Filing for bankruptcy might be your best option, a way to wipe the slate clean and get a fresh financial start. But, while taking the legal step can be quite helpful, it also has a significant impact on your credit.
Bankruptcy will stay on your credit report for seven to ten years, depending upon how you file. And as long as it remains, it will affect your credit score.
On the bright side, the damage bankruptcy does to your credit can diminish over time. You can be in a stronger financial position long before the bankruptcy comes off of your credit report.
Bankruptcy and Your Credit Report
The type of case you file determines exactly how long bankruptcy will remain on your credit report: The number of years until it comes off typically follows this timeline:
- Chapter 7 bankruptcies — 10 years from the filing date
- Chapter 13 bankruptcies — 7 years from the filing date
So, when time’s up, how do you remove bankruptcy from your credit report? It should come off automatically. If the deadline has passed and yours is still listed, contact the major reporting agencies.
Delinquent Accounts After Bankruptcy
Chances are, many of your debts have been delinquent for several months – or longer. These accounts may already be on your credit report. If so, regardless of when you file for bankruptcy, they’ll disappear seven years after the original delinquency date.
As a result, your delinquent accounts may start dropping off of your credit report before your Chapter 7 or Chapter 13 bankruptcy is removed. When your debts are no longer listed, your credit score should improve – even with the bankruptcy still on the report.
How Bankruptcy Impacts Your Credit Score
There’s no denying that filing for bankruptcy negatively affects your credit score. With a lower score, lenders will consider you to be a higher risk – and you could have trouble getting approved for loans and credit cards.
Fortunately, you can start rebuilding your credit immediately and minimize the impact of bankruptcy on your score. Paying your bills on time helps, and you can get a secured card that reports to all three major credit bureaus. After your score improves a bit, you might consider a retail or department store card for a further boost.
But, be sure to keep your budget in mind, and don’t take on more debt than you can afford. After all, your score will suffer if any of your new accounts become delinquent.
Do you have questions about bankruptcy? For expert answers and advice backed by decades of legal experience, turn to the Law Office of Davis & Jones, P. C., in Salt Lake City, Utah.
Our legal team, led by attorneys Lee J. Davis and Tony G. Jones, has helped more than 20,000 Utah residents find debt relief. To schedule a free bankruptcy attorney consultation with the Law Office of Davis & Jones, contact our office today.