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Bankruptcy Credit Report - How Bankruptcy Affects Your
Credit Report
Bankruptcy and how it can effect your credit report. Learn
more about your credit and the two main types of personal
bankruptcy.
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Bankruptcy and Your Credit Report...
Personal bankruptcy generally is considered the debt
management tool of last resort because the credit results are
long-lasting and far-reaching. A bankruptcy stays on your
credit report for 10 years, making it difficult to acquire
credit, buy a home, get life insurance, or sometimes, get a
job. However, it is a legal procedure that offers a fresh start
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Addresses There are two kinds of personal bankruptcy
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Chapter 7 Bankruptcy Each must be filed in federal
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Chapter 13:
Also known as reorganization, Chapter 13 allows you to keep
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Both types of bankruptcy may get rid of unsecured debts and
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shut-offs, and debt collection activities. Both also provide
exemptions that allow people to keep certain assets, although
exemption amounts vary among states. Note that personal
bankruptcy usually does not erase child support, alimony,
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have an acceptable plan to catch up on your debt under Chapter
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Personal Bankruptcy and Your Credit Report...
Check your credit report before filing bankruptcy to make
sure you have properly listed your debts and creditors.
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know exist that may not be on your credit report. For example,
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Credit Report with Creditor Addresses Including all
items on your credit report in your bankruptcy may also help
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Effective October 17, 2005, new Federal bankruptcy law
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With the change in the new bankruptcy law effective October
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counseling within the six months before filing bankruptcy. The
credit counseling service must be from a government approved
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Your credit counseling requirement can be satisfied in
person, on the phone or online on the Internet. The session can
be expected to last about 90 minutes. Upon completion of the
session you must obtain a certificate of proof that you
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will be submitted to the bankruptcy court with your bankruptcy
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Your credit counseling session will generally cost about
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Some credit counseling organizations may recommend that you
enter into a debt management plan (DMP) to pay
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Counseling and Your Credit Report...
If you aren t disciplined enough to create a workable
budget and stick to it, can t work out a repayment plan
with your creditors, or can t keep track of mounting bills,
consider contacting a consumer credit counseling
service. Your creditors may be willing to accept
reduced payments if you enter into a debt repayment plan with a
reputable organization. In these plans, you deposit money each
month with the credit counseling service. Your deposits are
used to pay your creditors according to a payment schedule
developed by the counselor. As part of the repayment plan, you
may have to agree not to apply for, or use, any additional
credit while you re participating in the program.(By the
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Repayment Plan
A successful repayment plan requires you to make regular,
timely payments, and could take 48 months or longer to
complete. Ask the credit counseling service for an estimate of
the time it will take you to complete the plan. Some
credit counseling services charge little or nothing for
managing the plan; others charge a monthly fee that could add
up to a significant charge over time. Some credit
counseling services are funded, in part, by contributions from
creditors. debt problem
While a debt repayment plan can eliminate much of the stress
that comes from dealing with creditors and overdue bills, it
does not mean you can forget about your debts. You still are
responsible for paying any creditors whose debts are not
included in the plan. You are responsible for reviewing monthly
statements from your creditors to make sure your payments have
been received. If your repayment plan depends on your creditors
agreeing to lower or eliminate interest and finance charges, or
waive late fees, you are responsible for making sure these
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Credit History
A debt repayment plan does not erase your derogatory
credit history. Accurate information about your accounts can
stay on your credit report for up to seven years.
In addition, your creditors will continue to report
information about accounts that are handled through a debt
repayment plan. For example, creditors may report that an
account is in financial counseling, that payments have been
late or missed altogether, or that there are write-offs or
other concessions. A demonstrated pattern of timely payments,
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Auto and Home Loans
Debt repayment plans usually cover unsecured debt. Your auto
and home loan, which are considered secured debt, may not be
included. You must continue to make payments to these creditors
directly. Most automobile financing agreements allow a creditor
to repossess your car any time you re in default. No notice
is required. If your car is re-possessed, you may have to pay
the full balance due on the loan, as well as towing and storage
costs, to get it back. If you can t do this, the creditor
may sell the car. If you see default approaching, you may be
better off selling the car yourself and paying off the debt:
You would avoid the added costs of repossession and a
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Foreclosure
If you fall behind on your mortgage, contact your lender
immediately to avoid foreclosure. Most lenders are willing to
work with you if they believe you re acting in good faith
and the situation is temporary. Some lenders may reduce or
suspend your payments for a short time. When you resume regular
payments, though, you may have to pay an additional amount
toward the past due total. Other lenders may agree to change
the terms of the mortgage by extending the repayment period to
reduce the monthly debt. Ask whether additional fees would be
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