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It's difficult for some consumers to accept that their financial situation is not going to improve any time soon. Unfortunately, the longer these people wait to file chapter 7 bankruptcy, the worse things get. They may end up losing their home and vehicles, have their wages garnished, and have liens placed on their property if they wait too long. One reason some are reluctant to file for the debt relief they desperately need is fear of not being able to get more credit in the future. Much of their fears are not based on facts, however, but rumors and assumptions. For a better idea of what happens to a chapter 7 filer's credit after they file, read on.

Long-Term Effects

You may have heard that a chapter 7 filing remains visible on a credit record for 10 years, but that is not necessarily the whole picture. While the federal filing notation is present and can affect your credit score, there is more to the score than that single notation. As you start fresh, you have another opportunity to pay your bills on time, and that will cause your score to again begin to rise. Even with a bankruptcy on your record, you can achieve a good credit scores if you are careful with your future credit decisions. When the ten years are up, consumers don't need to act to have the federal filing notation removed — it disappears on its own.

Debts Are Eliminated

The best thing about filing chapter 7 bankruptcy is the complete elimination of (almost) all debts. That means that after you file, unsecured debts like credit cards, medical bills, and personal debt will disappear. If not having to pay those debts were not enough, your credit report is going to look a lot different after your debts are discharged. Once the bankruptcy is final, your report won't show any of the past-due bills that plagued you before. Of course, not having any debt on your record doesn't help you get credit, but that condition won't last long.

Making Better Debt Decisions

You might be offered new credit as soon as your bankruptcy is final. Many creditors know you have a bankruptcy because your federal filing is public information. Scrutinize these offers for credit carefully, however. Watch out for high "membership" fees charged yearly or even monthly, high interest rates, high penalties for late payments, and more. Secured cards are a good way to slowly and carefully build up your credit again, however.

Do yourself a favor and don't put off filing for bankruptcy due to fears of credit issues afterward. Speak to a bankruptcy attorney about your debts and find out what it means to have a fresh financial start.