How Long Does Bankruptcy Appear on a Credit Report?
July 14, 2023
Filing for bankruptcy is among the promising solutions through which individuals going through financial distress can achieve relief. However, bankruptcy often has a long-term effect on your creditor score and may turn a good credit rating into a poor or bad one. Information about your bankruptcy filing will likely remain on your report for quite some time, which could make it difficult to qualify for future loans.
At Kinnaird Law Firm, we're committed to offering outstanding legal services and guiding clients through the complex procedures involved in bankruptcy. As well-informed Colorado bankruptcy attorneys, we can enlighten you about your different bankruptcy options and how long they'll remain on your credit report. In addition, our trusted team will offer you insightful tips to help rebuild your credit rating gradually and achieve financial stability. We proudly represent clients throughout Douglas County, Colorado Springs, and El Paso County, Colorado.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy, commonly referred to as "liquidation bankruptcy," is designed to help individuals, couples, and businesses wipe out most of their general unsecured debts and achieve a financial fresh start. When you file for Chapter 7, the Colorado court will appoint an independent contractor (a trustee) who will oversee your bankruptcy case. Also, the trustee will gather and sell all of your non-exempt assets.
Non-exempt assets are assets and property that a trustee can sell in a Chapter 7 case. Examples include second homes, second vehicles, bonds, bank accounts, vacation homes, stocks, family heirlooms, cash, and other investments. The trustee will settle with some or all your creditors with the proceeds obtained from selling your non-exempt assets. However, you may still keep your exempt assets, such as your primary vehicle, home, household appliances, clothing, and furniture pieces.
Essentially, if you file for Chapter 7 in Colorado, the bankruptcy will remain on your credit report for ten years.
Chapter 13 Bankruptcy
Chapter 13, also known as the "wage earner's" bankruptcy, is available to consumers who make a decent income but are overburdened with substantial bills and debts. Filing a Chapter 13 petition allows you to pay back some or all of your debts using your future income over an extended period.
In Chapter 13 bankruptcy, the debtor will propose a structured repayment plan (usually over three to five years) to the creditor to repay their outstanding debts. Some of your unsecured debts may be discharged at the end of your Chapter 13 repayment plan. In addition, you will be allowed to keep your assets, including your vehicles and home, provided that you are consistent with your repayments.
If you file for Chapter 13 in Colorado, the bankruptcy will stay on your credit report for seven years. However, lenders will be able to see the bankruptcy filing in the public records section on your credit reports.
How Much Does a Bankruptcy Affect My Credit Score?
Your credit score can be described as a number (typically between 300 and 850) which is often used by creditors and lenders to assess your potential credit risks. These include your probability of paying bills and repaying loans on time. However, depending on the bankruptcy chapter you file under, your credit rating will decrease by 160 to 240 points, thus turning a good credit score into a poor one.
What Can You Do to Help?
Fortunately, you may start rebuilding your credit rating while bankruptcy still shows up on your report. Here are some things you can do to rebuild your credit score:
Monitor your credit scores frequently.
Review your credit reports annually and ensure that your reports are accurate.
Watch out for credit card offers.
Ensure that all applicable accounts are properly reported.
Apply for a secured credit card.
Apply for bankruptcy-friendly, unsecured credit cards.
Make sure you're zeroed out.
Become an authorized user.
Take out a credit-builder loan.
Carefully manage your reaffirmed debts.
Lastly, try as much as possible to avoid making previous mistakes.
Actually, you can start to rebuild your creditworthiness as soon as you close your case or receive your bankruptcy discharge. A seasoned bankruptcy attorney can work diligently with you to rebuild your credit rating and help make you become credit-worthy again.
Supporting You Through Anything
Filing for bankruptcy can affect your credit score adversely and stay on your credit report for an extended period. Nonetheless, you may gradually rebuild your credit score by making informed financial decisions. At Kinnaird Law Firm, our attorneys are poised and ready to assist and guide clients through the complex process involved in rebuilding their credit score post-bankruptcy.
As your legal counsel, we can evaluate your unique situation and craft a strategic plan to help you manage and repair your credit rating after your bankruptcy petition. Also, our reliable legal team will protect your rights, help you avoid previous mistakes and pitfalls, and eventually help you improve your financial situation.
Contact us at Kinnaird Law Firm today to schedule a one-on-one consultation with dedicated bankruptcy attorneys. We can help you navigate crucial decisions in your bankruptcy case and work diligently to improve your credit rating gradually. Our firm is proud to serve clients across Douglas County, Colorado Springs, and El Paso County, Colorado.