September 29th, 2012

How Does Bankruptcy Impact My Credit?

It is no secret that filing a Chapter 7 or Chapter 13 bankruptcy may adversely impact a person’s credit. As long as the bankruptcy is listed on your credit report, it will be factored into your score. Before filing bankruptcy, a debtor may want to consider other options to try to minimize credit damage. But be careful. Other options, such as enrolling in a debt settlement company, may not solve the problem and could cause you to waste a lot of money.

Your bankruptcy filing will remain on your credit report as follows:

  • Chapter 7 bankruptcy will remain on your credit reports for 10 years from the date of the filing.
  • Chapter 13 bankruptcy will remain on your credit report for 7 years from the date of filing, provided that you complete all payments.

Note that these time frames refer to how long your bankruptcy filing will remain on your credit report. All of the individual accounts that you included in your bankruptcy should be removed from your credit report after 7 years from the date of your bankruptcy filing.

Remember that bankruptcy will not hurt your credit forever. As the old song goes, “time heals everything”. The more time that passes after your bankruptcy filing, the more your credit score will rehabilitate itself, even before the bankruptcy notation has been removed from your credit report. In fact, most debtors will receive credit card offers within a couple of months after their bankruptcy has been successfully completed. It is not uncommon for a debtor to receive an offer to finance a new vehicle within a month or so after the bankruptcy filing.

Most debtors already have poor credit by the time they initially consult with an Arizona bankruptcy lawyer. And at some point, a debtor must take into account his or her priorities. Are you concerned about when your credit will improve enough to get a new credit card or home mortgage?  Or should you be concerned about putting food on the table, buying health insurance, and clothing your kids?

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