There is something of a misunderstanding when it comes to how Americans perceive bankruptcy. In popular culture, Chapter 7 bankruptcy is often portrayed as a desperate act that can ruin a Connecticut resident’s credit indefinitely. Thankfully, neither of these things is true: a bankruptcy filing can be an extremely important financial decision that can lead to reduced or cleared debt, and there are many things one can do to improve credit even while the bankruptcy is still on the books.
Chapter 7 is commonly known as a liquidation bankruptcy, and involves selling assets to pay down creditors. The court will discharge any remaining unsecured debt like credit cards bills and medical debt. This type of bankruptcy typically stays on a credit report for 10 years from the date of filing. However, this is not always the case, as it is important to note this is the maximum amount of time a bankruptcy can stay on a credit report, not a mandatory date.
There are several ways to remove a bankruptcy before that date. The first is to file a dispute with the credit bureau, which requires the creditor to carefully review all bankruptcy paperwork in the search for discrepancies. If errors are found in the report, including personal information like Social Security and full name, it can be grounds to remove the filing from the report. If this does not work, seeking out secured loans and credit cards that can be paid down immediately is a good way to rebuild a credit rating.
Ultimately, Chapter 7 bankruptcy is not the harbinger of financial ruin. In most cases, Connecticut residents suffering from severe debt can use a bankruptcy filing to improve their financial standing. Coupled with the support of an experienced bankruptcy attorney and other financial advisors who can help with better spending and budgeting habits, Chapter 7 can represent a road back to financial stability.
Source: blog.credit.com, “When Can I Get a Bankruptcy Off My Credit Report?“, Gerri Detweiler, May 21, 2018