How Long does a Bankruptcy Filing Remain on My Credit Report?
Bankruptcy attorneys get this question all the time. It seems to be one of the main concerns for people who are hesitant about filing for bankruptcy. The Fair Credit Reporting Act only goes so far as to require a creditor to exclude a bankruptcy filing if the discharge or other order for relief, i.e. a dismissal instead of a discharge, was entered more than 10 years prior to when the report is being made. Specifically, it can be found in section 605 which states:
§ 605. Requirements relating to information contained in consumer reports [15 U.S.C. § 1681c]
(a) Information excluded from consumer reports. Except as authorized under subsection (b) of this section, no consumer reporting agency may make any consumer report containing any of the following items of information:
(1) Cases under title 11 [United States Code] or under the Bankruptcy Act that, from the date of entry of the order for relief or the date of adjudication, as the case may be, antedate the report by more than 10 years.
Important Facts to Remember About the Statute
It’s important to note that the statute says that it goes 10 years from the date of “entry of the order for relief or the date of adjudication.” In the context of a Chapter 7 or Chapter 13 bankruptcy the “entry of the order for relief” is the date that the automatic stay goes into effect. The automatic stay goes into effect instantly upon fling. This means that the “clock starts running” on the date the individual filed the bankruptcy.
So take the following hypothetical, John Smith filed a Chapter 7 bankruptcy on October 1, 2010. This means his creditors can report the bankruptcy filing on his credit report until October 1, 2020 (10 years). John Doe could try to dispute it, but the creditor is not in violation of any statute by reporting it and most likely the Credit Reporting agencies will continue to include it.
If Jane Smith, on the other hand, files a Chapter 13, in which she makes a payment every month for 60 months (5 years) and then receives her discharge, the bankruptcy will end up being on her credit report for another five years after her bankruptcy is complete, because it is reported when she files, and remains on her credit report for another 10 years after the filing date.
Many Factors to Consider When Considering Bankruptcy
This should not be the only factor you consider when you are deciding whether or not to file for bankruptcy. While the bankruptcy is on your credit, you will still be able to build your credit back up using tool such as a secured credit card, and it is not uncommon for people to be able to purchase cars after filing. Furthermore, you will receive credit card applications in the mail again before you know it (This does not mean you should sign up for them! It’s only meant to illustrate that it is possible to get credit cards after filing.). It’s important to get your priorities in line, if you are experiencing any of the difficulties listed in this blog post, consider the fact that your credit only matters if you wish to borrow more money. Most people facing bankruptcy do not want to, nor do they need to borrow money for some time.