Bankruptcy can lead to a fresh financial start through debt liquidation. But, a Chapter 7 or Chapter 13 bankruptcy appearance on a credit report can place obstacles to seeking credit and reestablishing a new financial profile. There are ways to speed up the removal of bankruptcy on reports. Reestablishing credit can open a new financial future, grant access to loans and even lead to high credit scores.
A Chapter 7 bankruptcy fully liquidates a person’s assets without filing a repayment plan. Assets are sold, and their proceeds are used to pay off debts. It usually takes 10 years from the date of the bankruptcy filing for it to be removed from credit reports. But, there is no required minimum time that a Chapter 7 bankruptcy must remain on credit reports.
A Chapter 13 bankruptcy allows a debtor to develop a plan to repay all or part of their debts over a period of five years. This bankruptcy is automatically removed from credit report after seven years.
It is important to review credit reports and seek removal of any incorrect information concerning Social Security numbers, names or personal information. Any disputed items that are not properly validated within 30 days must be removed.
After building good financial practices, obtaining a secured credit card or line of credit from a bank can reestablish a credit profile. Banks will usually approve a secured credit card within a few years after bankruptcy has been filed. However, credit card offers should be approached with caution. Most credit card companies will target customers with bankruptcies or low credit scores because they can charge them higher interest rates.
An attorney should be consulted before filing for bankruptcy. They can provide guidance on the best options and ways to reestablish a strong financial history.