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Misconceptions about Chapter 7 bankruptcy

When the word "bankruptcy" is spoken in popular media, it is often meant to sound dramatic and fatalistic. However, financial experts agree that in many cases, filing for bankruptcy like Chapter 7 can be quite the opposite, opening doors to new opportunities for struggling Kentucky residents to rebuild their financial lives. In the face of overwhelming debt, this can sometimes be an extremely smart financial decision. 

For example, some people believe that for the duration bankruptcy references remain on their credit report, there is no way to improve their credit score. This is not necessarily the case. While credit scores will likely drop with a bankruptcy filing, intelligent borrowing practices -- including the use of secured credit cards or small installment loans -- can go a long way toward building credit back up in the following years. 

But how long does it take a bankruptcy to vanish from a credit report? Many people believe it takes 10 years for this information to be expunged, but in reality, only the public record of a Chapter 7 filing lasts that long. Other references to bankruptcy last a maximum of seven years, with some starting to disappear before then. Many individuals have even reported seeing a bump to their credit score during the intervening time. 

What this is meant to convey is simply that Chapter 7 bankruptcy is a valuable tool in the arsenal of a Kentucky resident wishing to return to financial stability. In filing for bankruptcy, some debts can be paid off through asset dissolution, while others can be formally discharged by the court. In this way, individuals can reboot their financial lives and move forward on a fiscally healthy path. 

Source:, "7 common myths about how bankruptcy affects credit", Barry Paperno, March 16, 2018

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