Removed in 7 to 10 yearsThe time before a bankruptcy is removed depends on your individual chapter of bankruptcy filing. If you filed a Chapter 7 Bankruptcy, the bankruptcy will be removed from your credit report 10 years from the date you filed. If you filed for a Chapter 13 Bankruptcy, the bankruptcy will be removed 7 years from the date you filed; not from the time of discharge. Keep in mind that a Chapter 13 bankruptcy involves a debt repayment plan so typical discharges occur 3-5 years after filing. Fortunately, in both filings, the bankruptcy is removed after the time of filing and not the date of discharge.
Rebuild Your Credit ImmediatelyThese numbers are good to keep in mind and should give you hope that the bankruptcy will eventually be removed. But 7 to 10 years is still a very long time. Fortunately, you can start rebuilding your credit immediately after you file for bankruptcy. Keep in mind that rebuilding your credit is not the equivalent of removing the bankruptcy altogether. Your credit score may go up as you rebuild your credit, but the bankruptcy will still show up on your credit report when it is being reported. Only after the above mentioned time has elapsed will the bankruptcy actually be removed from your credit.
Why Rebuild? By taking steps to rebuild your credit history, you may find it easier to acquire new credit despite the stain of bankruptcy. Lenders will see the bankruptcy, but they will also see the changes you have tried to make. This isn't to say you can go out and buy a new home immediately; but by rebuilding your credit steadily you'll find it much easier to deal with a bankruptcy in your past.
Troubles You Might Face and the Price You Will PayDuring the time when the bankruptcy is still on your credit report, you will certainly run into financial obstacles. Initially, it will be harder to acquire new credit and you may have to start with non-traditional forms of credit. This can involve secured credit cards or paying abnormally high interest rates on your accounts (one more reason not to carry a balance on your credit cards!). This is a phase you must endure while rebuilding your credit and is likely to affect you until the bankruptcy is removed.
Bankruptcy is a serious financial decision and as you can see, it can easily affect your financial future for many years. Before considering a bankruptcy, be sure to evaluate possible alternatives such as debt consolidation or credit counseling. In addition, speak to financial advisors or bankruptcy attorneys to get a better understanding of how a bankruptcy will affect your credit history.
US Courts-Bankruptcy Basics
About the Author:
Heindrick So works for a Bay Area Real Estate company that specializes in residential wholesale lending. His work experience is comprised mostly of sales and marketing background which included a high end media sales position at Magnolia Hi-fi. Heindrick is also in his final year of pursuing his Bachelor's Degree in Electrical Engineering at San Jose State University.