How Long Does Bankruptcy Stay On Your Credit Report?
When you file for bankruptcy, your credit report will be affected for a time. If you need to file for bankruptcy, learn more from DoNotPay
There are times when everything has gone wrong and you find yourself buried in debt. Your credit score never seems to rise, and you don't see any other way out of the financial nightmare you find yourself in. You may have made some unwise choices when it came to bill paying, or perhaps an unplanned medical crisis wreaked havoc on your savings. No matter what has transpired, you find yourself looking at your options, and bankruptcy is one of them, but you have a lot of questions before taking the plunge.
Filing for bankruptcy can provide you with an opportunity to get a fresh start. It is always wise to look to every other avenue you may have before turning to this step. For some, debt consolidation is a good alternative as long as you can stick to the plan and tighten your belt for a while. When you are in debt this deep, you tend to make some unwise decisions to help your family get by. Temporary solutions such as payday loans can only land you in even more trouble with their high-interest rates and short-term demands.
There are good things and bad things about bankruptcy. Getting a fresh start and relief from your bills can be a relief. Unfortunately, you may lose things in the process, or you do not want to live with the stigma of bankruptcy towering over you. Not only that, not everyone can qualify for bankruptcy. You need to know what to expect before you pursue this option. You also need to assess the kind of debt that you are trying to get rid of and confirm that the amounts are valid, because some very large ticket items cannot be discharged during bankruptcy. Non-dischargeable debts include student loans, child support, alimony, and taxes.
What is Bankruptcy?
For many, bankruptcy is a sign of failure. For others, it is a much welcomed fresh start.
Bankruptcy is a legal process that assists both individuals and businesses in eliminating all or part of their debt. In some cases, bankruptcy will help you repay a portion of the debt you owe, while other cases are focused solely on debt relief. Not everyone can qualify for bankruptcy, and there are some repercussions for which you will need to be prepared. Going through bankruptcy can be a grueling process as you try to follow all the rules and regulations the federal government has placed on bankruptcy proceedings. There are two types of bankruptcy, Chapter 7 and Chapter 13.
Chapter 7 Bankruptcy
A Chapter 7 bankruptcy is also known as "straight" bankruptcy. With this type of bankruptcy, you will need to learn what type of assets you are allowed to keep and which ones will need to be sold. Any money you make from the sale of assets once you have filed must go to your creditors. Once any of your savings and sales from assets is paid to your creditors, the rest of the debt that you owe is eliminated. You will be assigned a court trustee to oversee the sale of assets. This type of bankruptcy will remain on your credit report for ten years. If you find yourself in debt again, you will not be allowed to file another Chapter 7 bankruptcy for eight years.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy allows you to keep more of your assets in exchange for either a full or partial repayment of your debt. The bankruptcy court will negotiate a repayment plan over three to five years. Once you meet the parameters of the plan and repay what you have agreed to, the remainder of your debt is discharged, even if you only repaid a fraction of the amount. Chapter 13 bankruptcy does not affect your credit as heavily as Chapter 7, and will only remain on your credit report for seven years. If necessary, you can file another Chapter 13 bankruptcy two years after the discharge of your current case.
What Happens to My Credit if I Declare Bankruptcy?
Your credit will change with a bankruptcy on your record, but for some, the change can be good for them.
As we just discussed, a bankruptcy will remain on your credit report for a period of seven to ten years, depending on whether you filed Chapter 7 or Chapter 13. With your overwhelming debt, there is a good chance you have already lost the ability to have credit cards. For many, there was never even a chance to get anything beyond a secured credit card, to begin with. Most creditors will figure that you will not want to go through another bankruptcy, there is less of a chance that working with you will bring about bad debt.
Following a bankruptcy, you will be required to establish credit in some way. This is one of the requirements of every bankruptcy. You will not have the luxury of low rates, you will pay a substantially higher amount than those with good credit, but you will once again have credit. With a little looking, you will find that you can find a lot of scenarios for those who are in a rebuilding phase. Even home and auto loans can be found at higher rates. You will find, however, that there might be a requirement for a larger down payment than those with good credit enjoy, but this is your opportunity to build your credit back up. As you pay all your bills on time, you will see your credit score begin to build up to a more respectable level. If you do it right, you can prove yourself to the creditors of this world long before your bankruptcy even falls off your credit report. In the meantime, you will see an increase in your credit score within 12 to 18 months following your bankruptcy.
How Do You File For Bankruptcy By Yourself?
There are a lot of details to filing bankruptcy, and even one misstep can get you denied by the courts.
If you are ready to begin the process of filing bankruptcy, you will need to take the following steps.
- Obtain a copy of your credit report.
- Cringe when you realize just how much money you owe.
- Go ahead, cry over it for a little while.
- Verify the validity of the amounts shown.
- Send dispute letters to credit agencies for those items you know are incorrect on your credit report.
- Write up a detailed accounting of what you bring in every month, what you pay out every month and all of your monthly expenses.
- Organize all of your bills, figure out how much a minimum payment for each would be, and see if it works into your budget.
- When you realize there is no way, begin to list all of your assets and their value.
- Get copies of your bank statements.
- Get copies of the previous year’s tax return.
- Get any judgments against you and garnishments organized.
- Get a bankruptcy package from the courts to begin your bankruptcy petition.
- Male sure you till out every single form that applies to your situation.
- File a petition with the courts for bankruptcy, either paying a filing fee or if you qualify for a waiver, a request for a waiver.
- Arrange to take the required credit course.
- Take the required credit course.
- Meet with your assigned trustee who will go over all your assets and expenses, and freeze your bank account if there is anything there.
- Your court-appointed trustee will tell you which assets you will need to sell, and what you will be allowed to keep.
- Once filed, notify all of your creditors that you have filed for bankruptcy and prepare to never hear from them again.
- Hope and pray that the court approves your bankruptcy.
Next Steps if You Cannot File For Bankruptcy On Your Own
If you are having trouble filing for bankruptcy on your own, you may need to turn to professionals for assistance.
Now that you realize just how hard it is to file for bankruptcy, you understand how it is in your best interests to get some advice and counsel on your next steps. You can:
|Bankruptcy Lawyer||Pay them with money that you don’t have in addition to filing fees and other obligations|
|Legal Aid||Be one of the thousands handled by underfunded and overworked legal aid and self-help legal clinics for assistance|
|DoNotPay||We will handle the first steps of filing for bankruptcy with the courts.|
Filing for Bankruptcy With DoNotPay
When you choose to file with DoNotPay, you can start to breathe easier.
When it comes to filing for bankruptcy, DoNotPay has you covered in 5 easy steps:
- Search for File for Bankruptcy on DoNotPay.
- Put together a list of your debts, expenses, and assets. If you need help accessing information like your credit report, DoNotPay can help you get your report.
- Let DoNotPay walk you through your bankruptcy options and help you determine whether a Chapter 7, Chapter 12, or Chapter 13 bankruptcy is right for you.
- DoNotPay will then help find the best credit counseling course near you, which you need to complete before filing your bankruptcy forms.
- Lastly, DoNotPay will gather all of the forms you need (including available fee waivers) and help you locate your nearest bankruptcy court. All you have to do is complete the required forms, prepare your filing fee, and file the application with your local court.
And that's it! Once done, the court will give you:
- Your bankruptcy case number
- The name of your bankruptcy trustee
- The date, time, and location of your meeting with your trustee
At this point, your case has been filed! Congrats! The automatic stay now protects you from all debt collectors. Your trustee will then contact you for further financial documents you will need to provide. Make sure to attend your meeting as well as complete the post-filing bankruptcy debtors course!
Why Use DoNotPay to File for Bankruptcy?
With DoNotPay, you don't pay a fortune and you know that your filing is done right.
- Fast. Follow the prompts and give them the information they require.
- Easy. Get started with the click of a button.
- Successful. You know that your paperwork is done right and that you didn't miss anything.
DoNotPay is your first stop for getting things done right the first time.
What Else Can DoNotPay Do?
Some of the other things that DoNotPay can do for you include:
- Breach of Contract
- How to cancel memberships and subscriptions
- Chargebacks and Refunds for most credit cards and accounts
- Power of Attorney for anything you need
- Find that Missing Money
- Put in an Inflation Pay Request to get the raise you deserve
DoNotPay is the easy way to solve your problems, and it all starts with the click of a button!