One of the most common reasons my clients say they want to avoid bankruptcy is because it will stay on their credit report for so long. In fact, one of the first questions I’m asked in nearly every consultation is, “If I file for bankruptcy, how long will it stay on my credit report?”
In this blog, we are going to talk about bankruptcy, your credit report and your best options for getting a fresh start on a better financial future.
Bankruptcy Stays on Your Credit Report for 10 Years
That’s right, a Chapter 7 or Chapter 13 bankruptcy will stay on your credit report for 10 years. I realize that sounds like a long time. If you’re young, it could be your entire adulthood up to now.
The good news is that while that bankruptcy will stay on your credit report for 10 years, you can begin rebuilding your credit immediately after you file.
You might be wondering how it’s possible to even get credit after filing bankruptcy. Believe me, you can! And if you rebuild responsibly and control your debts, you can raise your score even with that bankruptcy still on your report.
I have a client in Aurora who was able to slowly rebuild her credit after filing for Chapter 13 bankruptcy. Most of her debts were discharged and creditors began offering her new credit with credit lines she could afford to pay.
Eventually, this client raised her score to over 800! Of course, she learned the hard lessons of bankruptcy, such as the absolute necessity to pay every debt on time, every single month. She did this and over time, was able to reap the rewards of good credit.
Bankruptcy and Your Credit Report
The fact is that letting your debts pile up with interest and maybe even penalties is actually worse for your credit score than filing for bankruptcy.
When you file bankruptcy, certain things happen that improve the way creditors look at you. For one, they know that since those bad debts were eliminated with your bankruptcy, they have a good chance of getting timely payments from you.
Second, they know you can’t file bankruptcy again for eight years. This improves their statistical chances of getting paid by you if they give you credit, and they like that.
If you’ve been avoiding having the “bankruptcy talk” because you’re worried about how long it will stay on your credit report, stop worrying. Worrying does nothing but postpone the problem and make your debt situation worse.