Filing for bankruptcy is often a deeply personal decision. You'll want to make sure you have a thorough understanding of the process, the consequences of filing for bankruptcy and what your bankruptcy record signifies prior to making your decision. While making such a decision can be overwhelming, knowing what to expect is the first step in deciding what is best for you.
Once you file for bankruptcy, your bankruptcy record will become public knowledge - available for creditors and others to scrutinize and determine if you're a good credit risk. Your bankruptcy report will help your creditors determine if your bankruptcy was a result of irresponsible behavior or events out of your control.
Unfortunately, because your bankruptcy record is public record, you are more vulnerable to fraud and identity theft. Information from your bankruptcy record that becomes public includes: your name, address, the last four digits of your social security number, bank account numbers, credit card numbers, tax identification number, marital status and available cash.
While sensitive information becomes public, by no means should this deter you from considering bankruptcy. However, you should be aware of the potential threat. Thoroughly reviewing your credit report at least once a year is a good start, but you'll need to be even more proactive. Make sure you study your checking account statement each month and any other statements you receive (i.e. any credit cards you were able to keep.)
Keep receipts when you use the ATM and check stubs so you can compare them to your statements each month. If you see any discrepancies, immediately contact your bank or credit card company. Consult your bankruptcy attorney and/or accountant to discuss ways to safeguard your personal information and for advice on what to do in case of identity theft or fraud.
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While bankruptcy records are a matter of public record, it shouldn't hinder you in instances such as employment. Unless a potential employer asks to run a credit check on you, you do not have to disclose that you filed for bankruptcy. Likewise, you cannot lose your job because you filed for bankruptcy. Furthermore, bankruptcy laws prohibit employer discrimination against employees and applicants who have filed for bankruptcy. Employers who fire employees for filing for bankruptcy can be sued for wrongful termination.
Your bankruptcy will remain on your credit report for a period of ten years. The debts discharged in bankruptcy will be listed on your credit report as "included in BK". Make sure you get a copy of your credit report and verify all discharged debts are marked accordingly.
Once you pass the ten-year mark, the bankruptcy should be taken off your credit report. Don't take for granted that it will be automatically removed. Get a copy of your credit report from Experian, TransUnion and EquiFax (there are many ways to obtain a free credit report) and make sure it has been removed. If it hasn't, contact the credit bureaus. You may need to have your discharge papers to prove ten years have passed.
Fortunately, as time passes, your bankruptcy becomes less of an issue when you're applying for credit. In addition, because you cannot file for chapter seven bankruptcy again for six years to the day you filed, many creditors will view you as a good credit risk. Of course, you should be careful of high interest rates and other unfavorable terms when reviewing credit offers following bankruptcy.
Once your debts have been discharged, you'll receive discharge papers, confirming the bankruptcy has gone through and the date of the discharge. Make a copy of your discharge papers, and keep your original and copies in a safe place. You may need them as evidence in case of errors on your credit report and to ensure your bankruptcy is wiped off of your credit report after ten years.
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+ How to get a free credit report before or after bankruptcy
+ Restoring your credit after bankruptcy
+ Getting a new mortgage after bankruptcy
+ Getting a new credit card after claiming bankruptcy
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