|Long Term effects of Bankruptcy
Bankruptcy is listed in the top five life-altering negative events that we can go through, along with divorce, severe illness, disability, and loss of a loved one. Very few people that have gone through bankruptcy would say that it is just a painless cleaning of your debts, where afterwards you can easily begin your new life.
A chapter 7 bankruptcy, which is a total bankruptcy, will stay on your credit report for 10 years.
A chapter 13 bankruptcy, which is similar to a payment plan, can stay on your credit report for 10 years, but some consumer credit reporting agencies remove the chapter 13 after seven years. If you are applying for a job with a salary of more than $75,000 a year, you can be asked if you have ever filed bankruptcy.
There is no time limitation to this; anytime you apply for a job for the rest of your life you can be asked this question. Also, when you apply for credit or life insurance that is worth more than $150,000, you can be asked if you have ever filed for bankruptcy. There is also no time limitation to this question. If you lie to get a loan or insurance because your bankruptcy is very old, technically you have committed criminal fraud.