Many of our clients approach us with questions about what bankruptcy will do to their credit reports. It is perfectly normal for our clients to be concerned about their credit scores and how bankruptcy will affect future opportunities to procure credit cards, loans and a new mortgage. Here are some of the questions we regularly hear from our clients.
How long will a bankruptcy remain on my credit report?
Bankruptcies will remain on a credit report for seven to 10 years, depending on if a Chapter 7 or a Chapter 13 was filed (as opposed to the date the debts were actually discharged).
- Chapter 13 bankruptcy is deleted from your credit report seven years from the filing date.
- Chapter 7 bankruptcy is deleted 10 years from the filing date.
Consumers do not have to contact a credit agency to have their bankruptcy removed. Whether it is a Chapter 7 or 13 bankruptcy, they are automatically removed after seven or 10 years.
What will bankruptcy do to my credit score?
Initially, a bankruptcy will cause your credit to drop significantly. However, we do see credit scores rebound very quickly afterward. Some of our clients are able to secure financing for a new mortgage and get into a new home within two to three years after the bankruptcy.
Will I be able to get a credit card and how will I rebuild my credit?
You will be surprised at how many credit-card offers you receive after filing bankruptcy. This is due to the fact that creditors know that you cannot file another bankruptcy for another 8 years after you initially filed. You can also choose to get a secured credit card to rebuild your credit.
What happens to my home and auto loans when I file bankruptcy?
Loans that are secured by property are also removed from your credit report, even if you retain the property. This means that mortgages and auto loans will no longer report to your credit after the bankruptcy. This can neither help, nor hurt your credit. It also means that if you default on your home or auto loan, and that property is repossessed, it will not be reported to your credit as a repossession.
For more information, contact your Yuba City bankruptcy attorney at (530) 751-2600.
Categorized in: Credit