Bankruptcy stays on your credit report for a while and affects your ability to get loans or credit cards. Chapter 7 bankruptcy lasts 10 years, while Chapter 13 lasts 7 years. Both start from the filing date, not when the process ends.
The bankruptcy shows up in your credit report’s public records section. Lenders, employers, and landlords can see it when they check your credit. You can’t remove it early unless it’s a mistake. After the set time, it falls off automatically.
Chapter 7 is more severe, as it clears most debts. Chapter 13 involves a repayment plan, which looks better to lenders. Your credit score can start improving before the bankruptcy drops off if you make payments on time.
Types of Bankruptcy and Reporting Duration
The two most common forms of personal bankruptcy are Chapter 7 and Chapter 13.
Chapter 7 is often called “liquidation bankruptcy.” In this process, certain assets may be sold to pay off debts. On the other hand, Chapter 13 is sometimes referred to as “reorganization bankruptcy.” It involves creating a structured repayment plan to address outstanding debts over time.
While these two approaches differ in their mechanics, both can have significant and lasting effects on a person’s credit score and overall financial situation. Due to these serious consequences, bankruptcy is typically viewed as a last resort for those facing severe financial hardship.
How Long Does Chapter 7 Bankruptcy Stay On Your Credit Report?
A Chapter 7 bankruptcy stays on your credit report for 10 years from the date you file. This long period shows how serious bankruptcy is to lenders and credit agencies.
In Chapter 7 bankruptcy, also called “liquidation bankruptcy,” your non-exempt assets are sold to pay off debts. Non-exempt assets might include extra vehicles, valuable collections, or cash savings. After this process, most unpaid debts are cleared or “discharged.” This gives you a fresh financial start, but it comes with a long-lasting impact on your credit.
The 10-year countdown starts when you file for bankruptcy, not when it’s completed. So even if your case wraps up quickly, the record stays on your report for a full decade.
During these 10 years, anyone who checks your credit can see the bankruptcy. This includes:
- Banks and credit card companies
- Potential employers
- Landlords (Read our detailed article on Can Landlords See Bankruptcy on Credit Reports]
- Car dealerships
- Insurance companies
While the effect on your credit score may lessen over time, the bankruptcy entry itself remains visible for the entire 10-year period.
This extended reporting period serves two main purposes:
- It gives lenders a clear view of your financial history, helping them make informed decisions.
- It discourages people from filing for bankruptcy too easily or frequently.
In most cases, it’s exactly 10 years, but occasionally it might come off slightly earlier or later. That’s why it’s a good idea to check back to your credit reports regularly. You can get free reports from each major credit bureau once a year.
After the 10 years are up, the bankruptcy should automatically disappear from your credit reports. If it doesn’t, you have the right to dispute this with the credit reporting agencies and ask them to remove it.
How Long Does Chapter 13 Bankruptcy Stay On Your Credit Report?
A Chapter 13 bankruptcy stays on your credit report for 7 years from the date you file. It’s often called a “wage earner’s plan” or “reorganization bankruptcy.” This type is for people with regular income who can pay back some of their debts over time.
In Chapter 13, you work with the court to create a repayment plan. This plan usually lasts 3 to 5 years. During this time, you make monthly payments to a court-appointed trustee. The trustee then distributes this money to your creditors based on the agreed plan.
Unlike Chapter 7 bankruptcy, you get to keep your property in Chapter 13. This includes important assets like your home or car. In exchange, you commit to repaying a portion of your debts through the repayment plan.
The 7-year countdown starts when you file for bankruptcy, not when you finish your repayment plan. This means the bankruptcy might come off your credit report before you’re done with all your payments. For example, if you have a 5-year repayment plan, the bankruptcy will still be removed from your credit report 7 years after you filed, even if you’re still making payments.
Chapter 13 stays on your report for less time than Chapter 7 (7 years vs. 10 years). Lenders and credit agencies view this more favorably because you’re making an effort to repay your debts, rather than having them completely discharged as in Chapter 7.
During these 7 years, the bankruptcy will be visible to anyone who checks your credit report. This includes:
- Banks and credit card companies
- Potential employers
- Landlords
- Car dealerships
- Insurance companies
As you consistently make your plan payments on time, your credit score might start to improve, even with the bankruptcy still on your report. This is because recent payment history is an important factor in credit scoring.
The impact on your credit score often decreases over time, especially if you keep making payments as scheduled. Your credit score might start to recover even before the bankruptcy falls off your report.
After 7 years, the Chapter 13 bankruptcy should automatically be removed from your credit reports. If it doesn’t disappear on its own, you have the right to dispute this with the credit reporting agencies (Equifax, Experian, and TransUnion) and request its removal.
It’s important to note that while 7 years is the standard, the exact timing can sometimes vary slightly. That’s why it’s a good idea to check your credit reports regularly. You’re entitled to one free credit report from each major credit bureau every year.
Keep in mind that a Chapter 13 bankruptcy shows that you’ve taken responsibility for your debts and are working to repay them. While it does impact your credit, it also provides a structured path to regain your financial footing.
Conclusion
Bankruptcy, whether Chapter 7 or Chapter 13, has significant long-term impacts on an individual’s credit report and financial future. While Chapter 7 remains on credit reports for 10 years and involves liquidation of assets, Chapter 13 stays for 7 years and allows for a structured repayment plan. Both types start from the filing date and appear in the public records section of credit reports. They are visible to lenders, employers, and landlords.
Although the impact on credit scores may diminish over time, especially with consistent payments in Chapter 13, the record cannot be removed early unless it’s an error. After the set period, the bankruptcy should automatically fall off the credit report.