In general, a bankruptcy will stay on your credit report for ten years. This report is the simple method for determining your credit worthiness, and it can even have an impact on whether or not you can be hired for certain jobs when you file a straightforward Chapter 7 bankruptcy. If you file for Chapter 13, agreeing to pay certain amounts of debt over a period of time, the bankruptcy usually stays on your credit report for seven years.
It has become increasingly more popular to screen potential employees by looking at their financial records. This is particularly the case when the employee might be handling large sums of money, but it may also hold true for other types of jobs. Though it may not be fair, bankruptcy can follow you for a long time.
This does not mean that you cannot get a job, purchase a home, rent an apartment, or even get a credit card within a few years of bankruptcy, but financial experts warn those who are newly bankrupt to be very cautious about obtaining or using any new credit cards. In fact, it's often best to pay in cash as much as possible for a few years.
Any new credit cards that are offered to you are likely to have very high interest and high yearly fees, so they may not be worth having. In fact, people who do get credit cards after a bankruptcy are very high credit risk and are more likely to miss payments or have trouble paying new loans. Missed payments can further damage your credit, since they indicate that you have not corrected your financial behavior.
A person who has declared bankruptcy and then contracted additional debt is likely to face challenges finding work, renting a house, or buying a car on credit. This is because the person continues to establish a dubious financial record. It is essential that any new debt be contracted only with a great deal of thought, and only when you are able to repay debt.
It can be necessary to declare bankruptcy for many reasons, and they are certainly not all the fault of the person who borrowed money in the first place. Unemployment, sudden grievous illness in the family, or a personal illness could all make repaying debt very challenging. Once you have been able to recover financially from these setbacks, you may find it helpful to tell relevant people what happened. Most employers, for example, can relate to a person’s struggle to find work in a difficult job market or the need to take care of an ill spouse.
Being upfront about the issue and why it occurred can also score some points with people who are analyzing your ability to be a good tenant. It can help to have letters from former landlords detailing a good payment schedule on past rents. Some people are faithful with their rent, but had difficulty meeting other debts.
For some creditors, however, bankruptcy may have occurred for viable reasons, but it is still treated as a tremendous mark against your credit. It also does not matter to them when or why the bankruptcy occurred — it may have happened five or six years ago and still prove a factor. Legally, it can be considered until ten years later.
