How long does it take to clear your credit
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Creditors and collection agencies can report credit card delinquencies and charge-offs for seven years. After seven years, you can legally request that the debt be removed from your credit report listing; it's possible that the items will drop off without your request. Even though the debt is erased from your credit report, the debt is still valid and creditors and collectors can still attempt to collect.
If a creditor or collector sues you for non-payment of a credit card debt and wins, the court will issue a judgment against you. Judgments remain on your credit report for seven years, but some states allow renewals so the time frame can be even longer. Judgments are liens against real property and will be paid if you sell your home. Depending on the judgment laws in your state, your wages may be garnished, your bank account levied and/or your assets confiscated as payment for the debt.
Each state has a statute of limitations relating to credit card debt. This is the window of time that creditors have to file suit against you and possibly obtain a judgment against you for the debt. Statutes of limitations vary by state, ranging from two to 10 years. When credit card debt is out
of statute, creditors and collectors can only win a judgment against you by default. You must defend yourself based on the statute. Even if debts are out of statute, they are still valid and creditors can still attempt to collect the debt. Out-of-statute credit card debts can still be reported to credit bureaus for seven years.
One alternative to the ramifications of letting your credit card debt lapse is filing for bankruptcy. Chapter 7 bankruptcy eliminates credit card debt; Chapter 13 bankruptcy eliminates the credit card debt that you did not pay off in court-appointed structured payments. Even though a bankruptcy can remain on your credit report for up to 10 years, each year that passes lessens the impact. Creditors cannot continue to contact you or file lawsuits against you that threaten your home and property if the credit card debt is covered in a bankruptcy.
While it is true that credit card debt can be erased from your credit report after seven years, you still technically owe the debt. Rather than wait it out, filing for bankruptcy may be a better option. A bankruptcy will also seriously impact your credit rating, but you can begin to recover quicker with less aggravation than if you let your credit cards be turned over to collections.Source: ehow.com