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How Long Will a Foreclosure or Bankruptcy Affect Credit?

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By Susan Tompor

6-30-consumer-topRISMEDIA, June 30, 2009-(MCT)-Question: How long will a foreclosure or bankruptcy show up on your credit report?

Answer: A foreclosure can be reported on your credit report for seven years from the date the foreclosure was filed in the court, according to Gerri Detweiler, author of “Reduce Debt, Reduce Stress.” The book is $14.95, and an ebook is available at www.ReduceDebtReduceStress.com.

Bankruptcy, she said, legally can remain for 10 years from the date you filed – not the date of discharge or when the bankruptcy is completed. However, credit reporting agencies have agreed to voluntarily remove completed Chapter 13 filings – where someone pays off part or all of their debt under a court-supervised plan – seven years from the date of filing.

The idea is to give consumers some credit for having paid back as much of their debt as they could afford to pay back.

What happens with a short sale? Or an arrangement in which the lender allows the homeowner to sell the home for less than the mortgage due? Detweiler noted that a short sale may either be listed as a charge-off or a debt settled for less than the full balance. Both remain on your credit report for seven years from the date that action occurred.

©2009, Detroit Free Press.
Distributed by McClatchy-Tribune Information Services.

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