The effect that filing for bankruptcy has on a credit report varies based on the type of bankruptcy that is filed. For individuals who live in Virginia, the most common bankruptcy filings are Chapter 7 and Chapter 13. A bankruptcy filing under Chapter 7 might stay on a credit report for up to 10 years while a Chapter 13 filing might be reported for seven years. However, the effect on the credit score will diminish as time goes on.
One common reason why people hesitate to file for bankruptcy is because they worry about how this action will affect their credit scores. While it is true that a bankruptcy will leave a mark on your credit rating, it is also possible that taking this step will provide you with relief from debts you could not otherwise manage. In fact, for many people, their debt situation has already damaged their credit rating.
A recent survey reveals that revolving debt in Virginia grew by more than $1 billion during the second quarter of 2019 and has now reached a worrying $31 billion. The average Virginia household owes $10,480 to credit card companies, which is a figure that is only surpassed in Alaska and Hawaii. The personal finance website WalletHub based the survey on data provided by TransUnion and the U.S. Federal Reserve.
Many Virginia residents struggle to pay their bills each month. While this could be the result of financial irresponsibility, debt is often caused by unavoidable circumstances. For example, debt could be tied to an illness or injury within a household.
Military veterans in Virginia may face a difficult time adjusting to their time after service, especially when it comes to financial issues. As a result, many veterans face escalating debt and may be forced to file for bankruptcy. Under a 2019 federal law, the Honoring American Veterans in Extreme Need Act -- the HAVEN Act -- disabled military veterans receive some additional protections during the bankruptcy process. This can be important in helping people decide to file and seek debt relief.