How Long Will Bankruptcy Stay on Your Credit Report?

It is possible to get overwhelmed by your debts. When this happens, you can opt to file for bankruptcy to protect yourself or your business. Bankruptcy is a legal form of debt relief regulated by federal bankruptcy courts. It can help prevent a foreclosure, wage garnishment, car repossession, and prevent your utility services from being discontinued.

While bankruptcy has its fair share of merits, it can also negatively impact your credit. It could affect your ability to get approved for loans with favorable rates or open a credit account. This tends to raise the question; how long will bankruptcy stay on your credit report?

If you are considering filing for bankruptcy, you should consult with a New York Bankruptcy Attorney.

How Does Bankruptcy Affect Your Credit Score?

Bankruptcy can help you avoid debt collection actions and foreclosures. In some cases, it could help you maintain your property and assets. Unfortunately, it could also have a negative impact on your credit score. A bankruptcy record could lower your score by up to 100 points. It could also reduce your eligibility for loans with favorable rates.

The good news is; this negative impact tends to diminish over time. The effect on your credit five years after you file for bankruptcy will be much less than the first year.

Removing Bankruptcy from Your Credit Report

Bankruptcy is regulated by the federal government. This means that your creditor, a credit bureau, or credit repair company have no powers to remove a bankruptcy from the record. As long as the bankruptcy is legitimate, it will remain on your credit report for the specified time.

That said, it is crucial to work with an attorney to ensure that bankruptcy is recorded on the right accounts on your credit report. All the involved accounts should show a zero balance.

Bankruptcy Timeline on Your Credit Report

Typically, a bankruptcy stays on your credit report for 7 to 10 years. A Chapter 13 bankruptcy involves an agreement to pay part or all of your debt in 3 to 5 years. It usually stays on your record for 7 years. A Chapter 7 bankruptcy, on the other hand, works by discharging all eligible debts immediately. It stays on your credit record for 10 years.

If a delinquent account is included in your bankruptcy, it will also remain on your credit report for 7 years. However, this timeline will begin when the account is reported as late, not when you file for bankruptcy. This means that all accounts that were delinquent before you filed will fall off your record before the bankruptcy.

While these timelines are fixed, you can dispute an error and have it removed.

Talk to a New York Bankruptcy Attorney Today

How long will bankruptcy stay on your credit report? Fortunately, not forever. With good credit habits and patience, you can have bankruptcy knocked off your record in 7 to 10 years. It will then have no impact on your future credit or loan eligibility.

Bankruptcy is a serious legal decision with far-reaching consequences. While it has its merits, you should consider other possible avenues before settling on it.

If you believe that you may have a need to file for bankruptcy, you shouldn’t navigate the process alone. Contact Pierce McCoy Bankruptcy to set up a consultation with an expert New York Bankruptcy Attorney.