Effect on Credit Report
One of the main reasons people hesitate in filing a bankruptcy proceeding is because they believe their credit will be “ruined.” This is not true. There are three major credit reporting agencies; Equifax, TransUnion, and Experian. Each is governed by both State and Federal law that dictates what they can and can’t do on your credit reports. The general rule is that they are allowed to report most negative transactions for 7 years from the date of your default. If you choose to file a bankruptcy under either Chapter 7 or Chapter 13, that filing will remain on your credit report for 10 years.

If you file Chapter 7 bankruptcy, your credit report should indicate not only the filing, but also that all debts owed by you now have a -0- balance. This, by itself, should assist you in obtaining new credit since you are now “debt free.” In addition, under the current bankruptcy law, you cannot re-file a Chapter 7 for 6 years. Therefore, you are technically “safer” than your neighbor who could file a Chapter 7 tomorrow.