When will your bankruptcy come off of your credit report?

On Behalf of | Feb 8, 2022 | Bankruptcy Law |

The misinformation people share about bankruptcy might prevent someone coping with unsustainable levels of debt from filing. Common myths about bankruptcy include the idea that you lose all of your property and that you will never be eligible for credit again.

Some people believe that they can get credit after bankruptcy but expect to always receive subpar credit offers because of the blemish on their record. The truth is that bankruptcy will limit your credit options for years. However, people can start rebuilding their credit with secured credit cards and similar financing options just a few months after their discharge.

Eventually, someone’s credit report will no longer have a record that they even filed for bankruptcy. How long does it take for the credit bureaus to stop reporting a personal bankruptcy discharge?

The length of reporting depends on the form of bankruptcy

There are different kinds of personal bankruptcy that work better for people in different situations. Many people filing for bankruptcy as an individual will choose either Chapter 13 bankruptcy or Chapter 7 bankruptcy.

Chapter 7 is also known as a liquidation filing. It may require that someone sells off some of their assets, but it will lead to a discharge of their unsecured debts relatively quickly. Someone who successfully filed for Chapter 7 bankruptcy will have the discharge on their credit report for 10 years.

In a Chapter 13 Bankruptcy, the person filing usually makes payments on their unsecured debt through the courts for at least three years prior to their discharge. When the courts eventually discharge the remaining balance on those accounts, the record of that discharge will affect someone’s credit for seven years, just like any other blemish.

Once a bankruptcy comes off of a credit report, the credit bureaus can no longer report the discharge. Future lenders will then not be able to when deciding whether to offer you financing in what terms they want to approve for your loan. 

Filing for bankruptcy can be a way to improve your credit in the long run

People become so fixated on the idea that bankruptcy hurts their credit score that they overlook the long-term benefits. Yes, credit scores drop when someone files for bankruptcy, and the record of a bankruptcy discharge will limit someone’s financial options for years.

However, when the bankruptcy discharge comes off of someone’s credit report, they may have a better score than they had at the time that they filed. Learning more about how bankruptcy works can help you decide if it is a viable solution for your financial troubles.


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