How long does bankruptcy stay on credit report?

Bankruptcy, god forbid, that’s the worst thing to happen for any American citizen dealing with loans providers and banks. Don’t even think about filing for it as it could glimmer as a good option when you are suffering from a bad debt, however, it will deeply hurt your credit report.

Filing for it could be an easy way to set you free from past obligations, but it will stand as an obstacle hindering you from obtaining new credit or loan of any kind for long period, varying mainly from 7 to 10 years according to the type of filing.

 

Types 

There is Chapter 7 bankruptcy which is designed for debtors who have no regular income, little or barely no assets as well.

Upon filing for this kind a trustee is assigned to administer the debtor case. The trustee job is to pay back creditors in case there is an asset to sell after reviewing the documents and papers. In case there is no asset the creditors will get nothing.

Chapter 13 is another sort designed for debtors who do have regular income and able to payback their debts using a repayment plan.The debtor can keep his assets just in case of this case as long as he is able to payback using his income.

It’s worth mentioning that chapter 7 remains on the credit report for 10 years, while other one remains for less period, seven years, which is actually a big deal too.

 

What to do?

First of all you need to retain a suitable flow of income coming on regular basis by any mean either through a job, private business, equities, etc.

Since you have regular income, you can file for chapter 13 bankruptcy which is known as a re-organizational one, actually this one doesn’t hurt your credit report as much as the 7.

Under chapter 13 if the debtor catches up with missed mortgage payments and paid good portion of his debt it will be removed sooner, even before seven years. Also under this kind debtor can keep his assets.

As for for the other kind we think there is only one way to get out of it and regain the ability of getting loans; get a job and start gaining some cash on a stable basis.

Bankruptcy is a nightmare for both lenders and debtors. No bank by any mean seeks losing its money by lending unqualified people who tend to pass their payments time after another, that’s why it’s pretty difficult to wipe it out from a report.