If you have decided to file for Chapter 7 bankruptcy, you need to know how this will affect your credit report. A Chapter 7 bankruptcy credit report will come with some changes, which can impact your credit score and future financial decisions.
At Grady BK, PLLC, our goal is to help our clients navigate the process of filing for bankruptcy and handling life after bankruptcy. We understand that this process can be overwhelming, which is why we always approach each client’s situation with empathy and understanding. We will help you understand your credit score after Chapter 7 and how this can impact certain financial decisions you may want to make. In this article, we will be discussing Chapter 7 bankruptcy credit reports and how your credit score will be impacted.
Understanding Chapter 7 Bankruptcy
There are different types of bankruptcy options available, but Chapter 7 bankruptcy is one of the more popular options. It is a type of bankruptcy that only lasts for 3 months and allows you to have certain debts discharged. When compared to other types of bankruptcy, it is considered to be a faster and easier solution that doesn’t require a repayment plan like Chapter 13 bankruptcy.
However, Chapter 7 has some types of debts that are not dischargeable, such as child support, student loans, alimony, and certain tax debts. There are some instances where you may not qualify for Chapter 7 if you do not meet the income limit, which would most likely qualify you for Chapter 13 bankruptcy.
How Does Chapter 7 Bankruptcy Affect Your Credit?
The number one question people have when it comes to their Chapter 7 bankruptcy credit report is the impact this has on their credit score. Unfortunately, there is no way around having your credit impacted as a result of filing for bankruptcy, but it isn’t always as bad as people think.
Most people see their credit score go down once they have filed for bankruptcy, but as each year passes, this will become less and less noticeable.
Bankruptcy is a public record, so many of the details in your bankruptcy case will be reflected in your credit report. This can include discharged debts, updates on the status of your accounts, etc. Although this is not necessarily a bad thing, credit lenders will be able to see these entries if you apply for credit in the future.
A positive aspect of the entries included in your credit report is that the accounts you have included in your bankruptcy filing will no longer be reported as unpaid or past due. Because of this, your credit report may not look as bad to credit lenders, especially if you have kept up on any remaining payments.
How Long Will Chapter 7 Affect Your Credit Score?
Another question many people have when considering bankruptcy is if their credit score will go up after Chapter 7 discharge and how long this will impact their credit score. Chapter 7 bankruptcy will stay on your credit report for a total of 10 years before being removed. During that time, the impact on your credit score will most likely be reduced year by year. You will see your credit score start to improve within the first year after filing for bankruptcy.
Something to keep in mind is that those with good credit may notice more negative impacts on their credit report after filing for bankruptcy. Whereas those who already have a poor credit report or poor credit score may not notice as significant a change.
You also will not have to initiate having bankruptcy removed from your credit report as this will be done automatically once the 10 year deadline has been reached.
When you are filing for Chapter 7 bankruptcy, you should take the additional step of hiring a New York bankruptcy attorney to represent you. Not only can they help you throughout the filing process, but they can also ensure you understand how this process works and how your credit score will be impacted.
How to Start Building Credit After Bankruptcy
Even though Chapter 7 bankruptcy will impact your credit report for 10 years, this doesn’t mean you can’t work towards improving it. The main thing you should do is keep an eye on your credit reports so that you have a thorough understanding of how they look and whether or not they are improving. We will give you information on how to rebuild your credit after you file the bankruptcy.
If you have credit accounts not wiped away in your bankruptcy or you applied for additional credit, you need to keep your balances as low as possible. In some instances, having these remaining credit accounts can be beneficial as long as you are able to make the necessary payments on time.
If your finances have stabilized, you could also consider applying for a credit builder loan or a secured card if you know for certain that you can cover the monthly payments. You may also have a family member who may allow you to be an authorized user on their credit card or a co-signer on a loan.
New York’s Top Compassionate Bankruptcy Attorney
Understanding how long Chapter 7 stays on your credit can be confusing, especially if you want to work toward improving your credit score after filing for bankruptcy. At Grady BK, PLLC, we can help you every step of the way as you file for bankruptcy and navigate what comes afterward. Having a New York attorney on your side can help to give you peace of mind and the knowledge you need to proceed with confidence when you declare bankruptcy.
At Grady BK, PLLC, we have handled hundreds of bankruptcy cases across New York and focus on providing a personalized experience for each of our clients. We will take into account your financial situation and your future goals to help you find the right bankruptcy option.
Contact us today at 315-299-9005 to discuss your financial situation with a bankruptcy attorney in New York. Our team at Grady BK, PLLC, is here to provide you with the legal assistance you need as you navigate the bankruptcy process.