How Long Does a Bankruptcy Stay on Your Credit Report?

By Lauren Ward. October 11, 2024 · 8 minute read

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How Long Does a Bankruptcy Stay on Your Credit Report?

Filing for bankruptcy is a major decision that can provide relief from overwhelming debt, but it also has long-lasting consequences, particularly when it comes to your credit. A bankruptcy will stay on your credit report for seven to 10 years, potentially making it harder to obtain new credit or loans, and sometimes even qualify for jobs or housing. Here’s a closer look at how Chapter 7 and Chapter 13 bankruptcies impact your credit and what you can do to minimize the financial fallout.

Key Points

•   Chapter 7 bankruptcy stays on your credit reports for 10 years, while Chapter 13 stays on your credit reports for seven years.

•  Bankruptcies typically appear in the “Public Records Information” section of credit reports.

•  You generally can’t get a bankruptcy removed from your credit reports, but you can dispute errors.

•  Bankruptcy’s impact on credit scores diminishes over time, especially with responsible financial management.

•  Using secured credit cards and credit-builder loans can establish a positive payment history post-bankruptcy.

How Long Does Bankruptcy Stay on Your Credit Report?

Bankruptcy can stay on your credit reports for seven to 10 years, depending on the type of bankruptcy you file. Chapter 7 and Chapter 13 bankruptcy are the most commonly filed types of bankruptcy for individuals, and each has different rules and credit impacts. Chapter 7, which discharges most debts, remains on your credit reports for a longer period; Chapter 13, which involves a repayment plan, stays on your reports for a shorter duration.

It’s important to note that even though bankruptcy stays on your credit reports for many years, its impact on your credit scores diminishes over time, especially if you take steps to rebuild your credit.

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When Is Bankruptcy Removed From Your Credit Report?

Bankruptcy will automatically fall off your credit reports after a set period of time, which varies by type of bankruptcy. The clock starts from the date you first file for protection from the court, not the date of discharge or when the bankruptcy procedure ends. Here’s how long each type of bankruptcy stays on your credit reports:

Chapter 7 Bankruptcy: 10 Years

With Chapter 7 bankruptcy, also known as “liquidation” bankruptcy, a trustee liquidates your assets (with some exceptions), then distributes the proceeds among your creditors. If those funds aren’t enough to cover all of your dischargeable debts, your obligation to pay any remaining debt is eliminated. Since Chapter 7 completely wipes away most of your debt, the consequences to your credit are relatively severe. As a result, Chapter 7 bankruptcy stays on your credit reports for 10 years from the filing date.

During this period, your bankruptcy will be visible to potential lenders, landlords, and employers who check your credit reports. Although the bankruptcy’s impact on your credit scores lessens as time passes, its presence can still make it harder to secure favorable credit terms or loans for up to a decade.

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Chapter 13 Bankruptcy: Seven Years

Chapter 13 bankruptcy, also known as “reorganization” bankruptcy, allows filers to repay their debts over a period of three to five years through a court-approved repayment plan. Unlike Chapter 7, Chapter 13 allows you to keep your assets and work with creditors to pay off some or all of what you owe. At the end of the repayment period, any remaining eligible debts are discharged.

Because Chapter 13 involves a repayment plan and demonstrates an effort to pay back some of what is owed, it remains on your credit reports for a shorter time — seven years from the filing date. After this period, the bankruptcy automatically falls off your credit reports, allowing them to be free of any bankruptcy records.

Can You Remove Bankruptcy From Your Credit Report?

Barring any errors, you generally can’t get a bankruptcy removed from your credit reports. If, however, your credit report says you filed bankruptcy but you did not, or there is any other kind of inaccuracy (such a bankruptcy entry that stays on your credit report past its expiration date), you have the right to dispute the inaccuracy with the credit bureau that compiled the credit report. A dispute doesn’t hurt your credit score and must be addressed by the bureau within 30 days.

Where Does Bankruptcy Appear on Your Credit Report?

Bankruptcy filings typically appear in the “Public Records Information” section of credit reports. While bankruptcy courts don’t directly report information related to bankruptcy cases to the credit bureaus, the three major credit bureaus (Equifax®, Experian® and TransUnion®) collect bankruptcy information from court records, which are open to the public.

As part of your bankruptcy entry, you may see information such as:

•   Type of bankruptcy

•   Status

•   Dates filed and closed

•   Liability amount

•   Exempt amount

•   Amount paid

•   Estimated date of when your bankruptcy should be removed from the credit report

Bankruptcy may also appear on your credit reports under specific accounts. Any accounts that were included in the bankruptcy, such as credit cards or loans, may be noted as “discharged” or “included in bankruptcy.”

What Does Bankruptcy Do to Your Credit Score?

Payment history is the most important factor in your credit scores, so a bankruptcy can take a significant toll, knocking as much as 200 points off your score, according to Experian.

Exactly how bankruptcy will impact your scores, however, will depend on where they stand before you file. For many people, the time leading up to a bankruptcy may include missed payments and accounts in collections — all of which would already cause a major drop in your credit scores. A bankruptcy is more likely to cause significant damage if you didn’t have a lot of negative payment history beforehand.

Either way, the impact of bankruptcy on your credit scores lessens over time. If you take positive steps, such as making timely payments on new accounts and keeping your credit utilization low, you can start building your credit even while the bankruptcy is still on your report.

How to Rebuild Your Credit After Bankruptcy

Rebuilding your credit after bankruptcy takes time, but there are things you can do to help speed up the process. Here are some proven tactics to try.

•   Check your credit report regularly: You can get free copies of your credit reports from each of the three major credit bureaus at AnnualCreditReport.com. When scanning your reports, check to see that the bankruptcy and related accounts are reported accurately. Be sure to dispute any errors that may be dragging down your score unnecessarily.

•  Make all payments on time: Payment history is typically the most important factor in your credit scores, accounting for 35% of the FICO score. To build a positive payment history, you’ll want to pay all of your bills on time and in full. Using a spending app can help keep you on track by ensuring you have sufficient cash available to cover your bills as they come due.

•  Keep credit utilization low: If you have access to credit, aim to use no more than 30% of your available credit limit at any time. This shows that you’re managing credit responsibly.

•  Get a secured credit card: A secured credit card requires a deposit that acts as your credit limit. Using this card regularly and paying off the balance in full each month establishes a positive payment history that can help rebuild your credit.

•  Consider a credit-builder loan: Consider a credit-builder loan: With a credit-builder loan, the lender deposits the loan amount into a savings account, which you cannot access until you finish repaying the loan. Your payments to the lender are reported to the credit bureaus, generating a positive payment history on your credit reports. When you finish paying off the loan, you gain access to the cash.

Recommended: How to Check Your Credit Score Without Paying

The Takeaway

Whether you’re figuring out if bankruptcy is the right choice for you or have already started the process, know that it’s not a permanent part of your credit profile. It will take seven to 10 years to drop from your reports, but bankruptcy’s negative impact can diminish before then, especially if you manage your money responsibly and proactively work to rebuild your credit.

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FAQ

Can Chapter 7 be removed from credit before 10 years?

Chapter 7 bankruptcy generally stays on your credit report for 10 years from the filing date, and it’s difficult to remove it before that time. However, if there’s an error on your credit report or if the bankruptcy is not verifiable with the court, you can dispute it with the credit bureaus. If the dispute is successful, it may be removed early.

How long does Chapter 7 stay on your credit?

Chapter 7 bankruptcy remains on your credit reports for 10 years from the filing date. During this time, the bankruptcy will be visible to lenders, landlords, and others who check your credit report. Although the bankruptcy remains on the report for a decade, its impact on your credit score lessens over time, especially if you take steps to proactively rebuild your credit.

Can you have a 700 credit score after Chapter 7?

Yes, it is possible to achieve a 700 credit score after Chapter 7 bankruptcy, though it may take time. Rebuilding credit after bankruptcy requires careful financial management, including paying your bills on time and keeping your credit utilization low. Taking out a secured credit card or credit-builder loan, and managing repayment responsibly, can also help you rebuild your credit after Chapter 7 bankruptcy.


Photo Credit/ iStock Photo:Viorel Kurnosov
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