When people in Tennessee file for bankruptcy, it does not necessarily mean they will be unable to rebuild their credit again. A Chapter 7 bankruptcy stays on the credit report for 10 years, but a Chapter 13 bankruptcy remains there for only seven. Furthermore, liens, judgments and some other debts discharged in bankruptcy also fall off the report after seven years.

Having a positive payment history prior to bankruptcy will do little to lessen the effect of the bankruptcy on the credit score. The discharged debts will continue to appear on the credit report for seven to 10 years. However, the amount of debt and the number of accounts involved may affect how severe the drop in the credit score is. People should be aware that some debts, such as student loans, are generally not dischargeable in bankruptcy and will remain on the credit report.

People can begin rebuilding their credit after a bankruptcy, and even before the bankruptcy is off the credit report, it is possible to return to a good score. They should make payments on time and look into getting a secured credit card or a small loan, such as a credit builder or passbook loan, to start this process.

One advantage of filing either a Chapter 7 or a Chapter 13 bankruptcy is that it puts an immediate stop to creditor harassment, lawsuits and other creditor actions such as foreclosure. In a Chapter 7 bankruptcy, a person might be able to exempt some assets from being sold to pay back creditors. A person who qualifies for a Chapter 13 bankruptcy might be able to keep the home and other assets. A Chapter 13 bankruptcy involves creating a payment plan to repay creditors over a period of three to five years. It must be approved by the bankruptcy court and is then managed by a trustee.