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What is a Bankruptcy?

A bankruptcy is a legal process through which consumers, businesses or municipalities, that are unable to repay their outstanding debts, can discharge or reorganize their debt.

The bankruptcy process begins with a petition filed at a federal court by the debtor.

After the petition is filed, a hearing is scheduled at which the trustee and creditors review the debtor’s petition and supporting documents, and question the debtor on the details of their case.

What are the Different Types of Bankruptcy?

There are six different types of bankruptcies according to U.S. law;

  • Chapter 7: Complete debt liquidation for individuals and businesses
  • Chapter 9: Municipal bankruptcy; bankruptcy for local governments like cities, villages, and counties.
  • Chapter 11: Reorganization of debt for businesses and high net worth individuals which allows companies to continue to do business while they restructure their debt.
  • Chapter 12: Restructuring plan for farmers and fishermen.
  • Chapter 13: Restructuring plan for individuals that involves debt repayment, also known as a Wage Earner Plan
  • Chapter 15: Bankruptcy for international cases.

Chapter 7 Bankruptcy

Most people have heard about Chapter 7.

This type of bankruptcy allows you to eliminate most of your consumer debts.

For example credit cards, medical bills, personal loans, judgments, etc. It also stops your creditors from trying to collect on your debt.

At the end of the bankruptcy process, most of your debt (in some cases all the debt) is discharged, which means you do not have to pay it back.

Although the accounts included in bankruptcy can only report for up to 7 years on credit reports, the actual chapter 7 public record can report for a period of up to 10 years.

The best way to determine if a chapter 7 is the right solution for you is to speak to a bankruptcy attorney.

Call 800-750-1416 or Sign Up online »

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Chapter 13 Bankruptcy

This type of bankruptcy basically works as a repayment plan.

You are allowed to keep your property and use your income to pay off your debt within 3-5 years based on the terms the trustee puts forth.

A lot of people file for Chapter 13 Bankruptcy in order to get back on track with their original loans or pay off tax liens.

If you are making payments under a Chapter 13 and your financial situation has changed due to a layoff, you have the right switch to Chapter 7.

A chapter 13 bankruptcy can report for a period of up to 7 years on credit reports.

Speak with a bankruptcy attorney to find out if Chapter 13 is right for you.

How Long Can a Judgment Report on My Credit?

In some cases, bankruptcies may drastically lower your credit scores, especially if you have an impeccable credit history and high credit score.

On the other hand, if you have active collections, charge-offs, late payments, or other derogatory items reporting in your credit reports, your credit score may actually improve after a chapter 7 bankruptcy.

In most cases, if all of the information is reporting correctly and you start to reestablish a little credit, your credit score will be in the 640s a few months after discharging the chapter 7.

If after speaking with your attorney you decide that filing for bankruptcy (Chapter 7 or Chapter 13) is the best option in your situation, you should consider reestablishing your credit after your bankruptcy is discharged.

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What to Do If You Get a Judgment?

Bankruptcies reporting on your credit reports may cause substantial negative issues to your credit scores, or it may actually increase your score.

But, if you file a chapter 7, it’s very important to make sure that the creditors that were discharged in your bankruptcy are reporting correct information in your credit reports.

According to the FCRA, accounts that were discharged in chapter 7;

  • Cannot report any late payments in the payment history.
  • Cannot report past due balances. (Balances should be $0)
  • Cannot report statuses of collection, charge-off, past due, etc…. (Status should be “Included in Bankruptcy”)

If one account is reporting incorrect information, even something as small as a 30-day late payment, your credit scores may drop into the mid-500s instead of being in the mid-600s.

One small discreprency can cost you 100 points and the opportunity to start establishing credit by opening up a small credit card.

This is why it is so important that you check your credit reports a few months after you discharge your chapter 7 and look for any inaccuraccies.


If you find incorrect information reporting in your credit reports you will want to adress those issues as soon as possible.

You can contact the credit furnishers and the credit bureaus to resolve any issues.

Or you can hire a credit repair agency like to make sure that your credit reports are reporting everything correctly as they should and address any incorrect compliance issues to get everything reporting correctly.


Now, let’s address the elephant in the room.

Most people want to know whether we can delete a bankruptcy from their credit reports so they don’t have to wait the full 7 to 10 years for the account to fall off itself.

The answer is that according to the law, the only information that can be removed from a credit report is information that is inaccurate, incomplete, unverifiable, or out of compliance with the law.

We can work on trying to delete the bankruptcy by initiating investigations with the credit reporting agencies (Experian, Equifax, TransUnion), completing procedural compliance verification, validating the bankruptcy with Lexis Nexis and LCI, requesting documents corroborating the information reporting in the public record, etc… and if any information is inaccurate or out of compliance, the bankruptcy can be deleted but, if everything is reporting 100% correctly and in compliance with the law, the account will not be deleted. has helped tens of thousands of clients improve their credit scores after bankruptcies and even removed thousands of bankruptcies from our clients credit reports due to non-compliance issues.

If you have a bankruptcy reporting in your credit reports contact to find out how we can help fix your credit and improve your credit scores.

Call 800-750-1416 or Sign Up online »