Bankruptcy is something that nobody wants to go through, however due to the economic times we have gone though it is a very common occurrence. In fact, over 1 million people file bankruptcy in the US each year. However, when someone is going through hardships and is forced to file bankruptcy many people look at it as a potential "fresh start". Of course filing for bankruptcy is going to negatively impact your credit, but if you are in the position where you need to file bankruptcy it is likely your credit is already being impacted.
The Good News: The credit scoring model allows you to have good credit again after bankruptcy particularly if you reestablish your credit and do not have any new negative items show up on your credit report. Once you discharge a bankruptcy you should pretty much be debt free which allows you to be in a much better financial position. From there it is just about creating good financial habits and it may take time, but you will be able to finance things again!
The Bad News: I have seen thousands of credit reports with bankruptcies on them and just about everyone I have seen has glaring inaccuracies and many of which can significantly impact the consumer’s credit scores. A bankruptcy is much more complex than just a typical tradeline on a credit report and because of that there are many errors that occur. Unfortunately as well there is not a lot of information out there for consumers going through bankruptcy that they can find out what to look for and how to get help. You can search online for questions about bankruptcy and how it reports on your credit all over and most of the information is incorrect and this leads to more of the misinformation spreading about credit we see online.
What you need to know about bankruptcy!
How long does a chapter 7 bankruptcy stay on your credit report?
A chapter 7 bankruptcy will stay on your credit report as a public record for 10 years from the file date of the bankruptcy. Contrary to popular belief the discharge does not determine how long the bankruptcy appears on the credit report, however many lenders will use the discharge date to determine how far after that date the consumer qualifies for a mortgage. The tradelines included in the chapter 7 bankruptcy will show up on the credit report for 7 years from the original date of delinquency on the original account. This goes for any tradeline on a credit report which is another common misconception. When an account first goes delinquent and is never made current that is the original date of delinquency. This means if a $5000 brand new collection was on your credit report and you included it in your bankruptcy it would come off your credit report 7 years from the original date of delinquency on the original account. Contrary to popular belief as well it doesn’t matter how many times an account is sold it does not restart the 7 years it is always from the ODD date on the original account.
How long does a chapter 13 bankruptcy stay on your credit report?
A dismissed chapter 13 bankruptcy will stay on your credit report for 10 years from the file date of the bankruptcy. Again the tradelines included in the bankruptcy would be on your credit for 7 years from the original date of delinquency. A discharged chapter 13 bankruptcy will stay on your credit report for 7 years from the file date.
The Bad News: Unfortunately, even though all of this is true it doesn’t mean that the data furnishers (credit, collection companies, etc.) that are reporting to your credit are reporting correctly. Mistakes are made all of the time and many times you may have no idea even by looking at the credit report. This is why many consumers and credit repair companies fail to correct these inaccuracies, because they either don’t know what is reporting inaccurate or they don’t know how to launch a proper investigation to get it corrected.
The Good News: CRE’s proprietary audit process has made us the best in the country at dealing with consumers with errors on their credit reports from bankruptcies or any other situation a consumer may encounter.
At CRE we work with fortune 500 companies, major universities, professional sports organizations, and many mortgage and real estate professionals around the country. We have a customized portal for our referral sources to login and track all of their referrals and we have a department dedicated to getting your referrals back to you as soon as they are qualified!
Get more information about bankruptcy and your credit report