How Long Does a Bankruptcy Stay on Your Credit Report?

If you’re considering filing for bankruptcy, you’re likely wondering how it will affect your credit score. The good news is that bankruptcy does not stay on your credit report forever. However, the bad news is that it will remain on your report for years, making it difficult to get approved for new lines of credit. 

Discover how long bankruptcy stays on your credit report and what you can do to improve your credit score after filing.

How Does Bankruptcy Affect Your Credit Score?

The legal process of bankruptcy filing can negatively impact credit scores for the first few years. You may find it difficult to get approved for new lines of credit during this time because creditors will see that you have filed for bankruptcy. This is because bankruptcies are considered “negative marks” on your credit report.

Credit bureaus keep track of negative events, such as bankruptcies, late payments and foreclosures. The longer ago the event occurred, the less impact it will have on your score. This can also impact your ability to get approved for a lease or loan. Most landlords and lenders use credit scores to evaluate applications, so a low score may mean you’re less likely to get approved.

Banks may also be hesitant to approve you for a new credit card or line of credit because they see that you’ve filed for bankruptcy. These institutions access credit reports using the FICO score, a numerical representation of your creditworthiness, to evaluate applications.

However, as time goes on, the effect will lessen. Time heals all wounds, as they say. After a few years, you may see your credit score improve. Because a credit report depends on credit history, and bankruptcy wipes the slate clean, you’re starting from scratch. After the bankruptcy is off your credit report, you may be able to get approved for new lines of credit.

Chapter 7, Chapter 11 and Chapter 13 Bankruptcy

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Photo by Scott Graham on Unsplash

Chapter 7, Chapter 11 and Chapter 13 are some of the most common types of bankruptcy. Depending on your circumstances, you may qualify for one of these types of bankruptcy. Because each type of bankruptcy has different requirements, you’ll want to speak with an attorney to see which type is right for you.

Chapter 7

Chapter 7, a type of individual or consumer bankruptcy,  liquidates your assets to pay off creditors. This type of bankruptcy is known as “straight” or “liquidation” bankruptcy. If you have a low income and few assets, Chapter 7 may be your best option. Many people who file for Chapter 7 are able to discharge their personal loans and some unsecured debt and start fresh.

Chapter 11

Chapter 11 bankruptcy is typically used by businesses to reorganize their debts. Individuals can also use this type of bankruptcy, but it’s less common. Chapter 11 bankruptcy allows you to keep your assets and reorganize your debts. This type of bankruptcy is more complex than Chapter 7 and typically takes longer to complete.

Chapter 13

Chapter 13 bankruptcy is also known as the “wage earner’s” plan. This type of bankruptcy reorganizes your debts, sets up a repayment plan, and allows you to keep your assets. To qualify for Chapter 13, you must have a regular income, and your debt must be below a certain limit. If you have a higher income or more debt, you may not qualify for this type of bankruptcy.

How Long Does Bankruptcy Stay on Your Credit Report?

Depending on the type of bankruptcy you file, the time it stays on your credit history will vary. But the general length of time is seven to ten years. Chapter 7 and Chapter 11 bankruptcy stays on credit reports for about ten years after filing. On the other hand, Chapter 13 bankruptcy can last up to seven years.

You may also see the bankruptcy notation on your report for up to ten years after discharge. However, this will not have as much of an impact on your score as the actual bankruptcy filing.

But some people may see bankruptcy removed sooner than seven to ten years. A delinquent account included in the bankruptcy may be removed from your credit report after seven years. So if your few old delinquent accounts dragging down your score become discharged debts, you may see your score improve after seven years.

Which Type of Bankruptcy is Better for Your Credit Score?

Chapter 7 bankruptcy will negatively impact your credit score more than Chapter 13. This is because your assets are liquidated in a Chapter 7 bankruptcy to pay off creditors. As mentioned, credit reports will show a Chapter 7 bankruptcy for up to ten years after the filing date, so it will have a long-term effect on your credit score.

Chapter 13 bankruptcy, on the other hand, may be better for your credit score in the long run. This is because you can keep your assets and reorganize your debts. Many people who file for Chapter 13 can improve their scores over time. And, since it can only stay on your credit report for up to seven years, it won’t have as long of a negative impact on your score.

Meanwhile, Chapter 11 bankruptcy is typically used by businesses, so it’s less common for people. If you do choose to file for Chapter 11 bankruptcy, it will have a similar effect on your credit score as Chapter 7.

Keep in mind that no matter which type of bankruptcy you file, it will have a negative impact on your credit score. You can work with a credit repair service to help you improve your score after bankruptcy.

What Can You Do to Improve Your Credit Score After Bankruptcy?

young woman helping old man with credit card and laptop
Photo by Andrea Piacquadio on Pexels

Although bankruptcy can harm your ability to borrow money in the short term, you can take steps to improve your credit score after bankruptcy. A good score can help you qualify for loans and get better interest rates, so it’s worth taking the time to improve your credit score altogether.

1. Get a secured credit card

A secured card is a great way to start rebuilding your credit because it requires a security deposit that acts as collateral in case you default on the card. A traditional credit card doesn’t have this deposit, so it can be harder to get if you have bad credit.

2. Use a co-signer

If you’re having trouble getting approved for new lines of credit, you may consider finding a co-signer who can help you get approved. A credit card issuer may be more likely to approve you for a card if you have someone with good credit who is willing to co-sign. Just be sure to make all of your payments on time, so you don’t damage their credit in the process.

3. Keep balances low

One of the most significant factors in determining your credit score is how much of your credit you use at any given time. To keep your score high, aim to keep balances below 30% of your available limit. Your credit utilization ratio will improve as you pay down your balances, so be sure to keep up with your payments.

4. Make payments on time

This one goes without saying, but making all your monthly payments on time is essential if you want to improve your credit score. Set up automatic payments if necessary so you never make a late payment. Your credit limit will increase over time as you demonstrate your ability to make on-time payments. Credit limits, in turn, help to determine your credit utilization ratio.

5. Check for errors

If you see any errors on your credit report, be sure to dispute them right away. This can help improve your score by removing blemishes that shouldn’t be there. A credit repair service can help you identify and dispute errors on your credit report and offer financial protection against other credit issues.

How Can You Avoid Bankruptcy in the Future?

Bankruptcy is a serious decision that should only be made as a last resort. But if you’ve already gone through bankruptcy, there are things you can do to avoid it in the future.

1. Stay out of debt

Most people who file for bankruptcy do so because of overwhelming debt. So one of the best ways to avoid bankruptcy in the future is to stay out of debt. You can do this by only using your credit cards for emergencies and paying off your balances in full each month.

2. Make a budget

Another way to avoid accumulating too much debt is to make a budget and stick to it. Track personal finance and ensure you’re not spending more than you can afford. Doing this will help you stay on top of your finances, avoid debt, and keep a good credit score.

3. Keep an eye on your score

Monitoring your credit score is an excellent way to catch any potential problems early on. This way, you can improve your score before it gets too low. offers free annual credit reporting from the top three credit bureaus in the US: Experian, Equifax, and TransUnion, so you can check yours periodically.

4. Use credit wisely

If you do use credit, be sure to use it wisely. This means only borrowing what you can afford to pay back and making all your payments on time. Using credit responsibly will help you avoid debt and keep your credit score high.

5. Have an emergency fund

An emergency fund can help you cover unexpected expenses without having to rely on credit. This way, you can avoid accumulating debt and falling into financial trouble. Try to save up enough to cover 3-6 months of living expenses, so you’re prepared for anything.

If you’re considering declaring bankruptcy, it’s crucial to understand how it will affect your credit score. While bankruptcy will stay on your report for many years, there are things you can do to help improve your score after filing. By following the tips above, you can help rebuild your credit and get back on solid financial footing.

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