One of the consequences of filing for bankruptcy is that the bankruptcy will go on your credit report and remain there for an extended length of time. This will have an immediate negative impact on your credit rating. However, it’s important to remember if you do not file bankruptcy, missed payments and other debt deficiencies will continue to be reported each time they occur. A bankruptcy, if completed successfully, will allow the negatives on your credit report to be removed as of a certain date.

The Fair Credit Reporting Act and related guidelines place the following limits on how long credit reporting agencies can keep a bankruptcy or other negative information on your record:

• Chapter 7 bankruptcy — 10 years
• Chapter 11 bankruptcy — 10 years
• Chapter 13 bankruptcy — seven years
• Missed payments or delinquent accounts — seven years

The time period begins when your bankruptcy was filed and the negative information is supposed to be removed automatically when the period ends. Outside of a bankruptcy, each missed payment has its own seven-year reporting period.

Although you can’t do anything about the statutory reporting periods, once you’ve committed to the bankruptcy plan that best fits your needs, you can begin the process of rebuilding your credit right away. The most important action you can take is making sure there are no longer any missed bill payments. To help you pay bills on time, look into taking a second job if possible.

Other ways to rebuild credit include these actions:

• Apply for a secured credit card — Such an account requires a cash deposit as collateral and usually has a low limit. Make sure you pay off the balance in full and on time each month. Doing so helps you establish a new history of responsible credit use and timely payments.
• Make a budget and stick to it — Restrict your spending as much as possible, cutting out luxuries and reducing non-necessities. It’s also important to be realistic. Recognize that unexpected expenses can arise and try to create an emergency fund to deal with them.
• Regularly monitor your credit score and report inaccuracies — Check your credit report regularly. If you discover information that you believe is inaccurate, such as inclusion of negative items that should have been deleted, you can file a dispute with the credit reporting agency. That agency (TransUnion, Experian or Equifax) is required to investigate and correct all inaccuracies.

The Law Offices of James C. Zimmermann is experienced in guiding New Jersey residents through the bankruptcy process and with credit rebuilding afterward. We can advise you on making the best decisions for your individual situation. Call us at 973-764-1633 or contact us online to schedule a consultation. We have locations in Vernon, Wayne, Pompton Lakes, Hackensack and Nutley.