Bankruptcy is the worst possible credit event, with credit bureaus listing personal bankruptcies for a minimum of 10 years. Usually, it is not necessary to disclose a 10-year-old bankruptcy -- unless you are responding to a specific question on an official document, such as an application for credit or employment.
Applications for employment or bankruptcy may ask if you have ever filed for bankruptcy. In that case, you should answer yes, even though a bankruptcy 10 years old may no longer appear on your credit report. Failing to disclose bankruptcy when asked about it is the same as lying on the application. An employer could dismiss a new hire for that reason, or a bank could cancel an automobile loan and repossess the vehicle.
Bankruptcy information disappears eventually from credit reports, but remains available to the public from other sources. Bankrupcy is a legal action and records about a specific bankruptcy are also available though court databases. For example, an employer performing a credit and background check might not see the bankruptcy on credit reports if it is older than 10 years. However, a character check digging into court records could reveal the bankruptcy.
People with 10-year-old bankruptcies should check their credit reports to determine if credit bureaus are still reporting the information. Even if the information no longer appears, people completing official documents should respond truthfully if asked about bankruptcy. Also, as part of a background check, a potential employer may ask for permission to check the applicant’s credit -- without asking specifically about bankruptcy. In a case like that the applicant may choose to disclose a 10-year-old bankruptcy voluntarily, if the applicant knows that the information, for whatever reason, still appears on credit reports. The applicant may choose to include a letter explaining the 10-year-old bankruptcy and why it is no longer relevant, instead of allowing the employer to discover the bankruptcy through a credit check and arriving at a wrong conclusion.
AnnualCreditReport.com offers free credit reports from major credit bureaus TransUnion, Equifax and Experian. It is the only website specifically authorized by the Federal Trade Commission to distribute free credit reports under the terms of the Fair Credit Reporting Act. The federal law entitles people to three free credit reports during a 12-month period, including one from each of the major credit bureaus. Reports are available immediately to view or print through the website.