Individuals dealing with financial hardship often want to find solutions that won’t limit their financial opportunities in the future. Many people fear bankruptcy because they worry that lenders and maybe even employers can see a record of the bankruptcy in the future and may choose to deny them opportunities because of their previous financial challenges.
That is a reasonable concern, especially for those who work in well-compensated professions where employers have their choice of who to hire. A surprising number of people who could benefit from a bankruptcy filing choose not to eliminate their debts because they worry about the consequences of bankruptcy.
The credit bureaus maintain a record of all major financial matters, including bankruptcy discharges. Interested parties can access those financial records and use them when making decisions about important matters. How long can outside parties find information about a bankruptcy on an individual’s credit report?
Bankruptcy is a temporary blemish
Some people mistakenly assume that bankruptcy remains on a credit report forever. After all, it is a drastic financial maneuver. Thankfully, like every other financial issue, bankruptcy eventually comes off of an individual’s credit report.
How soon the credit bureaus have to cease reporting the bankruptcy depends on the type of bankruptcy an individual files. Those who qualify for Chapter 7 bankruptcy have the discharge of their debts reported to the credit bureaus for 10 years.
Individuals who pursue a Chapter 13 Bankruptcy instead have to make at least three years of payments before they are eligible for discharge. The credit reporting rules reflect that longer turnaround time. A Chapter 13 bankruptcy comes off of an individual’s credit report seven years after their discharge.
While bankruptcy can lead to denied job opportunities and less favorable credit offers, it does not totally freeze people out from financing or advancement opportunities in their careers. The impact bankruptcy has on the decision-making of outside parties tends to decline as more time passes. Once the bankruptcy comes off of the filer’s credit report, they no longer have to worry about others judging them based on their previous financial challenges.
Learning more about the rules for bankruptcy and what happens afterward can help those who might benefit from filing. The discharge of debts and the automatic stay that bankruptcy provides can be beneficial enough to balance out the impact of a bankruptcy showing up on an individual’s credit report for a time.