Tuesday, July 3, 2012

How long does a Bankruptcy stay on the books?

I have had a number of clients who have inquired into a bankruptcy ask me how long a bankruptcy will stay on their record and credit report.  And today, CNN Money answered this question:

How long does bankruptcy stay on the books?

My wife has applied for credit cards, but was denied because the credit reporting services have a record of her filing bankruptcy in 2003. Does this record stay permanent, or does it become purged after a period of time? – James V.
It depends on what kind of bankruptcy your wife filed nine years ago. Generally speaking, a completed Chapter 13 bankruptcy will stay on a credit report for seven years, and a Chapter 7 will stay on a report for 10 years. So if your wife filed Chapter 7, it'll probably hang around for another year.
Other negatives on your record — late payments, foreclosures, collections info, and derogatory public records — tend to drop off after seven years.
"The older these negative items are, the less impact they have on the score," says Tom Quinn, Credit.com's credit scoring expert, "assuming no other more recent negative items are posted."
— Kate Ashford

In other words, if you file a bankruptcy because of credit card debt, and it is granted, you can expect that for 10 years following the bankruptcy this will appear on your credit report.  Yet another reason to make sure that you no longer have any other options except to file for bankruptcy, as there are long-term implications that may follow you for a decade after the fact.

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