Bankruptcy Law Questions? Ask a Bankruptcy Lawyer Now.
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Question: “I recently attended a seminar where information was disseminated about obtaining a secured credit card up to the maximum amount allowed by law in your state. I was unaware that such was even possible; however, I'm interested to know if that is true.”
Answer: Unfortunately, you cannot get any lines of credit while you’re still paying your Chapter 13 Plan unless you get permission. Therefore, before applying for any such credit card, you should speak to your bankruptcy trustee.
Question: “Also, can you set the record straight as to how long a Ch. 13 will appear on one's credit report? I've heard 7 years from date of discharge, 10 years from date of filing, and many other variations?”
Answer: Yes, I noticed that there is a lot of misinformation on the internet about how long the bankruptcy can be listed, so let’s look at the actual federal law governing it. The Fair Debt Collection Practices Act states the following:
§ 605. Requirements relating to information contained in consumer reports [15 U.S.C. §1681c]
(a) Information excluded from consumer reports. Except as authorized under subsection (b) of this section, no consumer reporting agency may make any consumer report containing any of the following items of information:
(1) Cases under title 11 [United States Code] or under the Bankruptcy Act that, from the date of entry of the order for relief or the date of adjudication, as the case may be, antedate the report by more than 10 years.
And the Bankruptcy Code states the following:
§ 301. Voluntary cases
(a) A voluntary case under a chapter of this title is commenced by the filing with the bankruptcy court of a petition under such chapter by an entity that may be a debtor under such chapter.
(b) The commencement of a voluntary case under a chapter of this title constitutes an order for relief under such chapter.
So, to put it all together: A bankruptcy may remain on a credit report for 10 years from the date of the order for relief. Filing for bankruptcy constitutes an order for relief. Therefore, the bankruptcy can remain on your credit report for 10 years after it is filed (not when it is discharged). But you have to understand that the provisions in the FDCPA merely provides the limits, and is not mandatory. In other words, although the credit bureaus can, if they choose, report the Chapter 13 for 10 years, they are not required to do so. One or two of the credit bureaus only reports a Chapter 13 for 7 years.
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