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Russell G. Small and Kenneth E. Lenz

How long will your credit report reflect your bankruptcy?

| Jun 15, 2021 | Bankruptcy

Filing for bankruptcy usually means that your credit score drops substantially. Although it can start going back up relatively soon, it will be years before you fully recover from the impact of a bankruptcy on your credit score and before you can qualify for the best financing terms and interest rates.

Some people feel so concerned about the financial limitations they will face after a bankruptcy filing that they put off filing and get into even worse debt. How long will a bankruptcy affect you after you get a discharge?

The kind of bankruptcy you file affects how long it stays on your credit report

There are several different kinds of individual bankruptcy, and the type you file determines how long the bankruptcy will stay on your credit report after discharge. In a Chapter 7 or liquidation bankruptcy, the courts will report your discharge to the credit bureaus for ten years. After a decade has passed, the bankruptcy will no longer appear on your credit report, likely leading to a substantial increase in your overall score.

If you file for Chapter 13 bankruptcy, you will likely spend several years completing a repayment plan. Once you do, the bankruptcy will stay on your credit report for seven years. When you add the three years you will likely spend repaying your creditors to the seven years of reporting, you can see that the impact of both forms will likely persist for ten years.

Understanding the credit report impact of bankruptcy can help you make a more informed decision about whether to file and what type of personal bankruptcy to use, if you have a choice.

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