Bankruptcy can be a helpful step for people with overwhelming financial obligations to eliminate or reorganize their debt. A Chapter 7 bankruptcy can stay on your credit report for 10 years, and a Chapter 13 filing will remain for seven to 10 years.
Accounts included in a bankruptcy filing will be listed as “discharged” or “included in bankruptcy” on your credit report, which can hurt your chances for a loan or a credit card. However, those accounts are no longer listed as “unpaid” or “past due,” and your credit scores will start rebounding, providing you remain financially responsible.
Recovering from a bankruptcy filing
After filing for bankruptcy, rebuilding your credit can be a long process, but it’s one that many have done successfully. A few steps to take include:
- Make a list of debts: These are the accounts included in your bankruptcy which you need to check on your credit report. After the debts are discharged, it takes a couple of months for the updated information to appear. Make sure they are labeled as “included in bankruptcy,” “discharged” or similar language.
- Check for errors: Make sure you thoroughly check your credit report for mistakes at least every few months and that the negative comments are removed from your accounts.
- Consider a secured credit card: You can start to rebuild your credit using this type of credit card, where you must place a deposit with the issuer. They are typically for people with poor credit or someone with no credit history.
Bankruptcy can be a first step to rebuilding your credit
Financial problems usually don’t arise overnight, and the path to rebuilding your credit can take some time. However, bankruptcy is often a good step for many people to regain control of their finances. If you live in New Jersey or Pennsylvania, an experienced bankruptcy attorney can help you find the best option for your situation and help you with the complicated process to regain your financial freedom.