How Long Does a Bankruptcy Stay On Your Credit Report & How Long Does it Realistically Take to Recover From It?
How long does a chapter 7 bankruptcy stay on your credit report?
Here is the good and the bad of dealing with a bankruptcy
Having a bankruptcy appear on your credit report can be daunting and extremely intimidating.
It can seem overwhelming.
And while dealing with its effects may seem insurmountable…
They really don’t have to be.
We have great news about why a little bit later in this article! ????
How long will you have to deal with its effects?
There are two types of bankruptcy and there are two short answers.
Chapter 13 will stay on your report for 7 years. This term starts from the date that you file.
With a Chapter 13 bankruptcy (also known as a wage earner’s plan), the consumer, (that is still making an income) has the opportunity to repay back some or all of their debts on a payment plan over a period of time. Usually 5 years.
Chapter 7 will stay on your report for 10 years
With a Chapter 7 bankruptcy, all of your debts are discharged with no obligation to pay them back.
Which is better a Chapter 7 bankruptcy or a Chapter 13 bankruptcy?
If you take a look at this from a creditors’ point of view, Chapter 13 is better because they stand the chance to get their money back.
It is also advantageous from the consumer’s point of view because they will have a chance to pay off their debts, and a chance to rebuild their credit faster.
Which option makes more sense (Chapter 7 or 13)?
This is a tough one and one that we hear all the time.
See below to weigh the options.
Pros, and cons of a Chapter 13 bankruptcy
Let’s go over the advantages, pros, and cons of a Chapter 13 bankruptcy.
Pro – You can pay off your debts and rebuild your credit faster.
Pro – You’ll be able to keep assets such as your house and your car. (as long as you make your payment and stay compliant with your payment plan.
Pro – Attorney fees can be built into the term of the loan so you do not have to come up with out-of-pocket money. Just remember, that there is still a high chance of your bankruptcy being dismissed if you default on your loan. (See cons below).
Con – Making your monthly payments for 5 years is very difficult. Chapter 13 has a high failure rate because as life happens, and more debts get in the way, almost 3 out of 4 consumers fail to stay compliant with their payment plan.
Con – If your case is dismissed because you could not remain compliant with your payment plan, your debts will still be there and your interest juice will continue to run which may put you in a worse-off condition than when you started. :(
Con – If you default you will also still lose your assets including your house and car. Unless you are very certain that you will make enough money to live and pay down Chapter 13, it is a risky proposition that will just set you back. remember, life happens. Emergencies happen, the unfortunate loss of a jod and unforeseen health issues happen.
These variables must be weighed in heavily before choosing the Chapter 13 bankruptcy option.
Pros, and cons of a Chapter 7 bankruptcy
Let’s go over the advantages, pros, and cons of a Chapter 7 bankruptcy.
Pro – You can immediately get all of your debts wiped off of your plate.
Pro – Even though you may lose your assets, and hurt your credit, you will have way less or no debt with a fresh start.
Pro – You can still begin to rebuild credit right after your finalize your bankruptcy.
Con – You will forfeit assets that are not exempt from the Chapter 7 bankruptcy laws. This means you will most likely lose your larger assets like your house and your car.
Con – Attorney fees have to be paid upfront.
Conclusion
Every case is different and please check with the laws in your state but in most cases, Chapter 7 bankruptcy is usually the better option.
If you have already filed for bankruptcy and it is being reported on your credit report, see 5 strategies on how to get bankruptcy off credit report early.
What does bankruptcy do to your credit score?
Your score will drop
If you file for bankruptcy and finish the process, your credit score will initially drop drastically.
In most cases anywhere from 100 points up to 200 points.
That means a 720 score could go as low as 520.
If you are currently dealing with this situation we want to give you some uplifting information.
It is really only a temporary situation.
One that you can work through.
Keep your head up and remain optimistic.
You can get through this and we are going to give your best on solutions on just how to do it.
Stay positive and keep reading to see how you can rebuild quickly.
How long does it take to rebuild credit after chapter 7
Great question:
Here is the best answer.
If you get a couple of secured credit cards and manage them effectively, you can start to rebuild your credit and raise your score in the first year.
It is also a great idea to get added to a couple of credit lines of your family or friends.
This is known as piggybacking credit.
How soon will my credit score improve after bankruptcy?
In most cases, your score will start to go up just a little after a couple of months.
If you get a couple of secured cards and piggyback on a couple more and manage them effectively, your score can go up within the first year up to 100 points or more.
It usually takes about two years for a significant positive change.
The more that time passes the less severe the negative weight of the bankruptcy is on its adverse effect on your score.
Other ways to quickly improve your credit score after bankruptcy
Get unsecured credit cards
Getting a couple of unsecured credit cards with higher credit limits and keeping your balances low on them will help with drastically improving your score.
You just have to find a creditor to give you an unsecured line of credit.
Get a high-risk auto loan
Getting an auto loan and paying it off will help your score tremendously as well.
There are creditors who target this space and will give you an auto loan with bad credit.
Your auto loan rate will be through the roof, but it is still worth it in a small price to pay to improve your credit as quickly as you can.
A good strategy would be to go to a smaller auto dealership and finance the least expensive car that they will let you finance so that you can pay it off quickly.
Get a co-signer
Try to find smaller creditors that are willing to give $2,000 dollar personal loans and have someone cosign for you when you take out the loan to improve your chances of getting it.
Then simply pay off the loan.
That will help you establish new credit and help you to raise your credit score.
Get the bankruptcy removed from your credit report
This one is a little bit more difficult to do but there are credit laws and loopholes that protect you as a consumer where this option may very well be a viable option.
The company we are recommending below (Sky Blue Credit) has a lot of experience with getting bankruptcies removed legally.
Here are two other ways to get bankruptcies removed
Leverage the legal loopholes in the Smart Money Secret system.
Leverage these 5 executable strategies to get existing bankruptcies removed from your credit reports legally.
Do you want a little help with rebuilding your credit after bankruptcy?
Sky Blue Credit is a professional company that has experience with bankruptcies and rebuilding credit. They also have a 90-day money-back guarantee.
Is it possible to get credit after a bankruptcy?
Yes, it is.
There are credit card companies that specialize in giving credit to consumers that have gone through bankruptcy.
Most of them are secured lines where you have to deposit money into an escrow bank account and use that as your credit limit.
They will charge very high fees and interest rates as you may be considered a high risk, but it is worth it because you get the chance to immediately start rebuilding your credit.
Just make sure to manage your new credit lines responsively.
How long does it take to establish credit after bankruptcy?
Two years.
On average most consumers who manage their payments 100%, and keep any balances low for two straight years after their bankruptcy are then usually able to establish new credit (meaning getting unsecured credit cards or loans).
How long does it take to fully recover from bankruptcy?
You can initially start recovering within a few months
But only time will allow you to fully recover.
As we stated earlier, a Chapter 13 bankruptcy will remain on your credit file for 7 years.
And a Chapter 7 will remain for 10 years.
You can still almost fully recover after just 2 – 5 years if you are managing your new debt and credit situation wisely.
But unfortunately to 100% fully recover, you would need to wait for the bankruptcies to either drop off due to the statute of limitations, or be removed.
Yes, bankruptcies can be removed (before the statute of limitations) for a real legal loophole if any applies to your situation.
Final thoughts
Going through a bankruptcy can be very difficult.
But it is not the end of the world.
Sometimes it can provide much-needed relief because it will help you to clear your existing debts and ease your mind a little bit.
Just think about staying positive and starting over and ride out the time.
It will go quicker than you think if you work hard to manage your new credit life better.
You can still establish very good credit during the time that you waiting for word the bankruptcies to drop off.
Some creditors don’t put as much weight on it which is good for you.
We certainly wish you the best to get through it.
Don’t worry you will.
You don’t have to do it on your own
If you need help, advice, or a free consultation, you can contact Sky Blue Credit.
This firm has over 30 years of hands-on experience with credit repair laws.
They do not have pushy salespeople that answer the phones, they have a staff that can set you in a positive direction.
Other recommend reading
How to effectively get an existing backruptcy removed from your credit report.
Check out our full in-depth review of the Smart Money Secret system. This system shows you real legal loopholes to use to get negative items removed from your credit reports permanently.
Here are more do it yourself strategies (using 5 powerful laws) to leverage real legal credit repair loopholes to repair your credit.
Read our guide on how to raise your credit score fast. Tip #6 is all of the secret sauce that you will ever need.
Visit our credit repair blog for professional credit repair tips and tricks.
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