Credit and Bankruptcy

Myth #1:  bankruptcy will solve my financial woes and clean up my credit.

Truth:    Bankruptcy can eliminate the debt, depending upon what Chapter you filed.  The collection agencies and creditors will stop calling you.  But that’s all.  Bankruptcy has a negative effect on your credit all the way around.

The reality is that the fact of bankruptcy is ADDED to your credit report.  Within a few months of the discharge, your accounts will reflect that they were included in the bankruptcy.  But the fact that you had a bankruptcy and that the accounts were written off stays on your credit report for 7 years in the case of Chapter 13, and 10 years in the case of Chapter 7.  An individual account will be deleted from your report 7 years after the original delinquency date.

If, after bankruptcy, you find that a creditor is still showing that your account is open and delinquent, you may dispute that with the individual credit reporting agencies to be corrected.  It will take at least two years after discharge of a bankruptcy before any creditor is likely to offer credit to you.

Myth #2:  I had tax liens at the time of my bankruptcy that should have been removed from my credit report.

Unfortunately, tax liens can stay on your report for 15 years.  If they were actually charged off during the bankruptcy, then they should come off the report when the bankruptcy is removed.  However, if they were not specifically noted on Schedule A of the bankruptcy filing, then they will probably still be on the report long after the bankruptcy has been removed.