How Long Does Chapter 7 Stay On Your Record?
Today we’re going to be talking about how long chapter seven bankruptcy impacts a consumer’s credit report. Hi, my name is Mike Ziegler. I’m the managing attorney for The Debt Fighters. We’re a Florida law firm focused on strategically eliminating serious debt. So let’s answer this a few different ways. First, just like any good attorney I have to give you the answer, but then all of the exceptions to the rule. So the answer to the question is that bankruptcy stays on a credit report for up to 10 years. That is can be longer than most information stays on a credit report. Most other information stays on credit report for seven years. However, the misconception is that a credit report is in the garbage can for the duration of that 10 year period and that’s just not true. There’s plenty that you can do proactively to improve your credit score. Most clients we work with have a better credit score than when they started, in about two years of filing for bankruptcy. And you can definitely get reasonable lending within a shorter period of time.
So let’s break that down in a little bit more detail. First, it’s important to take into consideration that for most people that file for bankruptcy, the alternative to a credit report that has bankruptcy on it isn’t a perfect 800 sport credit report it’s a credit report that either already has some deterioration from missed payments, or if it hasn’t already, it’s going to in the near future. The problem with missed payments is that that doesn’t just have impairing effect on the first month that they can miss payments, but for each payment that is missed, that can have a continued impairing effect on the credit report. So it’s like an anchor that keeps on sinking the ship. When you file for bankruptcy, that’s kind of like burning over the top of a wound. It stops the bleeding, even though it may have an impairing effect to begin with.
So after the bankruptcy is filed, the credit report should show zero balance and discharged in bankruptcy at the conclusion of the case. So you have cleared the field so you can rebuild good positive information on top of the negative. So what are some options for good positive information? One option is during the bankruptcy case, you can reaffirm using your secured debts, meaning your car or maybe your mortgage. And those debts may begin reporting again to show that you’re making those payments. Also shortly after the bankruptcy, you may be able to take out a secured credit card. So that’s going to be a card where you’re putting a deposit down and you’re making the payments, but if you would stop making the payments, the credit card company would take the deposit. Because the credit card company has some protection, they may be more lenient about offering the card.
Now let me say, I strongly encourage any bankruptcy filer to proceed with caution on taking out a new credit card, but if you were responsible and using the credit card just to put your gas money on paying it off religiously every month, then that can be a favorable tool to rebuilding your credit score. This is some information on your credit after chapter seven bankruptcy. If you have any questions about what your future looks like after a bankruptcy case or in anticipation of a bankruptcy case, please feel welcome to schedule a complimentary consultation with one of our qualified attorneys.
