How Does Bankruptcy Appear on My Credit Report?

The Fair Credit Reporting Act (FCRA) governs how negative information, like bankruptcy filings, should be disclosed on your credit report. This is so that creditors and lenders are made well aware of your history of financial issues before making major decisions like approving you for a credit card or lending you money. With that being said, please read on to discover how a bankruptcy history will appear on your credit report and how a seasoned Louisville, Kentucky consumer bankruptcy lawyer at Schwartz Bankruptcy Law Center can help the way creditors and lenders view your report.

How does a bankruptcy history appear on my credit report?

Even though certain debts may be removed from your immediate financial responsibility through a bankruptcy filing, their existence may not be removed from your credit report for a while. That is, these debts may be stated as “discharged” or “included in bankruptcy.” Of course, the debts that were still non-dischargeable in your bankruptcy will appear as active debts or delinquent accounts.

Generally speaking, your bankruptcy history itself may remain on your credit report for up to 10 years if it was a Chapter 7. This timeframe may be reduced to seven years if it were a Chapter 13. This time difference is because the complete discharge of most of your debts without repayment in your Chapter 7 bankruptcy may be viewed by credit agencies as a more severe offense. In turn, they see the Chapter 13 repayment plan as a more favorable approach, which they may reward by helping improve your credit score three years sooner.

How do creditors and lenders view a bankruptcy history?

The FRCA rules that it is necessary to disclose a bankruptcy history on a credit report for many years to follow, so that creditors and lenders can better comprehend your risk profile. At its surface, a bankruptcy filing signals financial distress, which may limit the number of creditors and lenders willing to work with you initially. But you must not feel helpless over this, and rather use this time to improve your credit in alternative ways.

For one, the impact of your Chapter 7 discharged debts on your credit report will lessen over time. In the meantime, you may take measures to demonstrate your responsible credit use through making consistent on-time payments with your existing credit cards and diligent borrowing practices with the existing lenders of your non-dischargeable debts. As for a Chapter 13 bankruptcy, you may rest easier knowing that some debtors qualify for credit cards and loans again within one to three years of completing their repayment plans.

At the end of the day, if you are still hesitant about taking the monumental step of filing for bankruptcy, consult with a competent Louisville, Kentucky consumer bankruptcy lawyer from Schwartz Bankruptcy Law Center to get the assurance and confidence you need to proceed. From here on out, we will be with you every step of the way.