How Long Does Bankruptcy Stay on Your Credit Report?

The amount of time that bankruptcy impacts your credit report depends on many factors—including which type of bankruptcy you choose to file.

The impact of a bankruptcy on your credit report can depend on many factors, including your overall credit history, the types of debts you’re able to discharge in the bankruptcy, and your current financial situation.

But of course, the key factor is time. One of the most common concerns of people facing bankruptcy is how long it stays on their credit report. Although the length of the bankruptcy process itself can take from four months to up to five years depending on which chapter you file, you might feel the impact on your credit score for a while.

Although a bankruptcy doesn’t let you discharge every type of debt, it can enable you to manage your debt more effectively and eventually raise your credit score. Those improvements can make it easier to get future loans if you keep up with your payments. Plus, in the state of Ohio, some of your assets are exempt from bankruptcy.

Within just two years of filing, you may be able to increase your credit score significantly. As soon as you’re out of bankruptcy, you could start receiving offers from credit card companies again.

Depending on your financial situation, you can choose one of two main types of personal bankruptcy—Chapter 7 or Chapter 13. Here’s an overview of how long different types of personal bankruptcy stay on your credit report. This knowledge can be handy when you call a bankruptcy attorney.

Chapter 7 Bankruptcy: Up to ten years

Chapter 7 bankruptcy remains on your credit report for up to 10 years from the date you file. This type is also known as a “liquidation bankruptcy,” because it enables you to sell off—or “liquidate”—assets to pay off creditors for your unsecured debts. As you discharge your debts under a Chapter 7 bankruptcy, lenders can’t collect on their debts, and you’re no longer responsible for repaying them.

The debts that you can discharge with a Chapter 7 bankruptcy include credit card debt, personal loans, utility bills, and medical bills. Debts that you cannot discharge through Chapter 7 bankruptcy include: student loans, alimony, child support, court fees, homeowner and condo association fees, criminal fines and penalties, and tax liens.

Chapter 7 bankruptcy has its pros and cons, including when it comes to how long it stays on your credit report. During the 10 years that a Chapter 7 bankruptcy can impact your credit score, you may face real challenges obtaining credit cards, loans, and some jobs. But depending on your situation, that length of time can result in a fresh start. You can eventually increase your credit score over time as you eliminate your unsecured debts, and potentially help change your mentality about future debt and purchases. Plus, some creditors may be willing to work with you after you file, especially if you demonstrate that you have made efforts to improve your credit.

But the impact of Chapter 7 bankruptcy on a credit report can diminish over time. While the bankruptcy remains on your credit report for 10 years, its impact on your credit score can lessen as time goes on.

Immediately after you file a Chapter 7 bankruptcy, your credit score may drop significantly because most credit agencies see such a filing as a meaningfully negative event. That can cause lenders to view you as a high credit risk. But because credit reporting agencies often rely more on recent credit history than on older credit events, you can lessen the impact of a bankruptcy with responsible credit behavior over time. As you rebuild your credit history, the impact of the bankruptcy can begin to fade.

Chapter 13 Bankruptcy: Up to seven years

Chapter 13 bankruptcy remains on your credit report for up to seven years from your filing date. Also known as a “reorganization bankruptcy,” a Chapter 13 bankruptcy requires you to create a repayment plan over three to five years to pay off your creditors. This type of bankruptcy works best if you have a regular income, because it enables you to keep assets like your home or car as long as you stick to the repayment plan.

Chapter 13 bankruptcy can bring much-needed relief if you’re struggling with debt. But it can also have a significant impact for the seven-year timeframe that it’s on your credit report. During that time, lenders who pull your report will be able to see your bankruptcy filing, which can make them more hesitant to extend loans to you. This can make it more difficult initially to rebuild your credit.

While a Chapter 13 bankruptcy can negatively impact your credit score for up to seven years, it may prove less severe than Chapter 7 bankruptcy. In fact, as with Chapter 7, the impact on your credit report can lessen with time. That’s because Chapter 13 bankruptcy involves a repayment plan, which shows creditors that you’re addressing your debt situation. If you can maintain a good payment history and keep your debts under control after you file the bankruptcy, you may be able to improve your credit score over time.

Get in Touch With Richard P. Arthur

Richard P. Arthur, Attorney at Law, can provide advice about how to minimize the effects of bankruptcy on your credit report. You can call 937-254-3738 for a consultation. He has more than three decades of experience helping clients in Dayton and Trotwood, as well as Montgomery, Greene, Miami, Clark, and Warren counties.