How Long Before a Bankruptcy Record Can Be Expunged?

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Bankruptcy enables Americans with financial problems to partially or fully eliminate their overdue debts like credit card and medical bills. When you file bankruptcy, it creates a public record that anyone can access online or in-person. Also, the fact that you filed bankruptcy reflects on your credit reports. These record-keeping concepts apply even if a judge ultimately dismisses your bankruptcy request.

Types of Bankruptcy

Most consumers choosing bankruptcy file either Chapter 7 or Chapter 13. Chapter 7 permanently eliminates the legal obligation to repay pre-existing debts like medical bills, credit card accounts and most types of loans. Chapter 13 offers debtors with some disposable income the opportunity to partially repay their creditors. It usually takes three to five years to finish a Chapter 13 plan.

Applicable Time Frames

If you filed Chapter 7, that fact will reflect on your credit reports for 10 years from the date of filing, according to Experian. A Chapter 13 plan reflects on your credit reports for seven years from the date of filing. Even if a judge dismisses your case, the fact that you asked for bankruptcy is still legally reportable and will harm your credit rating. Court records regarding your bankruptcy case will never be expunged. Thus, any interested party can view your bankruptcy documents even after your death.

Tax Considerations

You must have filed your last four due tax returns to declare bankruptcy. You don’t have to report the fact that you filed bankruptcy on your current or future tax returns. But you can’t include tax debts less than three years old in your bankruptcy case. The time frame begins with the date you filed the tax return and not the tax year itself. Thus, if you filed a 2010 return in 2011 you can’t discharge through bankruptcy the resulting tax obligations until at least 2014.

Ineligible Debts

Some debts can’t be included in bankruptcy no matter what your financial situation. Also, some of these debts like court judgments are also permanent public records that are not expunged. You cannot include child support, alimony, court fines and civil damages awarded to someone due to your illegal activity. You also can’t reduce or eliminate future debts or debts incurred right before filing a case. In most cases, you can’t discharge government-issued student loans unless a judge accepts a compelling reason such as a serious and permanent disability or the college going out of business.

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References

  • "How to File for Chapter 7 Bankruptcy"; Stephen Elias, Albin Renauer, Robin Leonard; 2009
  • Experian: Bankruptcy
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