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How long will the credit bureaus report your bankruptcy?

On Behalf of | Nov 7, 2022 | Bankruptcy

Filing for personal bankruptcy will extend multiple, valuable protections to individuals and businesses struggling with debt. The act of filing leads to an automatic stay, which stops collection activity for a little bit. 

If the courts approve the bankruptcy filing, they will grant you a discharge of your qualifying unsecured debts. The downsides of bankruptcy include losing access to personal lines of credit when you file and having your credit score drop significantly.

People do start qualifying for credit cards shortly after receiving discharges, but early credit card offers after bankruptcy often reflect an individual’s lower credit score and bankruptcy records. How long will the record of your bankruptcy discharge affect your credit score?

There are rules regulating what the credit bureaus report

If businesses could forever damage your financial opportunities before mistakes made decades ago, would be very hard for people to live in a society that demands the use of credit. Most past-due accounts, late payments and collection judgments will only show up on your credit report for seven years after initially reported. 

The rules for bankruptcy are a little bit different. The type of bankruptcy that you filed determines how long it can show up on your credit report. The bureaus can report your discharge for 10 years after the courts grant it when you file a Chapter 7 bankruptcy. It will impact your credit opportunities for three years longer than any other blemish, but it will also allow you to remove all of the late payments and judgment accounts that you discharge.

Those who pursue Chapter 13 proceedings have to make multiple years of payments before discharge. The rules for the credit bureaus take those years into consideration and therefore only report the discharge for seven years, as they would with any other credit blemish.

Bankruptcy won’t have a permanent impact on your options

Although some of the consequences of bankruptcy are permanent, like the end to collection activity related to certain debts, the personal consequences, like a lower credit score, fade over time and eventually dissipate entirely.

Bankruptcy will mean some big adjustments for your finances, but it can also mean a fresh start when things have gotten out of control. Learning more about what life can be like after bankruptcy might help you overcome your fear of filing.

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