How Long Will a Bankruptcy Stay on My Credit Report?

Bankruptcy is often seen as a road to a fresh financial future. While discharging debts through bankruptcy does provide a fresh start, the record of that discharge will show on your credit report for some time to come. This often prompts the question, “ How long will a bankruptcy stay on my credit report? ” To answer that question it is necessary to learn a bit about how bankruptcy impacts your credit report now and in the future.

How long a bankruptcy shows up on your credit report depends upon the type of bankruptcy you file. Individuals (and married debtors) typically file under chapter 7 or chapter 13; although both chapter 11 and chapter 12 can also be used by individuals. A chapter7 bankruptcy, also referred to as a “liquidation”, will remain on your credit report for ten years from the date the bankruptcy was filed. A chapter 13 bankruptcy, commonly referred to as a “wage-earners” bankruptcy, will remain on your credit report for seven years from the date the bankruptcy was filed.

Negative credit, including a bankruptcy filing,  is sometimes reported after the seven or ten year limit under special circumstances, such as when your credit report is used in connection with applying for a life insurance policy of $150,000 or more, applying for credit of $150,000 or more, or applying for a job with a an annual wage of $75,000 or more.

Even though bankruptcy will impact your credit, bankruptcy usually does more good than harm for your credit. In most cases, a debtor’s credit score is less than exemplary at the time of filing for bankruptcy protection. While your credit score will drop when you file the bankruptcy petition, chances are good that the drop only makes a bad credit score worse – temporarily.

In a chapter 7 bankruptcy your credit score may begin to climb back up immediately after discharge because the elimination of debts caused a dramatic, positive shift in your debt to income ration. Furthermore, lenders may see you as a decent credit risk because they know you cannot file for bankruptcy again anytime in the near future.

In a chapter 13 bankruptcy your credit score may slowly increase during your repayment plan period. As long as you make your monthly payments to the trustee your creditors cannot report you as late or delinquent during the repayment plan period. Furthermore, you are slowly decreasing your debt load, causing your debt to income ratio to improve.

In summary, the record of your bankruptcy will remain on your credit report for a significant period of time; however, an improved debt to income ratio and a higher credit score will likely far outweigh any negative impact the record of bankruptcy filing has on your credit worthiness.

If you believe that bankruptcy is the solution to your financial issues, it is important that you speak with a Kentucky bankruptcy attorney as soon as possible.