People who file for bankruptcy worry about how long it will stay on their credit report. The drive to improve your credit as soon as possible is a key consideration to deciding whether to file for bankruptcy.
The amount of time a bankruptcy stays on a credit report could be a deciding factor when choosing to file a Chapter 7 or a Chapter 13. One of the major advantages of a Chapter 13 bankruptcy is that it is removed from the credit report much quicker than a Chapter 7 bankruptcy.
The Fair Credit Reporting Act limits the time that bankruptcy notations can appear on a credit report to a maximum of 10 years from the date of filing – not from the date of discharge.
Another thing to think about is the way that a bankruptcy is reflected in your credit score. When a lender sees that you filed a Chapter 13 bankruptcy it shows that you did what you could to pay back a portion of your debts – that’s significantly better than a Chapter 7 bankruptcy, which means that your creditors did not get paid anything.
Of course, for many people, Chapter 7 bankruptcy may be the best way to jump-start your debt-free life and give you the chance to start over. After all, your credit report is what got you into trouble in the first place, and if you’re thinking about bankruptcy it’s best to consider your financial health rather than some arbitrary number on a credit report.