Bankruptcy and Your Credit Report

: Reese Baker & Associates

  Filed under: Credit

Bankruptcy usually does not make your credit any worse if you are already behind in your bills. Yor late and missed payments will already be reflected on your credit report.

Defaults will remain on your credit for seven years, while bankruptcy will stay on there for ten years. When you file bankruptcy, all lenders actions to collect on your debt will stop. Qualifying debts will be wiped away in bankruptcy, and you will no longer be legally responsible for paying them.

Chapter 7

Chapter 7 is the most popular form of personal bankruptcy. Most of your unsecured debt will be eliminated within three to six months. This type of bankruptcy is often referred to as an elimination bankruptcy. The trustee will look over your income and debts, and any non-exempt property may be seized and sold to satisfy your creditors. Most cases, you will not lose any assets due to the exemption laws.

Chapter 13

Chapter 13 Bankruptcy may be considered more favorable to future lenders. In this type of bankruptcy, you keep all of your assets and make court approved payments from a predetermined period of three to five years.

Soon after filing your bankruptcy paperwork you may start receiving offers of credit. Be leary of these offers as they often come with a high-interest rate. Also remember, you are trying to eliminate your debt and not add to it. You will not be able to discharge debt acquired after you have filed for bankruptcy.


If you make your payments on time either in Chapter 13 or after a Chapter 7 bankruptcy, you will show the lenders that you are a good candidate for credit and loans. Take some time to rebuild your credit. You usually do not have to wait the entire ten years before you can get loans with reasonable rates.

If you have questions about what happens to your credit report or any other bankruptcy questions, contact a Rio Grande bankruptcy attorney.