How Long Will Bankruptcy Stay on My Credit Report?
Bankruptcy is a tough canyon to cross. Aside from the fact that it makes up public every detail of a person’s financial life, it can also be felt as an admission of personal failure.
Society has a huge expectation that people will just figure things out financially, no matter what happens. However, the fact that the bankruptcy legal process exists acknowledges that the same society knows not everyone can get through life without help sometimes. The event can come about due to a job loss, a medical emergency or impact, a death in the family of an income earner, or similar.
As a result, the court’s process allows a filer, once approved by the bankruptcy court, to either reorganize their debt or be absolved of it after everything that can be paid is addressed. For Brooklyn bankruptcy filings, the Ursulova Law Offices can help.
Bankruptcy Stays on Your Credit Report
After going through bankruptcy, that does not mean the effect is over. Being a bankruptcy filer is the modern version of a scarlet letter financially, as the incident is then recorded for a number of years in a person’s credit history.
Traditionally, bankruptcy records have been assumed to last 7 years from completion, becoming a significant problem when trying to get credit again with new financing.
How Long Will Chapter 7 Bankruptcy Stay on Your Credit Report?
The current legal proceeding record can remain on a credit history for up to 10 years for a Chapter 7 bankruptcy filing. Many people are unaware of how much more severe a Chapter 7 proceeding is in their financial history. They only find out after the filing is complete and the damage is done.
How Long Will Chapter 13 Bankruptcies Stay on Your Credit Report?
The concept of a reorganization under Chapter 13 bankruptcy law means that the schedule of debt repayment gets reset under the monitoring of the court. It does not mean the debt is wiped out. Instead, the court makes adjustments to the amount of monthly payment or life of the debt to make it easier for the commitments to be met and paid.
Once the filer is complete, the court approves the completion of the reorganization plan, and the filing is finished.
Is the Legal System Unfair to Chapter 7 Filings?
Why does the harsh treatment on Chapter 7 filings last for so long? Part of the perspective is industry-driven in the financial world, and part of it is societal.
A Chapter 7 filing is a complete waiver of any remaining debt not paid by liquidating the filer’s remaining assets. In most cases, creditors lose any claim on the outstanding loans if the debt was not secured against property, such as in a mortgage. So, Chapter 7 dramatically impacts financing when a filer is approved and completed.
Clearly, society wants failed borrowers to learn how serious reneging on debt is. If everyone walked away from loans, the financial system as we know it would fall apart.
Additionally, the length of time ensures that the filer does not go and take out new loans and create the same problem immediately. With a sizable time gap, ideally, the borrower has fixed their income or financial problems and takes borrowing far more seriously.
Worried About Filing a Bankruptcy?
A bankruptcy lawyer in Brooklyn, Ursulova Law Offices helps clients navigate a bankruptcy filing in federal bankruptcy court and prepare for the long-term impact of the legal proceedings, including its impact on one’s credit report. In some cases, the guidance from Ursulova Law Offices’ expertise for a Brooklyn bankruptcy can help offset the inevitable difficulties of post-bankruptcy financial life or at least prepare a party completely for the ramifications before deciding to go into a filing in the first place.
