How long does Chapter 7 bankruptcy stay on credit reports?

When a consumer in Tennessee has more debt than they can manage, bankruptcy may be the solution. Consumers commonly choose Chapter 7 bankruptcy, which allows them to erase certain debts, but filing for bankruptcy can impact credit scores.

Chapter 7 bankruptcy and credit scores

Chapter 7 bankruptcy gets rid of debt more quickly than other types of bankruptcy through the liquidation of non-exempt assets. The debtor receives a discharge after they meet all requirements, which usually takes three to six months.

However, the bankruptcy can stay on the person’s credit report for 10 years, and it eventually drops off once the credit bureaus stop reporting it. Since bankruptcies are public records, lenders will be able to view it, making it more difficult to get loans.

While bankruptcy can remove many debts, it does not remove all of them. It only removes unsecured debts, such as medical bills and past-due utilities, which may still leave debts that impact credit scores. Bankruptcy also impacts debtors with higher credit scores more than it affects debtors with lower scores.

Rebuilding credit

A bankruptcy doesn’t mean that getting credit becomes impossible, but it can be trickier. The debtor has to prove to the lender that they are trustworthy, which may be done in several ways.

The debtor should check their credit report for errors, such as paid debts still listed, because they can cause denials. The top three credit reporting agencies offer one free credit report annually. Adding utility bills to credit reports may help boost scores.

Secured credit cards are another way to improve credit scores after bankruptcy. These cards require a deposit to cover non-payments and low credit lines, but the card holders may get increases if they keep paying on time. Some credits cards are specifically for rebuilding credit.

Debtors have the option to file pro se, but bankruptcy laws can be complex, and a single error could get the case dismissed. An attorney may help an individual file the right paperwork.

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