How will filing bankruptcy affect my credit?

The fact that you have filed bankruptcy will remain on your credit report for 7 years if you’ve filed Chapter 13, or for 10 years if you’ve filed Chapter 7. This period of time starts from the date of your bankruptcy filing.

Despite this however, just because your bankruptcy filing remains on your credit report doesn’t mean that you won’t have any credit. From the date that your “Discharge Order” has been granted by the Court (this is the order that wipes out your debts), you will be considered eligible to borrow money from lenders. It will depend on the lender what the interest rate will be however. And it will depend on how you rebuild your credit rating after the bankruptcy is concluded. (More on that in another post, but suffice to say that you should in all instances attempt to pay your reported debts on time).

A recent client of mine gives us a clearer picture of what to expect. I represented a woman in 2006 who filed a Chapter 7 bankruptcy. The Court approved her case at the end of 2006 and she reaffirmed her mortgage loan and continued to make regular, on-time payments.

She called my office in May 2009 to get some documents from her old case. She said that she needed them to show her mortgage broker for a new house that she had just purchased. Her mortgage rate? 30 years, 5.5 per cent fixed rate. Right now, that’s a pretty good interest rate, so obviously her bankruptcy filing did not negatively affect her credit rating.

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