Escalating job losses, declining home values and weakening consumer confidence pushed over a million of individuals into bankruptcy in 2008—during the midst of the Great Depression. While filings have declined since then—with fewer than 775,000 people filing in courts last year—bankruptcy remains a word that strikes fear. However, after other options are considered, bankruptcy may be the only solution left to dire financial problems. Yes, it does affect your credit for a bit of time, but exactly how long?
A bankruptcy is known as public record information, maintained by the court where the case is filed. A credit reporting agency gets their information from the courts, and verifies it when there is a dispute. In fact, you can access these records through Public Access to Court Electronic Records (PACER), an online public access service that allows you to obtain case and docket information.
How Long Will Bankruptcy Stay on Your Record?
This depends on the type of bankruptcy you file. Under the federal Fair Credit Reporting Act, bankruptcies can be reported for 10 years from the filing date—not the discharge date. However, all major credit reporting agencies remove Chapter 13 bankruptcies 7 years from the date the case is filed. Chapter 13 bankruptcy is when a debtor pays back all or someone of their debt through monthly installments over a period of 3 to 5 years.
On the other hand, a Chapter 7 bankruptcy remains on your credit report for 10 years. In a Chapter 7 case, almost all unsecured, nonpriority debts are wiped, such as credit card debt, and property and nonexempt items are sold to cover debt.
Speeding Up the Process
As for the bankruptcy, a debtor doesn’t have to do anything to get it removed from their record after the 7 or 10 years are over. The bankruptcy is tracked by the creditor reporting agencies and automatically deleted from public records. However, there is the possibility of speeding up the process, but only under rare circumstances. If you want to remove a bankruptcy, it requires you filing a separate dispute with each of the three credit bureaus. The dispute can be over inaccurate information in your credit report or an inquiry into how your bankruptcy was verified.
While You Wait
Contrary to popular belief, you can get back to excellent credit after bankruptcy. While you’re waiting for it to be removed from your record, you can actively make efforts to improve your credit by staying current on your payments and getting a secured credit card.
If you want to discuss your options, please contact our Altamonte Springs bankruptcy lawyer at the Law Office of Russell S. Hershkowitz, L.L.C. We are well-prepared to help you with any debt troubles you may be facing.
Call (407) 753-4111 or contact us online to set up a free consultation.