The flipside of filing for bankruptcy


ADVERTISING DISCLOSURE: is an independent, advertising-supported web site. receives compensation from most credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » Research » Guides » Building Credit History » The flipside of filing for bankruptcy

The flipside of filing for bankruptcy

Updated: December 26, 2012

This content is not provided by Citi. Any opinions, analyses, reviews or recommendations expressed here are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by the Citi.

Bankruptcy would seem like the perfect solution when debts get out of control and there is no other option left. This is normally the last resort that people choose, to be able to avoid annoying calls from creditors. If you file for Chapter 7 bankruptcy protection, then you can expect almost all of your debts to disappear. Filing for bankruptcy for Chapter 13 also works well and here the debt can be paid off over a schedule that suits you and you also don`t have to deal with annoying calls from creditors. However, there is a bit of problem with this line of reasoning. The debt almost disappears and that is fine, but what happens to the negatives that are going to be associated with the filing for Chapter 7 or Chapter 13 bankruptcy protection.

More American citizens would have actually filed for bankruptcy by the end of 2010 than any other year since 2005. This was before the changes were brought about to the bankruptcy laws and filing for bankruptcy became more difficult for clients. Most of these customers didn`t take the negatives into consideration while filing for bankruptcy.

The Chapter 7 bankruptcy filing shows up on your credit report for 10 years and Chapter 13 bankruptcy filing tends to remain in the credit report for 7 years at least. This period will be very difficult for consumers as they will not be able to avail any loan or mortgage, personal loans, auto loans etc. They will also fail to qualify for the high-interest rate credit cards. When people file for bankruptcy it is obvious that banks and lending institutions will look at these people as high-risk and will avoid giving them loans as they are likely to default on their loans as well as miss on credit card payments. It is quite natural for institutions to feel this way. By resorting to bankruptcy protection they have, in a way shown, that they are irresponsible.

Now that the damage is done, the next step would be to do some credit repair. Immediate steps should be taken to do the necessary credit repair and boost the credit scores. The first step should be to make all credit card payments on time and refrain from running up further credit card debts. Close all credit card accounts that are not in use and have patience while building your credit report as it takes time before the damages of filing for bankruptcy can be erased.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
Add to Favorites:
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.

Related Research:

Top 5 Cards for Travel from Our Partners: Spring 2018 – Expert Choice

Top 5 Cards for Travel from Our Partners: Spring 2018 – Expert Choice

Posted: February 12, 2018

Days are getting longer, snow is melting and you already feel the lightest breath of warm breeze on your face - spring is here. Summer holidays are looming, and so is Easter with its shopping. You can lift in spirits and let CreditLand ... Continue reading
Cash Back or Travel Rewards? Here’s How to Decide On The Right Card

Cash Back or Travel Rewards? Here’s How to Decide On The Right Card

Posted: February 10, 2018

If you're trying to find the perfect rewards credit card, you might feel like you're drowning in options. There are just so many out there, and many of them look similar. This can make it tough to decide on a card. One thing people often ... Continue reading
Price Protection: Credit Cards That Will Refund a Price Drop

Price Protection: Credit Cards That Will Refund a Price Drop

Posted: February 8, 2018

Those who often find themselves buying stuff and then discovering that they could pay less for the same item they've just bought, will appreciate this credit card benefit – price protection. This is the least known and the most neglected ... Continue reading