Bankruptcy is a viable option that helps hundreds of thousands of Americans each year put their heads above water after drowning in debt. However, once a person files for bankruptcy, it can wreak havoc on their credit report. Even after recovering financially, a person may try to buy a car or take out a loan for a home and find that they cannot do so with their new credit score. Many landlords now require credit checks before renting out homes or apartments. How long do bankruptcies affect a person’s credit report after filing?

Unlike diamonds, bankruptcies are not forever. There will be a time when your credit score will no longer reflect your past bankruptcy. The amount of time bankruptcy will affect your score depends on the type of bankruptcy you filed.

How Long Does Chapter 7 Bankruptcy Affect Your Credit Report?

During Chapter 7, assets are wholly liquidated to pay creditors, wiping away all qualified debt. Once the liquidation process is complete and the liquid assets have been distributed amongst the creditors, the person filing bankruptcy is discharged. Commonly, a Chapter 7 bankruptcy discharge remains a “derogatory mark” on a credit score for ten years. During that decade, the discharged debts will most likely be listed on the report with a balance of $0 and a note that they were included in the bankruptcy.

How Long Does Chapter 13 Bankruptcy Affect Your Credit Report?

Filing Chapter 13 bankruptcy creates a payment plan for people making enough income to pay their debts, just not during the time frame they were given. Typically, they are given an additional 3-5 years to pay back what is owed. A Chapter 13 filing stays on a credit report for seven years after the filing date.

How Do You Rebuild Your Credit After Filing for Bankruptcy?

Bankruptcies will always play a part in the calculation of your credit while they are on your record. However, each year that passes after the original filing lessens the overall impact it has on your score. So while the initial credit score drop can seem jarring, by the end of the first year there will already be less impact.

Each credit situation and profile will react differently to having a bankruptcy added to the mix. To learn the best ways to improve your situation, speaking in person with a credit expert is prudent. Some general tips are applying for secured credit cards, which require a deposit, and paying your monthly bills on time and in full.

It is important to note that if you believe there are mistakes on your credit report making it unreasonably difficult to control your financial situation, you may want to reach out to a debt relief attorney with the proper qualifications to assist you. If you have further questions, call our law office to schedule a consultation with a knowledgeable lawyer.