How Long Does A Bankruptcy Stay On My Credit Report
There are differences in severity between a Chapter 7 and a Chapter 13 bankruptcy. According to the Fair Credit Reporting Act , a Chapter 7 bankruptcy can remain on your credit history for up to 10 years from the filing date and a Chapter 13 bankruptcy can remain for a maximum of 7 years.
The FCRA states only the legal maximum amount of time bankruptcies can appear on your report and not the minimum. This means a bankruptcy can be removed earlier than the legal maximum, but it must be proven that it is misreported, unsubstantiated or otherwise found inaccurate. A bankruptcy cannot be removed simply because you do not want it there.
Chapter 7 Bankruptcy Timeline
The Chapter 7 bankruptcy process has many steps. Your obligation includes gathering information required by the court and the trustee, taking a credit counseling course, paying a filing fee, which sets the court process in motion, attending a meeting with creditors, and more. The judge could discharge your debt once all that happens.
Most cases follow the same basic timeline.
Normally, the process takes about four months, Cibik said. Once you file your Chapter 7 bankruptcy, the meeting of creditors with the Chapter 7 trustee is approximately 30-45 days later. Then, the court waits 60 days to see if any creditors object to your Chapter 7 bankruptcy. If no objection, it takes about another 15 days to close out the case and get your Chapter 7 discharge of debt.
How Long Does A Bankruptcy Take
Many people are unfamiliar with the bankruptcy process and how long it takes. Most people have the misconception that legal proceedings can take a long time–months to years. Although this is true for most litigation cases, when you file for bankruptcy, the process is much shorter, from start to finish. Read more below for the specifics:
Chapter 7 Bankruptcy
Chapter 13 Bankruptcy
Chapter 13 bankruptcy is a much more complicated and lengthy process, where you will pay back a certain percentage of your debts, as well as all of your priority debts over the term of your plan. Once your case is filed, you will attend the 341 Hearing. You might also need to attend your Confirmation Hearing, to determine whether or not the bankruptcy judge will Confirm the terms of your repayment plan. Generally, you will not have to go, and only your bankruptcy lawyer will. After your case is confirmed, you will continue to make your monthly plan payments on time. Chapter 13 plan lengths are usually between 36 months to 60 months. After you complete your plan and make all your payment, you will receive your discharge.
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Does The Debtor Have The Right To A Discharge Or Can Creditors Object To The Discharge
In chapter 7 cases, the debtor does not have an absolute right to a discharge. An objection to the debtor’s discharge may be filed by a creditor, by the trustee in the case, or by the U.S. trustee. Creditors receive a notice shortly after the case is filed that sets forth much important information, including the deadline for objecting to the discharge. To object to the debtor’s discharge, a creditor must file a complaint in the bankruptcy court before the deadline set out in the notice. Filing a complaint starts a lawsuit referred to in bankruptcy as an “adversary proceeding.”
The court may deny a chapter 7 discharge for any of the reasons described in section 727 of the Bankruptcy Code, including failure to provide requested tax documents failure to complete a course on personal financial management transfer or concealment of property with intent to hinder, delay, or defraud creditors destruction or concealment of books or records perjury and other fraudulent acts failure to account for the loss of assets violation of a court order or an earlier discharge in an earlier case commenced within certain time frames before the date the petition was filed. If the issue of the debtor’s right to a discharge goes to trial, the objecting party has the burden of proving all the facts essential to the objection.
The Timeline For Chapter 7
A Chapter 7 bankruptcyis usually the faster of the two personal filing types, but that doesnt mean that its a fast track to a clean slate. Chapter 7 filings take anywhere from four months to one year to complete. The specific time depends on the number of assets you have to liquidate and the details of your specific case.
Fact: About 2/3 of the filings submitted in the 3rd quarter of 2014 were Chapter 7.
So if you have a limited number of assets to liquidate and everything goes smoothly with your means test and the rest of your filing, then you could be done in just a few months. But if there are any complications or issues with the asset liquidation, your filing may take long. The majority are complete in six months, but there are Chapter 7 filings that take up to one year.
Keep in mind that once the filing is complete and all of your remaining balances are discharged, the Chapter 7 bankruptcy creates a negative item that remains on your credit for ten years from the date of discharge.
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Can My Chapter 13 Bankruptcy End Earlier Than The Plan
It is possible to have your Chapter 13 case end earlier than expected if you are able to pay off all of your creditors earlier than the plan allows. This is usually only in a 100% repayment plan, again that 100% referring to the money going to unsecured creditors. If not all of your creditors file a Proof of Claim before the deadline, there will be more money available to the ones who did and they may then get paid off faster.
You Must Attend A Creditors Meeting
About a month or so after you file, you will need to attend a creditors meeting where a trustee will ask about the information you submitted you will have to answer under oath. This meeting is known as the 341 meeting.
Within two months of attending the creditors meeting, you must complete a financial counseling course. After youve received budget counseling, you wait to receive a discharge of your debts from the bankruptcy court.
Many people who file for Chapter 7 bankruptcy can retain all their assets. However, you cannot sell or give away any property without clearing it with the trustee during this time. Most bankruptcy cases generally receive a discharge order from the court about 60 days after the initial creditors meeting.
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Advantages And Disadvantages Of Chapter 7 Bankruptcy
There’s no question that deciding whether to declare bankruptcy is very difficult. It affects your future credit, your reputation, and your self-image.
It can also improve your short-term quality of life considerably, as the . Taken as a whole, it’s a difficult process with both advantages and disadvantages.
Chapter 7 bankruptcy, in particular, will damage your credit for a little while but also may provide much-needed relief and a roadmap for getting your financial house back in order.
How Long Does It Take To File Chapter 13 Bankruptcy
The decision to file bankruptcy is a weighty one. And if youre unsure how it works, starting the process could be both intimidating and overwhelming. So how long does it take to file Chapter 13 bankruptcy? And what can you expect during the timeline?
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Can A Bankruptcy Come Off My Credit Report Early
A legitimate bankruptcy record cannot be removed from your credit report, but a bankruptcy can come off your report if it is inaccurately entered or otherwise incorrect.
The FCRA makes provisions for challenging anything on your credit report that is incorrect, has remained on your credit report beyond the maximum time allowed, or cannot be substantiated by the creditor who reported it.
In the case of bankruptcies especially because they remain on the credit report for so many years its not uncommon for errors to creep in.Some of the most common errors we find include:
- Debts that were discharged in the bankruptcy are still showing a balance.
- Individual accounts included in the bankruptcy are still appearing on the report after seven years. In both Chapter 7 and Chapter 13 bankruptcies, the individual affected accounts can only impact your report for seven years starting from original delinquency date, not the filing date of the bankruptcy in which they were discharged.
- The bankruptcy is still showing up on a report more than 10 years after the filing date.
- Any sort of material error in how the bankruptcy was reported, from the spelling of names to accurate addresses, phone numbers, dates, etc.
If any of these or other errors appear on your credit report, you have the right to challenge those errors. The reporting agency must remove them if the reporting agency cannot substantiate the item.
Factors That May Delay The Closing Of Your Case
The process described above may be delayed at several points. In most cases, issues that come up during a Chapter 7 bankruptcy may add several months to a case. In very complicated situations, a case may remain open for several years.
The most common things that delay a case include:
- failure to submit your certificate of completion of the financial management course in a timely manner
- the trustee investigating or selling an asset of yours.
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What Happens To Your Bank Account
When the bankruptcy order is made, you must:
- make sure you do not use your bank account
- give your cards and cheque books to the trustee
Your bank account will be frozen. Any money in your account will be an asset and claimed by the trustee. The trustee can ask to release some money:
- for your daily living needs
- to the other person in a joint account
The bank is allowed to use money from one of your accounts to pay your debts on another account you hold with them. This is called set off.
Otherwise, money owed to the bank is a bankruptcy debt, so you cannot pay this to the bank directly. The exception is if the bank has a charge on your home .
Open a new account
You can open a new bank account after the date of the bankruptcy order but you must tell the bank or building society that youre bankrupt. Some banks will let you use your old account after theyve spoken to the trustee.
Timelines During The Bankruptcy Process
In general, here are some basic timelines you can expect, after you begin the bankruptcy process:
Stopping : Immediate upon filing. Once you have filed a bankruptcy, the automatic stay of the Bankruptcy Code protects you from . Creditors who contact you attempting to collect a debt after you have filed for bankruptcy can be found to have violated the automatic stay. Creditors who knowingly violate the automatic stay can be required to pay damages to you, including court costs and attorneys fees.
Stopping foreclosure, repossessions or wage garnishments: Immediate upon filing. Any legal actions, such as foreclosures, repossession or wage garnishments, will be stopped upon the filing of your bankruptcy.
Chapter 7 bankruptcy to discharge your debts: Generally 90 days from start to finish. The usual bankruptcy takes about two weeks to prepare .
Chapter 13 bankruptcy to restructure your debts: Generally takes between 36 and 60 months to complete your case and receive your discharge. The case normally takes approximately two weeks to prepare and file a complete and accurate petition and repayment plan with the court .
Visit our FAQ page for answers to additional questions you may have about bankruptcy.
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Common Causes Of Closing Delays
With any home purchase, there is always the potential for roadblocks to delay or derail the path to closing. According to the National Association of Realtors, 24% of closings get delayed but eventually go to settlement only 7% of contracts die before the deal closes.
Below are some of the most common holdups:
What Does Discharged From Bankruptcy Mean
Getting discharged from bankruptcy is the final step in filing for bankruptcy. When you are discharged from bankruptcy, it means that you are no longer bankrupt: you are free from your debts and you can start to rebuild your credit.
If you do not get discharged from your bankruptcy, your trustee may get discharged from your file. Should this happen, your creditors can start contacting you again to collect their outstanding debt.
To learn more about the bankruptcy discharge, including how long the process takes and what debts are discharged in bankruptcy, watch the video below.
If the discharge is not automatic, Vincent is told a court hearing will be scheduled. At the hearing, the court will determine if and when the discharge will occur. Once the discharge is granted, Vincent will be relieved of his debt as of the day he filed for bankruptcy and he will be free to start rebuilding his credit rating and his financial future. But, the trustee explains there are certain debts that will not be discharged. These include alimony and child support payments in some cases, student loans, court-ordered fines or penalties and debts arising from fraud.
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Can The Discharge Be Revoked
The court may revoke a discharge under certain circumstances. For example, a trustee, creditor, or the U.S. trustee may request that the court revoke the debtor’s discharge in a chapter 7 case based on allegations that the debtor: obtained the discharge fraudulently failed to disclose the fact that he or she acquired or became entitled to acquire property that would constitute property of the bankruptcy estate committed one of several acts of impropriety described in section 727 of the Bankruptcy Code or failed to explain any misstatements discovered in an audit of the case or fails to provide documents or information requested in an audit of the case. Typically, a request to revoke the debtor’s discharge must be filed within one year of the discharge or, in some cases, before the date that the case is closed. The court will decide whether such allegations are true and, if so, whether to revoke the discharge.
In chapter 11, 12, and 13 cases, if confirmation of a plan or the discharge is obtained through fraud, the court can revoke the order of confirmation or discharge.
What Happens To Your Motor Vehicle
Your motor vehicle will be sold to pay for your bankruptcy debts, unless you need it:
- for your work or vocation
- to meet basic domestic needs where alternative transport is not practical
If the official receiver agrees you need the vehicle, it will be classed as exempt and not included in your bankruptcy. This does not apply if you own your vehicle through an ongoing hire purchase agreement .
If you are allowed to keep the vehicle you remain responsible for road tax, MOT and insurance.
If your vehicle is exempt but valuable it can be replaced with a cheaper alternative. The official receiver will use the money from the sale to either pay for the new vehicle directly or give you the money to buy one. You must provide proof of purchase for your new vehicle within 1 month. The guide price for a replacement is £1,250.
Stop the sale of your vehicle
If your vehicle is not exempt you may be able to keep it if a third party can pay to transfer it to them for you and you provide a:
- current insurance certificate
- vehicle registration document
- a valid MOT
The price paid will be the market value of the vehicle but must at least cover the agents costs for the sale of the vehicle.
If you do not want to keep the vehicle the official receiver will dispose of it.
Vehicles under finance agreements
A finance agreement can be a:
- hire purchase
- conditional sale
- leasing agreement
If the trustee decides they will not be claiming the vehicle, they will give notice to you and the finance company.
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Can You Get Credit After A Bankruptcy
Myth: You cant get a credit card or loan after bankruptcy.
The truth: Credit cards are one of the best ways to build credit, and there are options out there for those with a checkered credit history. Secured credit cards, which require an upfront security deposit, have a lower barrier of entry but spend and build credit just like a traditional card.
Similarly, there are loans availablesuch as passbook, CD or that are secured with a deposit or collateral and help you build credit as you pay them off. Like secured credit cards, these loans are much easier to come by because the lender is protected in the event you cant pay. Do note that you may need to get permission from the court to take on new debt during a Chapter 13 repayment plan.
Can I Apply For Credit
After your bankruptcy has ended, there is no restriction on applying for loans or credit. Its up to the credit provider to decide if they will lend you money.
Your credit reportwill continue to show your bankruptcy for either:
- 2 years from when your bankruptcy ends or
- 5 years from the date you became bankrupt .
It can take time to rebuild your credit rating.
For more information regarding your credit report, contact a credit reporting agency. Information about credit reporting agencies is available at ASIC’s MoneySmart.
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