If you’re having financial difficulties and struggle with debt, you may be considering bankruptcy. While bankruptcy can help you achieve financial freedom, it does come with some downfalls. Because of this, you may ask yourself, how long will bankruptcy be on my credit report?
A bankruptcy can significantly affect one’s life. It can stay on credit reports for many years and limit your ability to get a loan to pay for big-ticket purchases. If you’re thinking about filing for bankruptcy, you should contact a Cleveland bankruptcy attorney from Luftman, Heck & Associates first to understand your options. Call us today at (216) 586-6600.
Most negative items – including bankruptcies – tend to stay on credit reports for up to seven years. This applies to Chapter 13 bankruptcies, foreclosures, late payments, unpaid taxes and collections. A Chapter 7 bankruptcy, however, will stay on your credit report for even longer – up to 10 years.
What’s the difference? Those with low incomes qualify for Chapter 7, which eliminates all debts. Most bankruptcies are Chapter 7. A Chapter 13 bankruptcy simply reorganizes debts and allows debtors to repay a portion of the debt while allowing them to possibly keep their assets. These debtors have higher incomes and the ability to pay back some money. While a Chapter 7 bankruptcy is quicker and easier, it’s more serious in nature, which is why it stays on the credit report for a longer period of time.
Based on the credit reporting agency, these bankruptcy timelines could differ, depending on if the bankruptcy was dismissed or discharged. For example, Equifax keeps discharged Chapter 7 bankruptcies for seven years, while dismissed bankruptcies stay on the report for 10 years.
Impact of Bankruptcy on Your Credit
A bankruptcy means that you are a credit risk. Lenders will be less likely to approve you for loans and credit cards. At the same time, lenders know that your past debts have all been discharged and you now have more disposable income. If you do get approved, however, expect to pay high-interest rates.
Keep in mind that a bankruptcy is less likely to affect your credit as time goes on. A bankruptcy that was discharged three years ago is better than one that happened just recently.
A Cleveland Bankruptcy Attorney Can Help You
If a new car or home is in your future, filing for bankruptcy can prevent your dreams from coming true. Call a Cleveland bankruptcy attorney from Luftman, Heck & Associates to learn more about the process.
Luftman, Heck & Associates can protect your assets such as your home and vehicles and help you get a fresh financial start. To learn more about bankruptcy, give us a call today at (216) 586-6600.