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Chapter 7 & 13 | Consumer Bankruptcy

Will It Affect My Credit?

You may be wondering about the effect of a bankruptcy on your credit report. There is no clear answer to this question, and most people should disregard it. Although a bankruptcy must be removed from your credit history ten years after the day it was filed, some credit reporting agencies remove a bankruptcy after seven years.

There is nothing in the law about getting credit after a bankruptcy with two important exceptions:

  • Under federal law, bankruptcy does not affect your eligibility for student loans.
  • Under FHA rule, bankruptcy does not affect your eligibility for a home mortgage once the bankruptcy is eighteen months old. The VA rule is twelve months.
  • Also, federal law prohibits discrimination by an employer, or a government agency, based on a bankruptcy
    filing. See 11 U.S.C. section 525.

Most people who file bankruptcy find that if they have a stable job, future creditors generally are not concerned about the bankruptcy after twelve months or so. Usually, credit card solicitations start coming again immediately after the case is over. This liberal creditor attitude has probably developed in response to the large pool of consumers in the United States who have filed for bankruptcy: 936,795 bankruptcy cases were filed in 2014, 844,495 cases were filed in 2015, and 794,960 cases were filed in 2016.

Credit Reports

If you decide to order a credit report, use the free website established by the credit reporting agencies under the direction of Congress, www.annualcreditreport.com.  This is the only source from which you can obtain a free copy of your credit report.

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