • There will be no change for any debts which have already been marked as in default or for CCJs.

When you are discharged:

  • The Insolvency Service will notify the CRAs who will add this to the Public Record section. This doesn’t remove the bankruptcy note – that will stay on your record for six years.
  • The debts included in your bankruptcy should be marked by the creditors “to show that you no longer owe money on that account (perhaps by marking the entry as ‘partially satisfied’ or ‘partially settled’ or in some other way)”  (quote from the Information Commissioner’s Office).

After six years everything vanishes:

  • The bankruptcy marker will drop off your credit record.
  • Defaulted debts will drop off six years from the default date, so some of these will probably have disappeared already, but the rest should go at the same time as the bankruptcy marker.
  • CCJs drop off six years from the judgment date, so they will also be gone six years after date of your bankruptcy petition.

Correcting problems

1) Creditor doesn’t use the correct default date

There is no point in complaining to the CRA – this has to be corrected by the creditor. You should write a  letter along these lines to the Data Controller for the creditor(get the address from the ICO here), send it Recorded Delivery and keep a copy:

re: [account/reference xxxxxxxxxxxxxxx]

I went bankrupt at [xxxxx County Court] on dd/mm/yyyy. I attach a copy of my Bankruptcy Order.

I am writing to ask you to correct my credit file for the above debt. At the moment [there is no default date shown / the default date is shown as dd/mm/yyyy]. This is incorrect and a breach of the Information Commissioner’s Office guidelines and the Data Protection Act 1998. There should be a default date not later than the start date of my bankruptcy.

Please correct this entry within 28 days or supply me with a written reason why you will not do so.

Yours faithfully, 

Recheck you credit file after say six weeks. If it has not been corrected, put in a complaint to the Information Commissioner’s Office using the forms here. Attach copies of your letter to the creditor, proof of posting and any reply from the creditor.

2) Creditor doesn’t mark debt as satisfied when you are discharged

Note that the creditor doesn’t have to mark the debt as fully settled/satisfied so there is no point in complaining if the debt has been marked as partially settled/satisfied.

If you want to get this corrected ideally you need to get a Certificate of Discharge from the court where you went bankrupt (at the time of writing this costs £70 and £10 for additional copies) however many lenders will accept a copy of the free letter from the official receiverthat you may have received. Then send the following letter to the data controller for the creditor:

re: [account/reference xxxxxxxxxxxxxxx]

I went bankrupt at [xxxxx County Court] on dd/mm/yyyy. I was discharged on dd/mm/yyyy. I attach a copy of my [Certificate of Discharge]/[letter of discharge].

I am writing to ask you to correct my credit file for the above debt.  The Information Commissioner’s Office guidelines state that my credit file should show that I no longer owe money on that account, perhaps by marking the entry as ‘partially satisfied’ or ‘partially settled’ or in some other way.

Please correct this entry within 28 days or supply me with a written reason why you will not do so.

Yours faithfully, 

Again, complain to the  ICO as above if the entry is not corrected.

3) CCJs are usually not amended when you are discharged

There is no ‘partially settled’ status for a CCJ and the court only has to mark a CCJ as satisfied if you have paid it in full, which you haven’t.  The best you can do is to add a note to your credit file (Experian explains how to do this here) to say that this CCJ was included in your bankruptcy, that you were discharged on dd/mm/yyyy and so you are no longer liable for the debt.

Is it worth doing this?

It is definitely worth correcting the dates of default unless they are just a few days wrong. If these are months or even years late, then this will delay the time until your credit file is clean as these debts will remain for six years after the default date.

Marking your debts as satisfied after discharge is less important.  Even if you get this amended, applications for credit, a normal bank account or a mortgage may well be refused whilst bankruptcy is still on your credit file. If you are close to the six-year drop-off, then you could decide to wait and let that clean everything up. However, getting a debt marked as satisfied will improve your credit score slightly, which may be enough for you to be approved for a ‘bad score credit card’, see below. It also prevents the debt being ‘sold on’ to another Debt Collector, which is annoying as you have to correspond with yet another person and send them details of your bankruptcy.

Getting positive markers on your credit file

In addition to cleaning out the bad stuff from your credit history, you should aim to start acquiring new, positive credit marks after you are discharged. Make sure you are on the electoral roll, that your address etc are correct on your record, that your bankruptcy discharge is shown and start the clean-up process above. This may take several months to complete if you have to go to the ICO.

Then apply for either a Vanquis or a Luma credit card. If you are refused, double-check your credit file really is clean with all three CRAs and wait six months or so, then apply to the other card.

These two cards are aimed at people with very bad credit and they charge a very high rate of interest.  This doesn’t matter because you should aim to use the card every month and  repay it in full every month, so you will never get charged interest! If you find your balance is creeping up because you are not clearing it in full, then you need to stop spending on the card until it is cleared and have a re-think about budgeting. Your credit record will not improve faster if you leave a balance on this card.

After you have had one of these cards for a few months, think about getting a cheap monthly mobile phone contract, probably a SIM only one.

This all takes time

If you were expecting discharge to make an immediate difference, it usually doesn’t…  There isn’t a way to speed this up – don’t pay any firms offering a ‘credit repair’ service because either they don’t work at all, or they will be no better than what you can do yourself.

More Debt Camel articles:
Other articles on credit ratings

Other articles on credit ratings

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PPI claiming after IVA, DRO, bankruptcy

Still waiting for your IVA completion certificate?

Still waiting for your IVA completion certificate?

What do you think?