Bankruptcies can tarnish your credit reports for up to 10 years. But these steps could help you remove these derogatory items from your credit reports.
Times are tough, and you've decided to file for bankruptcy. But there's a catch: Your bankruptcy becomes a public record. Worse, it can stay in your credit reports for 7 to 10 years. In this guide, learn how to remove a bankruptcy and what else you can do after you've filed for one.
What is your biggest concern when considering debt relief or bankruptcy?Bankruptcy is a form of debt relief for people struggling to repay debts. It's a legal process that can eliminate debts and give you a fresh start. Additionally, bankruptcy allows you to restructure your finances to pay back debts over time. The most common types of bankruptcies for individuals are Chapter 7 and Chapter 13.
Chapter 7 vs. Chapter 13
Chapter 7 is referred to as a liquidation bankruptcy. When you sign up for Chapter 7, trustees liquidate qualified assets and use them to repay your creditors. [1] Chapter 13 is a repayment plan that lasts 3 to 5 years. You will create the plan and propose it to the court. If the bankruptcy court approves, an appointed trustee supervises your repayment plan and distributes the payment to your creditors. [2]
Bankruptcies can stay on your credit report the longest and affect your credit significantly. Here are two ways you can remove bankruptcy from your credit report.
What is your TOP priority when it comes to removing bankruptcy from your credit report?The next best thing to do is play the waiting game until your bankruptcy falls off. The record will impact your credit most in its early days. And though it will remain in your reports for years, the impact on your credit score will be less. Plus, this will be buried by more entries and records in your credit reports over time.
While you wait for the bankruptcy to disappear, you can start rebuilding your credit by paying debts not part of your bankruptcy petition.
How badly does Chapter 7 hurt credit?
Chapter 7 can deduct up to 240 points from your credit score. However, the exact impact depends on your credit history and score at the time of filing.
Does declaring bankruptcy erase debt?
Bankruptcy can help erase debts that you can't pay off anymore. However, take note that not all types of debts are eligible for bankruptcy, like child support, alimony, or certain unpaid tax debts.
Yes, you can boost your credit score after removing your bankruptcy. You may see more improvements as long as you continue to build a good credit history while waiting for your bankruptcy to go away. Credit builders can help you add more positive activity to your credit history for a monthly minimal fee. Over time, the initial effect of your bankruptcy wanes, and your credit score can increase.
Don't forget to pay your loans and credit cards on time. Missing a payment adds more negative items to your credit reports.
Did you know?
You can remove negative items from your credit report by yourself. Read guides to remove late payments and collection accounts from your credit report.
Removing bankruptcies can be tough. Credit bureaus only remove erroneous bankruptcy records or those that are too old to be part of your credit reports. Fret not! Bankruptcy isn't the end of the world — it's a clean slate for you. You can improve your financial habits, rebuild your credit history, and gain a better credit score over time.
Write to Alex Mambaje at feedback@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.
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