I recently closed a loan for 2 people who had both experienced a Chapter 7 bankruptcy. They were both forced to file separately.

The difference was how the bankruptcies were being reported to the credit bureaus, which shows an interesting insight on how proper bankruptcy reporting methods.

When someone discharges all their debts using bankruptcy filing, he/she can begin to re-establish credit one account at a time. Be aware that there are companies that specialize in giving credit lines to those with a bankruptcy in their background.

After 2 years and efforts to re-establish a credit score, the credit score should rise. After 3 to 4 years, it becomes even better. But unless a bankruptcy is properly reported to the three credit bureaus, Experian, Equifax and TransUnion, then the credit score repair will never occur.

It was hardly more evident than comparing this couple's credit scores. Suzy had a bankruptcy discharged in 2001 and her middle credit score was 685. James however had a much lower score, with his middle score coming in right at 545. This low score was keeping them from buying the home they wanted to acquire.

Even though his accounts were discharged those accounts were being picked up by credit bureaus as still being late. His credit report showed late payments, on credit accounts that had been discharged 3 years earlier! Negative items after a bankruptcy are just a killer.

The difference between Suzy and Jamey's credit report was that Suzy's counsel made sure that all three credit bureaus received the discharge notification and received verification that the bankruptcy was properly noted. James' lawyer did not. Suzy had re-established her credit scores while James still had a poor credit score.

Similarly, I knew a person with a similar situation. His bankruptcy had been discharged almost 5 years ago but his credit score was around 500. Way too low unless he had messed up his credit again. But he had not, in fact he had a car loan paid on time and he was always paying of his credit cards on time. I suggested him to pull his credit report and look to see if some of his accounts included in his bankruptcy were still being reported as late. He did and they were reported late. He quickly took care of this issue to get that fix immediately.

All Joe had to do is fax copies of his bankruptcy discharge notice to the credit bureau agencies to have his credit scores re-calculated. The credit bureaus examined the discharge notice, made the corrections in his report then "re-scored". His middle score increased to 685 in no time.

While it's always important for consumers to occasionally check their credit reports on an annual basis, it's even more so for someone who has recently experienced a bankruptcy. If the discharge is not reported properly, it could take years for the credit profile to be repaired.