How long does a bankruptcy filing stay on your credit report?

 Posted on June 04, 2024 in Chapter 13 Bankruptcy

When considering bankruptcy, one concern for many people is its long-term impact on their credit report. Bankruptcy is a legal process that can provide relief for those overwhelmed by debt. However, it also has consequences, including its effect on credit.

Understanding how long a bankruptcy filing stays on your credit report is necessary for planning financial recovery.

How long it stays on a credit report

A bankruptcy filing can remain on your credit report for up to ten years. This means that the bankruptcy record will be visible to lenders and creditors who check your credit history during that time. The type of bankruptcy filed also impacts how long it stays on your report. Chapter 7 bankruptcies, which involve liquidation of assets, typically stay on your credit report for ten years from the filing date. Chapter 13 bankruptcies, which involve a repayment plan, stay on your credit report for seven years from the filing date.

How it impacts a credit score

Having a bankruptcy on your credit report impacts your credit score. Despite the negative impact of bankruptcy on your credit report, it is possible to rebuild your credit over time. It may take several years to do so. During this time, obtaining new credit or loans may be challenging. If approved, you may face higher interest rates. However, it is still possible to improve your credit score over time by practicing responsible financial habits, such as making timely payments and keeping credit card balances low. It is also wise to check your report regularly for errors.

By practicing responsible financial habits and taking proactive steps to rebuild credit, you can work toward improving your financial health after bankruptcy.