How Long Does Bankruptcy Stay On Your Credit Report?
Bankruptcy is bad news for your credit report. It’s the most derogatory of all notations, wreaking havoc on your credit standing and leaving in its wake significant damage from which you’ll be lucky to recover in less than a decade — the longest sentence for any credit-related transgression.
However, the timeline ultimately depends on the chapter you file and whether your bankruptcy is successful, as the following table demonstrates:
|Bankruptcy Chapter||Bankruptcy Record Removed After*|
|Chapter 7||10 Years|
|Chapter 11||10 Years|
|Chapter 12||7 Years|
|Chapter 13 (Discharged)||7 Years|
|Chapter 13 (Nondischarged/Dismissed)||10 Years|
*Timeframes are relative to the date of filing.
Keep in mind, however, that the specific accounts included in your bankruptcy filing will come off your report after seven years from the date of first delinquency, which should benefit your credit standing despite the record of bankruptcy itself remaining. If an account that is part of your bankruptcy was not delinquent at the time of your filing, it will be removed at the same time as your bankruptcy record.
But just because a bankruptcy is listed on your credit report for seven to 10 years does not mean it will consistently hold you back that entire time. For instance, it’s not uncommon for people to begin receiving credit-card offers as soon as one year after going through bankruptcy, and the credit-score impact tends to diminish over time. That is, of course, if you don’t allow your newfound financial leeway to derail your rebuilding efforts by overextending yourself all over again, which unfortunately happens all too often. In 2014, for instance, 36% of the more than 300,000 Chapter 13 bankruptcy filers had filed a prior bankruptcy case in the previous eight years.
4 Tips For Dealing With Bankruptcy On Your Credit Report
Bankruptcy is a complex, high-stakes process — and not even just as it relates to your credit report. You can therefore use all the information and advice you can get. With that in mind, you can supplement the insights in our various bankruptcy guides, including our Bankruptcy Overview and analysis of bankruptcy costs, with the following tips specific to your credit report:
- Confirm Its Legitimacy: Credit reports are infamous for their inaccuracy, as roughly one in five consumers have an error in at least one of their credit reports that is serious enough to prevent credit approval. It’s therefore possible that the bankruptcy listed on your credit report — or the account(s) supposedly included in the bankruptcy — is a mistake. If you believe that to be the case, make sure to check out our article on what to do about an unrecognized bankruptcy.
- Seek Free Counsel: From WalletHub guides and other online resources to initial consultations with bankruptcy attorneys and nonprofit credit counselors, you have many free tools at your disposal that you can use to more confidently navigate the bankruptcy process. Plus, it could even be possible to stop the process before it really gets started, if you have the right help. In other words, preventative financial care can help solve your monetary woes before the “B” word even enters the equation.
- Sign Up For Credit Monitoring: Moving forward, it’s best to stay abreast of your credit report’s every move. But no one has time to do that on their own, especially while working to rebuild after bankruptcy. That’s where a free 24/7 credit monitoring service like WalletHub’s comes in handy, providing peace of mind in the form of an early warning system for any important change to your file.
Don’t Wait To Rebuild: Bankruptcy takes credit scores to the depth of the scale, and there’s not much you can do to prevent that before your case is discharged. But the recovery process should begin shortly thereafter.
The best, least expensive way to begin is to place a deposit on a secured credit card, use it to make small everyday purchases and then pay your bill both on time and in full every month. After all, some secured credit cards – such as the Open Sky Visa, for example – don’t even require a credit check. You can get more specifics on this strategy from our article on How To Rebuild Credit In 8 Steps.
Image: Topp_Yimgrimm / iStock.
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