A bankruptcy's effect on your credit depends on the Chapter

Q: I filed Chapter 7 bankruptcy and was discharged in 1995. At that time, I thought the bankruptcy was supposed to remain on my credit record for seven years. Now I learn that it will be reported for 10 years. Should it be on my credit for only seven years?
B.S., via e-mail

A: You may be confusing reporting practices of a Chapter 13 filing with a Chapter 7, suggests Gary Altman, an estate-planning attorney in Rockville, Md.

A Chapter 13 petition reorganizes debt and repays creditors a portion of what is owed them. The major credit reporting agencies - Equifax, Experian, and TransUnion - remove a dismissed or discharged Chapter 13 bankruptcy seven years after filing, Mr. Altman says, even though under federal law they could report that information for another three years.

A Chapter 7 petition, which liquidates all qualifying debts and assets, remains on your record for a decade. The good news for you is that this period should expire shortly. The 10-year clock starts to run from the date you filed your bankruptcy petition in court - not from your date of discharge of the debt.

Q: I have just rolled over my retirement money. But I am frightened that terrorists may strike again in the US and crash the stock market and I would lose all I have. I would like to invest in 10-year Treasury notes, but they don't pay much interest.
T.H., Louisville, KY.

A: While the stock market dropped over 12 percent in the aftermath of the Sept. 11 terrorist attacks, it recouped those losses within two months, notes Ivory Johnson, a certified financial planner in Annapolis, Md. He says investors currently have factored a potential terrorist strike into the market, although it cannot effectively measure uncertain events.

"Three things will increase the price of a stock," says Mr. Johnson, "earnings, earnings, and earnings."

Granted, the price of oil, the war in Iraq, the presidential election, the budget deficit, and potential terrorist attacks all have varying effects on bottom lines. Still, he advises against an investment strategy based on a terrorist attack, preferring instead that you focus more on the overall health of corporations in which you invest.

As for 10-year Treasury notes, Mr. Johnson sees them as acceptable as long as you understand they're meant for income, not growth.

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