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How bankruptcy affects a credit report

On Behalf of | May 1, 2017 | Bankruptcy

Virginia consumers might wonder how long a bankruptcy remains on their credit report and if it is possible to get it removed. In general, a Chapter 7 bankruptcy remains on a credit report for10 years while a Chapter 13 filing remains on a credit report for seven years.

However, there could be extenuating circumstances. In one case, a man decided to file for bankruptcy but then decided against it several months later. His credit reports still showed that the bankruptcy had been filed. It is difficult to stop the process of bankruptcy once it has begun, and as far as credit bureaus were concerned, the man had still filed.

While an attorney might have been able to review the man’s credit report and paperwork and find out if there is an error, for both him and people who do file for bankruptcy, the best approach is to work on rebuilding credit. A bankruptcy on a credit report has the greatest effect in the first two years after the filing, and a person can rebuild credit by paying bills on time and not accumulating additional debt.

Some people might have misconceptions about bankruptcy, including believing that their credit will be ruined permanently. For example, they might think that people have to file for bankruptcy because they are irresponsible. However, people may fall behind on their bills because of an illness, job loss, divorce or other life circumstances. A person might also think that they will lose all their assets if they file for bankruptcy, but if they qualify, a Chapter 13 bankruptcy allows them to work out a payment plan and keep all or some assets. An attorney can often review a client’s options for debt relief.