Bankruptcy Information Can Be Wrong
You may want to hire a credit repair attorney if your record shows inaccurate financial or bankruptcy information. They can speak with credit reporting agencies, credit card companies, or credit card issuers if you are having personal finance trouble. An attorney can also step in if a company does not discharge your debt correctly or you fall into a credit counseling scam.
Remember: A bankruptcy discharge legally stops creditors from harassing you. You have rights if a company is not following the process or respecting your bankruptcy filing.
How Will Bankruptcy Affect My Credit
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In a Nutshell
Filing bankruptcy does not ruin your credit forever! If you need debt relief but are worried about how a bankruptcy affects your credit rating, this article is for you.
Written byAttorney Andrea Wimmer.
Bankruptcy & Your Credit Score
Unlike what you may have heard – filing bankruptcy does not ruin your credit forever! Itâs one of the biggest myths about bankruptcy.
In reality, many people see their credit score go up almost immediately after filing bankruptcy. If you need debt relief but are worried about how bankruptcy affects your credit rating, this article is for you. Letâs start at the very beginning…
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Rebuilding Your Credit After Bankruptcy
You donât have to wait until your bankruptcy is removed to begin rebuilding your credit history. The good news is that as time goes by and you begin to reestablish your credit, the bankruptcy notations will begin to affect you less and less.
Here are some ways to help your credit recover from bankruptcy:
Thanks for asking.
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Some Bankruptcy Success Stories
Henry Ford is perhaps the most famously successful post-bankruptcy filer in American history. In fact, this industrialist and entrepreneur filed bankruptcy twice before he found success.
Fords first motor vehicle invention was the 1896 quadricycle. He quit his day job to produce the vehicle full time. That was a mistake. Because he could not balance the accounting aspects and production aspects of his business, Ford could not repay his investors, and his Detroit Automobile Company filed bankruptcy.
A few years later, Ford started the Henry Ford Company. But Ford was an inventor and not a marketer. The company produced high quality products, but they did not catch the publics eye, and sales never got off the ground. So, this company filed bankruptcy as well.
These two bankruptcies taught Ford some very hard lessons, which he learned well. His third company, the Ford Motor Company, was infinitely more successful.
Other post-bankruptcy success stories include personal finance guru, Dave Ramsey and chocolate magnate, Milton Hershey.
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Speak To An Experienced Gadsden Alabama Bankruptcy Attorney Today
This article is intended to be helpful and informative. But even common legal matters can become complex and stressful. A qualified bankruptcy lawyer can address your particular legal needs, explain the law, and represent you in court. Take the first step now and contact Dani Bone & Sam Bone to discuss your specific legal situation at .
Early Removal Of A Bankruptcy From Your Credit Report
When you file for bankruptcy, it will appear on your credit history. Chapter 7 bankruptcy cases stay on your credit report for 10 years and Chapter 13 cases stay on for seven years. After this time passes, the bankruptcy should disappear from your credit report automatically.
Creditors are required by law to only report accurate information to credit bureaus. This requirement protects consumers from having any inaccurate information on their reports that would unfairly harm their credit. But this also prevents information from being removed when it is correct. So when you have a bankruptcy case on your credit report and itâs accurate, it canât be removed early.
That said, if the bankruptcy entry has incorrect information or has been wrongly entered, you have the right to dispute it. The Fair Credit Reporting Act gives you the legal right to dispute inaccuracies and errors on your credit report. If you challenge an entry and the agency that reported the entry canât defend it, then theyâre required to remove it.
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Can Chapter 7 Bankruptcy Be Removed From My Credit Report Before 10 Years
Upsolve is a nonprofit tool that helps you file bankruptcy for free.Think TurboTax for bankruptcy. Get free education, customer support, and community. Featured in Forbes 4x and funded by institutions like Harvard University so we’ll never ask you for a credit card.Explore our free tool
In a Nutshell
Chapter 7 bankruptcy stays on your credit report for 10 years. Thereâs no way to remove a bankruptcy filing from your credit report early if the information is accurate. Bankruptcy will hurt your credit at first, but the effect will lessen over time. And in the long term, it can help you get your financial life back on track.
Even though Chapter 7 bankruptcy may be a good long-term solution to your financial problems, it can create issues in the short term. One issue is that it stays on your credit report for 10 years, which can make future lenders wary of giving you a loan. This might make you desperate to find a solution, such as reaching out to credit repair companies to see if they can help. To save you some time, so long as the bankruptcy is completely accurate, it canât be removed from your credit report.
Though Chapter 7 may hold you back temporarily, there are many ways to improve your credit following a bankruptcy filing. This article walks you through how bankruptcy works and how to improve your credit.
How To Explain A Bankruptcy
There may be instances in the future when youre applying for a loan and you must explain a bankruptcy. Again, because everyones situation is somewhat unique, the way in which you may go about doing so can depend on the specific details of your case. However, whats most essential is that you not be dishonest when writing a bankruptcy explanation letter.
If you ever have to write a bankruptcy explanation letter, you dont necessarily want to make any statements that indicate you had to file for bankruptcy simply because you were unreasonably irresponsible. On the other hand, you do want to explain why various life circumstances may have resulted in you finding yourself in a financial position that made filing for bankruptcy a wise decision.
You also should explain that the bankruptcy has been dealt with. Your goal is to indicate to a potential lender that you have taken appropriate steps to address the situation and improve how you manage your finances going forward. Although you may not need to work too substantially with an attorney during this process, when you first file for bankruptcy, your lawyer can potentially offer advice on how to explain your bankruptcy in the future.
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Contact An Experienced North Carolina Bankruptcy Attorney
If you are dealing with overwhelming debt, schedule a free consultation today with our compassionate consumer bankruptcy attorneys to discuss your options. At Sasser Law, youll work directly with a board-certified bankruptcy attorney. We pride ourselves on giving straightforward and honest legal advice.
The Sasser Law Firm serves individuals and businesses throughout North Carolina, including in Wake, Harnett, Johnston, Durham, Orange, Granville, Vance, Franklin, Warren, Nash, Lee, Chatham, and Moore counties.
This post was originally published in October 2019 and has been updated for accuracy and comprehensiveness in August 2021.
Does Bankruptcy Wipe Your Credit Report Clean
Myth: All bankruptcy debts will be wiped clean from your credit report.
The truth: While bankruptcy may help you erase or pay off past debts, those accounts will not disappear from your credit report. All bankruptcy-related accounts will remain on your credit report and affect your credit score for up to seven years or as long as they normally would, though their impact will diminish over time.
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How Long Does It Take To Remove A Bankruptcy
If you are on the verge of bankruptcy or just had to file, you may be wondering how long youll deal with the aftermath of your decision. This all depends on when you actually filed for bankruptcy, as well as the type of bankruptcy you filed for.
Heres how long bankruptcy stays on your credit reports:
- Chapter 7 bankruptcy, which lets low-income people liquidate their possessions and eliminate debt, stays on your credit report for ten years.
- Chapter 13 bankruptcy, which allows consumers to organize and repay some of their debts while eliminating the rest, stays on your credit report for seven years.
Note that these timelines start on the filing date for your bankruptcy, and not from the date your bankruptcy is discharged.
Consumers who have filed bankruptcy are right to worry about just how long bankruptcies linger on their credit reports, but its important to note that you may see less impact to your credit as time goes by. Generally speaking, newer bankruptcies wreak the most havoc on your credit score, so a bankruptcy filed three months ago is much more damaging than one filed eight years ago.
Monitoring Your Credit Report
Also, itâs essential to examine your credit report for mistakes after your discharge. If you notice an error, correct it promptly so that it doesnât derail your efforts to rebuild your credit. You can check your credit report for free using annualcreditreport.com . Youâre entitled to one free copy per year from each of the three reporting agencies. Requesting a report from one of the three agencies every four months is an excellent way to keep track of changes. Also, all of the three reporting agencies allow you to file a dispute online.
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Who Should You Hire For Your Bankruptcy Case
First, look for attorney’s qualifications. The National Trial Lawyers Associations selected Dani Bone as a Top 100 Lawyer in the Country for 2018. The National Trial Lawyers Associations selected Sam Bone as a Top 40 Lawyer Under 40 for 2015. Next, look at our reviews online for our services and compare them to other attorneys in the area to decide whether we should be your lawyer.
Bankruptcy And Your Consumer Credit Report
Chapter 13 does not remain on your credit report as long as Chapter 7. Generally, Chapter 13 is considered a less harsh remedy as it remains on your credit report for only seven years from the filing date. Chapter 7 has a more harsh effect as it remains on your credit report for 10 years. In some instances, a Chapter 13 that is later dismissed or not completed can also remain on your credit report for 10 years.
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You Can Take Steps To Improve Your Credit Over Time Even Before The Discharge Disappears
Even though the bankruptcy discharge will stay on your credit report for 7 or 10 years, the effect of the bankruptcy on your credit score will diminish over time. If you keep yourself financially responsible following the bankruptcy, you should see your credit score improve. In addition, many lenders will work with you even after a bankruptcy based on such factors as current income, current assets, co-signer credit and the fact that your bankruptcy has eliminated debt.
After filing for bankruptcy, check your credit report for errors. Make sure that only the accounts included in the bankruptcy are listed as discharged or included in bankruptcy. It will likely take two or three months after the applicable time period is up for these accounts to be properly updated on your report the same goes for when they should be removed from the report. If you know that an account was delinquent prior to filing for bankruptcy, make sure that the account falls off at the appropriate time . Make sure that the other negative marks are removed after the appropriate time period. If there are mistakes, notify the credit bureaus and dispute the errors. A qualified debt relief attorney can help you correct these errors.
You can also take steps to build your credit back up by, for example, getting a secured credit card. If you make all of your payments to the secured card in full and on time, and keep your credit utilization rate low , your credit will improve.
How Can You Rebuild Your Credit After Bankruptcy
While your credit score will take a hit after bankruptcy, there are steps that you can take to begin building a positive credit history again. First, if there are any credit accounts that weren’t included in your bankruptcy, make sure that you continue to make on-time payments on them each month.
Second, applying for a secured credit card can be one of your best options for rebuilding your score. Since these cards require a security deposit, which limits the issuer’s risk, they’re easier to qualify for with poor or damaged credit.
Payment history on secured cards is reported to the credit bureaus just like regular credit cards. So making consistent on-time payments on a secured card can improve your score over time which can open up more credit opportunities for you down the road.
Before you apply for a secured card, check to make sure that it reports cardholder payment activity to all three major credit bureaus. And to see the biggest positive impact on your score, try to keep the credit utilization rate on your secured card below 30%.
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How Long Does Chapter 7 Stay On Credit Report
The proceeds of the sale go to paying back your creditors, and the rest of the debt is discharged. However, with Chapter 7, you still have to pay things like student loans, alimony, child support, and taxes. The negative impact of filing for Chapter 7 is immense as it stays on consumers credit reports for 10 years. Plus, if you get into trouble again, you cannot file for Chapter 7 again for eight years.
How Chapter 7 Works
A chapter 7 case begins with the debtor filing a petition with the bankruptcy court serving the area where the individual lives or where the business debtor is organized or has its principal place of business or principal assets. In addition to the petition, the debtor must also file with the court: schedules of assets and liabilities a schedule of current income and expenditures a statement of financial affairs and a schedule of executory contracts and unexpired leases. Fed. R. Bankr. P. 1007. Debtors must also provide the assigned case trustee with a copy of the tax return or transcripts for the most recent tax year as well as tax returns filed during the case . 11 U.S.C. § 521. Individual debtors with primarily consumer debts have additional document filing requirements. They must file: a certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling evidence of payment from employers, if any, received 60 days before filing a statement of monthly net income and any anticipated increase in income or expenses after filing and a record of any interest the debtor has in federal or state qualified education or tuition accounts. Id. A husband and wife may file a joint petition or individual petitions. 11 U.S.C. § 302. Even if filing jointly, a husband and wife are subject to all the document filing requirements of individual debtors.
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Get Yourself A Secured Credit Card
These types of credit cards are specifically designed for people with bad credit scores. They often have high annual fees and interest rates, but they give you a chance to repair your low credit score.
But there are some rules you should follow if you go this route.
Dont just take your card and start spending. You should never spend any more than 30 percent of your limit. And whatever you spend, you should pay back each month to keep you from increasing your debt.
How Long Does A Chapter 13 Bankruptcy Stay On Your Credit Report
A Chapter 13 bankruptcy stays on your credit reports for up to seven years. Unlike Chapter 7 Bankruptcy, filing for Chapter 13 bankruptcy involves creating a three- to five-year repayment plan for some or all of your debts. After you complete the repayment plan, debts included in the plan are discharged.
If some of your discharged debts were delinquent before filing for this type of bankruptcy, it would fall off your credit report seven years from the date of delinquency. All other discharged debts will fall off of your report at the same time your Chapter 13 bankruptcy falls off.
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Can You Remove A Bankruptcy From Your Credit Report
Unfortunately, if a bankruptcy thatâs appearing on your credit report is legitimate and is being reported accurately, itâs highly unlikely that a creditor or credit bureau would agree to remove it.
However, youâll want to check your credit report to make sure that the right accounts were reported as being involved in the bankruptcy. Youâll also want to make sure that all the accounts that were part of the bankruptcy are showing a balance of zero.
If accounts that werenât part of the bankruptcy are being reported as included, you can dispute the errors to have them removed. Or if included accounts are still showing an outstanding balance, you can dispute this as well.