Remove Bankruptcy After 7 Years

Major credit reporting agencies usually remove bankruptcy after 7 years for Chapter 13 debtors. Wage earners who have faithfully complied with court-ordered repayment plans can rest assured that a once blemished credit report will no longer hinder efforts to seek employment or re-establish buying power. A Chapter 13 proceeding automatically vanishes from the debtor's report 7 years from the date of filing, as if it never existed. The formerly bankrupt consumer is free to apply for future financing without fear of disclosure of the previous proceeding. U.S. Bankruptcy Courts may have derived the seventh year Chapter 13 debtor's release from the Old Testament of the Bible. According to Deuteronomy 15:1-2, "At the end of every seven years thou shalt make a release. And this is the manner of the release: Every creditor that lendeth ought unto his neighbor shall release it: he shall not exact it of his neighbor, or of his brother; because it is called the Lord's release." Anyone who has paid creditors for three to five years through a repayment plan deserves to be released from further financial liability and boost credit scores after bankruptcy.

While filing has its negative connotations, Chapter 13 debtors have an opportunity to start afresh due to efforts to honor responsibility to creditors. Many Chapter 13 debtors live on a strict budget for several years in order to make monthly payments, sometimes enduring a lesser standard of living. A Chapter 13 is discharged when the last payment has been made and debtors can certify participation in an approved financial management course provided by a reputable consumer financial counseling agency.

When credit reporting agencies remove Chapter 13 filings, credit scores after bankruptcy usually rise. To a prospective lender, an individual's score is evidence of credit-worthiness. Scores above 600 indicate financial stability and a good history of repayment. Removing negative information and establishing a consistent payment history can boost scores overnight. Debtors should closely monitor reports after seven years have lapsed to ensure that reporting agencies have removed Chapter 13 discharges. And don't be lured off by companies which promise to remove insolvency before seven years for a fee; these kinds of offers are illegal. Like a scab on a nasty sore, a Chapter 13 proceeding will fall off by itself when it has had sufficient time to heal. If reporting agencies fail to remove bankruptcy after 7 years, debtors have legal recourse. Contact the three major agencies for free reports. Review all entries and determine if detrimental accounts which should have fallen off of the report are still listed. Call the agency which still shows negative entries and request that the Chapter 13 and all of its accompanying debts and judgments be expunged from databanks and reports. While one call should do the trick, if it is necessary to make repeated calls, do so. A debtor's future financial reputation, which negatively or positively impacts consumer scores, is at stake.

Good credit scores after bankruptcy are like a debtor's calling card. They announce to prospective lenders that the former Chapter 13 petitioner is a responsible bill payer who can be fully trusted to repay loans. Consumers may attempt to justify themselves to lenders in letters, emails and phone calls; but the credit score speaks volumes about someone's ability to follow through on promises; and it is right there in black and white. Consumer scores are derived from credit reports and can range from 300 to 900. The median credit score in the U.S. is 675. Scores are based on a proprietary formula (FICO) which takes into account a consumer's payment history, outstanding debts, and the types of current charge accounts.

Scores also reflect the number and frequency of report inquiries. These three-digit scores open doors to new debt-free lives, new homes, new cars, college education, retirement homes, and almost anything a consumer can buy. A good credit score after bankruptcy rebuilds and reverses most of the negative impact of insolvency and puts the debtor on firm financial footing again. When reporting agencies remove bankruptcy after 7 years, the key is to maintain a clean record. While some Chapter 13 debtors may want to go out and celebrate their newly found debt freedom, caution should be exercised. The same financial mismanagement practices that caused debtors to file bankruptcy seven years ago are prone to entangle them again if vigilance is not exercised. Maintain the same standard of living experienced while honoring the repayment plan. Don't be tempted to go out and spend irresponsibly just because credit scores after bankruptcy have gone up. Be frugal, be watchful and be wise about incurring more debt than one's budget can safely handle. And be careful about applying for financing too frequently. Consumer scores reflect the number of inquiries on a report; a large number can quickly lower credit scores which have been improved.

When reporting agencies remove bankruptcy after 7 years, deserving debtors can once again experience the liberty that comes with sound consumer money management. Chapter 13 petitioners who diligently adhere to a court-ordered repayment plan have a second chance to rebuild their lives and boost credit scores after bankruptcy. A word of caution: Debtors who fail to complete repayment plans within the three- to five-year time frame forfeit the right to debt release, unless they are deemed by the court unable to make payment due to illness or chronic unemployment. However, the seven-year debt release mandated by U.S. Bankruptcy Law is a testament to the fairness and impartiality of the American court system which provides debt relief for most consumers ridden with financial woes. Chapter 13 bankruptcy is not a quick fix for indebtedness, but a long range resolution toward financial freedom.

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