And to some extent, this is a little bit of an issue which causes people a lot of pause in filing bankruptcy. And not that it shouldn't, because that is is the price you pay when do you file a bankruptcy is experiencing a diminished credit rating.
However, it is not as bad as you think it is. I know that's simple for me to say. I'm a bankruptcy attorney and that is what I do for people, and I want to serve people with what their best interests is. But in the aftermath sometimes you may think I'm doing the dirty work and you pay the price.
But let me reassure you that the effect on your credit report isn't as bad as you think it is. By law, credit bureaus has the ability to keep a bankruptcy filing on your credit report for 7 years if you file a Chapter 13 and 10 years if you file a Chapter 7 bankruptcy.
Now, in my experience with my clients, and I can back this up with some reports and studies that have come out - It will be on your credit report but it will affect you for a handful of years instead of the 7-10 years.
Most of my clients will find themselves getting credit cards and vehicle loans, and even access to real estate loans within a period of about 2 to 3 to 4 years after their bankruptcy has been filed, depending on other factors like their income and job stability.
But I've met many of my clients and I will say, they open up their wallets again several years after their bankruptcy, I'll meet them walking around the street or the mall, and they'll just flash their credit card loads in their wallet again. That indicates that their bankruptcy was a successful thing when it all came down to it.
As well, let me share with you a study that I share this with my clients, but I'm not even sure that I believe it myself it's so incredible. It's a three year study that a professor at the University of Iowa, Katherine Porter, had collected data and concluded that the Bankruptcy Consumer Project found that nearly every debtor receives credit card offers shortly after bankruptcy. While most offers are for credit cards, debtors also receive offers from mortgages and car loans.
Only 1 out of 25 debtors fail to receive an offer of credit within one year of filing Chapter 7. Porter reports the other 24 debtors receive an average of more than 14 credit card offers per month.
So, I'm here to tell you that while it is on your credit report and you will experience diminished credit and there is a price you pay for debt relief, it's not as bad as you think.
It's been my pleasure to provide you with that information based on my experience of practicing bankruptcy law for 25 years in several different states.