How Long Does Chapter 7 Bankruptcy Stay on Your Credit Report?

Where Does Bankruptcy Appear on Your Credit Report?

Bankruptcy will appear on your credit report under both public records and account information sections; creditors can list accounts that were included in bankruptcy as part of this section.

Chapter 7 bankruptcy will remain on your credit reports for ten years. Discharged debts appear as “included in bankruptcy” with zero balance remaining after they’ve been included or discharged in Chapter 13 bankruptcy, in which an installment plan must be created over three to five years and completed to discharge qualifying debts.

Both types of bankruptcy can have detrimental impacts on your credit score; the exact impact will depend on your overall credit profile. Someone with perfect credit could experience an immediate drop, while someone with multiple negative items already on their report could experience only a gradual reduction.

What Does Bankruptcy Do to Your Credit Score?

Should you decide to file for bankruptcy, expect your credit score to take a significant hit. However, if your initial score was already low before bankruptcy began, its impact may be less dramatic.

Chapter 7 bankruptcy (the type most frequently chosen by consumers) allows a trustee to sell assets in order to pay off creditors. Typically only a portion of any proceeds are given back as compensation to creditors. Additionally, bankruptcy usually remains on your credit report for 10 years after bankruptcy filings.

Chapter 13 bankruptcy allows you to pay back debt over three to five years, while remaining on your credit report for seven years. No matter which form of bankruptcy you select, after seven or 10 years have passed, it is possible to begin rebuilding it through on-time monthly payments and responsible use of credit. This may help offset some of the negative repercussions from filing.

How to Remove Bankruptcy From Your Credit Report

There’s no way to remove an accurate liquidation bankruptcy filing from your credit report. However, you may file a dispute with major credit bureaus if an inaccurate reporting error relating to it arises. Chapter 7 bankruptcy remains on your credit report for 10 years from its filing. By contrast, Chapter 13 remains visible for seven years after your filing.

Bankruptcy is among the many derogatory marks that could appear on your credit report, along with late payments, defaults and charge-offs. Although these negative items should eventually fall off after seven or 10 years of the bankruptcy filing date (depending on state laws), filing a dispute to remove them sooner can often help restore your score as this reduces credit utilization ratios and ensures bills are paid on time with limited new inquiries.