Dealing with debt can be incredibly frustrating and stressful to the point where bankruptcy becomes the best (or only) option to address your current financial situation. If you have filed for bankruptcy or are considering filing, you may have questions or concerns regarding your credit score. “Will my credit score hit rock bottom?” “Will I ever be able to obtain credit or make large purchases?” and “Is there any way to repair my credit after bankruptcy?”

At Geranios Law, PLLC, I take a meticulous approach to resolving clients’ debt and guiding them toward a fresh start. However, I understand that your credit score will likely take a significant hit after filing for bankruptcy, so I also help clients get their credit back on track.

In my decades of practice, I have walked countless debtors in Missoula, Montana, through bankruptcy and credit repair processes. My law firm also serves clients in the surrounding area, including but limited to the counties of Beaverhead, Mineral, Sanders, Gallatin, Deer Lodge, Billings, Lincoln, Powell, Lake, and Silver Bow.

How Long Does a Bankruptcy Stay on Your Credit Report?

While filing for bankruptcy can give you a much-needed fresh start and help you get out of the burden of debt, you need to understand that bankruptcy can affect your financial picture for years. Yes, it can improve your quality of life in the short term and alleviate many – if not all – of your financial obligations, but it will most likely leave a severe dent in your credit score.

In view of this, many people wonder, “When will bankruptcy get removed from my credit report?” The answer to this question depends on the type of bankruptcy you file:

• Chapter 7 bankruptcy. By filing for bankruptcy under Chapter 7, a debtor can have most of his/her unsecured debt discharged. In return, however, the debtor’s non-exempt assets would be liquidated to repay the creditors. Some debts are not dischargeable when filing for bankruptcy. Such debts as alimony, child support, tax debts, most student loans, court and government fees, and certain others cannot be wiped out through bankruptcy. Typically, Chapter 7 bankruptcy is removed from the credit report ten years after the filing date.
• Chapter 13 bankruptcy. This type of bankruptcy is a debt relief option available to people with regular income. Instead of having your debts discharged (as is the case with Chapter 7), Chapter 13 bankruptcy allows the debtor to propose a repayment plan to pay back some or all of the debt over three to five years. Because the debt gets repaid, debtors do not have to lose any of their assets. Typically, Chapter 13 is removed from the credit report seven years after the filing date.

In both Chapter 7 and Chapter 13 bankruptcy, the removal of bankruptcy from the credit report is done automatically, which means the filer does not need to do anything on their end to initiate the removal or get it approved.

Does That Mean I Can’t Do Anything Requiring Credit for 7-10 Years?

Not at all. Just because bankruptcy stays on your credit report for seven to 10 years does not mean you cannot make large purchases on credit for so long. In most cases, you can purchase high-priced items on credit, but you might want to ask yourself first, “Is this purchase appropriate for my financial situation?” and “Is this purchase really necessary?”

Typically, bankruptcy filers can purchase a home within one or two years after filing for Chapter 13 bankruptcy. Those who file Chapter 7 bankruptcy will most likely have to wait two to four years after a discharge to buy a house. If you want to buy a car after bankruptcy, you may have to wait at least four to six months after the filing date to make that purchase, regardless of whether you filed under Chapter 7 or 13.

What Steps Can I Take to Rebuild Credit?

When your credit score takes a hit after bankruptcy, you should not just wait for your score to bounce back on its own. There are certain proactive steps you can take to rebuild your credit score after bankruptcy, including:

1. Pay for every bill you receive before its due date. Make this your habit. For example, if you still have a home mortgage, never fall behind on your payments. If you filed for bankruptcy under Chapter 13, stick to the repayment plan and always pay on time.
2. Apply for a secured credit card. A secured credit card is just like any other credit card with one exception: you need to place a deposit on the card that covers the credit limit. If you can maintain a monthly balance in the amount of your deposit, your credit score will improve over time, which means you will eventually qualify for an unsecured credit card.
3. Become an authorized user on someone else’s credit card. As an alternative to getting a secured credit card, you can become an authorized user on someone else’s credit card. This way, you will not be on the hook for the debt, but your responsible usage and on-time payments can help rebuild your credit score.
4. Keep an eye on your credit score. It is equally important to monitor your credit score to ensure that the report is accurate and that what you are currently doing actually works.

Remember: everyone’s situation is unique. You might want to get a personalized consultation with a bankruptcy attorney to talk about your particular situation and discuss your best strategy to repair your credit after filing for bankruptcy.

Your Next Steps Matter. Make Them Informed.

At Geranios Law, PLLC, I help clients file for bankruptcy and deal with the aftermath of bankruptcy. My job is not done until your debt is gone and your credit is restored. For nearly three decades, I have helped clients develop customized credit repair plans that work for their financial situations. Retain the guidance you need on how to get your finances under control and rebuild your credit score. Schedule a free consultation today.