How Long Will a Bankruptcy Stay On My Credit Report?

Written by Timothy Czekaj

For most people, bankruptcy provides an opportunity to eliminate or reorganize debt. Depending on the type of bankruptcy you file for, you may be able to wipe out your debts completely, or pay them back over three to five years. Unfortunately, since bankruptcy involves foregoing or altering how debts are repaid, this process can also result in your credit report being negatively affected.

If you have decided to start over with your finances, the bankruptcy attorney at Czekaj Law, LLC can help. With years of experience in the legal system, they can ensure you are not taken advantage of.

To find out how you can regain control of your finances, call (717) 275-9770 for a free consultation.

Chapter 7 Versus Chapter 13

Both Chapter 7 and Chapter 13 bankruptcy have distinct advantages; they are simply designed for different circumstances. Chapter 7 bankruptcy is often described as a “liquidation” where you may expect to sell off assets to repay creditors, but many people who file a Chapter 7 will not have to sell anything at all. If you decide to go with this option, a trustee will be assigned to your case, one who will oversee your case to ensure that assets do not exceed the exemption for the particular asset. As long as your assets are within the allotted exemptions, you can eliminate your unsecured debt without having to get rid of any personal property. In order to qualify for Chapter 7 bankruptcy, your disposable income must be minimal. This route is ideal if you have a “normal” amount of assets and you want your debts to be completely eliminated.

Chapter 13 bankruptcy, otherwise known as reorganization bankruptcy or “payment plan”, is for those who have the means to pay back some or all their financial debt, or who want to protect a secured asset that has fallen behind on payments. Chapter 13 bankruptcy involves paying back at least a portion of what you owe in monthly installments. In exchange, you may be able to keep all of your property; you will not have to give up your most prized possessions, such as your car or home.

Duration

If you declare bankruptcy, the major credit bureaus will be informed. As a result, you will have negative marks on your credit report for the foreseeable future. It will be difficult to get financing for a major purchase, and you may be denied employment opportunities, such as positions with financial roles.

When you file for Chapter 7 bankruptcy, you will have negative information on your credit report for approximately 10 years. However, the reporting period is only approximately seven years for a Chapter 13 bankruptcy. This is because the latter form involves paying back at least a portion of your debts, whereas Chapter 7 bankruptcy may not. Although these negative marks may hurt your credit, the effects will wane over time. Also, having a fresh start following a bankruptcy may allow for credit scores to improve more quickly. Continuing to battle substantial debt could prolong a bad credit score for even longer than the negative reports that result from a bankruptcy filing.

Seeking Help

An experienced bankruptcy attorney can give you crucial legal advice for your situation. For example, they may be able to tell you what you can expect during the process, or which type of bankruptcy would be ideal for your situation. They can also make everything easier for you by handling the complicated paperwork involved, and they may even be able to help you achieve your financial goals in the process.

A lawyer can also absorb the many stressful situations that come with filing for bankruptcy. Calls from creditors and court appointed trustees that would normally go to you can be handled by your legal representation. Overall, they can ensure that you are not taken advantage of.

Call Czekaj Law, LLC Today

If you are considering filing for bankruptcy, you need the help of someone who has worked in your area. The bankruptcy attorney at Czekaj Law, LLC have spent much of their careers helping people in Juniata County, Perry County, and the rest of central Pennsylvania. They understand the legal processes involved, and they are able to handle the technical aspects so that you experience minimal stress.

If you have questions about your case, or if you are ready to take action, call (717) 275-9770 today.