Call Us Today 781.848.5980
Call Us Today 781.848.5980
Bankruptcy Myth: No Credit For Seven Years

By Ullian Associates of The Law Firm of Ullian & Associates, P.C. on March 26, 2020

A common misconception is that a person cannot get credit for seven years after filing bankruptcy.  There is no law as to when a person can obtain credit.  Theoretically, a person can get credit again at any time, but the terms may be unfavorable.  Realistically though, you will not get credit until you take steps to make yourself worthy of credit.  So the important thing is to work toward reestablishing your credit once you have filed for bankruptcy. 

The effect of bankruptcy on credit depends on the current status of the person’s credit.  For example, Jane’s only major asset is a house that has $10,000.00 in equity, and she owes $45,000.00 on her credit cards.  Jane has been unable to pay on her mortgage for seven months and the bank is currently in the process of foreclosing.  She has not made her credit card payments for nine months.  Therefore, on a scale of 0 to 10, with 10 the best, Jane’s credit is already getting close to the bottom.  By filing for bankruptcy, her credit will not become much worse.

Here is a different scenario.  This time Jane has managed to stay current on her credit cards by making the monthly minimum payments.  In addition, Jane is current on her mortgage.  The problem is she knows she will not be able to remain current on her credit card payments and her mortgage for much longer since she has been doing a juggling act to maintain the payments.  In this situation, Jane’s credit score is currently pretty good.  Therefore, if she files for bankruptcy her credit score will drop significantly.  On the other hand, since it is only a matter of time until Jane is no longer able to keep up with her payments, Jane’s credit score will soon be going downhill even if she does not file for bankruptcy.

Typically, if you have financial problems, your credit is not good.  By filing for bankruptcy your credit may be slightly worse in the short-term, but hopefully you will be much better off in the foreseeable future.  A successful bankruptcy will eliminate all of your debt, which helps to increase your credit long-term.  If you do nothing to change your situation, it is very likely that your credit will be poor both in the short-term and the long-term.

A Chapter 7 bankruptcy stays on your credit report for 10 years.  A Chapter 13 bankruptcy stays on your credit report for seven years from the date you complete your Chapter 13 Plan; if you do not complete your Chapter 13 Plan, the bankruptcy stays on your credit report for 10 years.  All other credit information generally stays on your credit report for 10 years.

For more information on bankruptcy or to schedule your free consultation with The Law Firm of Ullian & Associates, P.C., contact us here.

What Our Clients Say

“ A note to thank you for your expert advice and guidance through my bankruptcy procedure. … Today I am debt-free and am able to maintain my household, the way I enjoy. … I now have great peace of mind. ”


All Testimonials