Bankruptcy Guide: How Long Does it Stay on My Credit Report?

One reason that many people don’t file for bankruptcy even when they should is that they fear what it will do to their credit report. They think that the bankruptcy will stay on their report for a decade or more, effectively destroying their credit score and making it impossible for them to get any new lines of credit, including a mortgage or car loan.

The good news is that many of these fears are unfounded. The bad news is that there is some truth in there also.

Different Types of Bankruptcy and Your Report

How long bankruptcy stays on your credit report depends on what type of bankruptcy you file. If you file for Chapter 7 bankruptcy – the kind that discharges most of your debts – you’ll have that mark on your credit for 10 years. If you file for Chapter 13 bankruptcy – the kind that restructures your debt so that it is more affordable to pay back – you’ll have that on your credit for seven years.

It is important to note that a bankruptcy filing also affects accounts listed separately on your credit history. For example, if you file for Chapter 7 in Mesa, your credit card debts are going to be discharged under it. The credit card accounts won’t disappear from your credit report. They will simply show a zero balance and have a note that they were discharged in bankruptcy. These accounts will disappear from your report after seven years, but the bankruptcy filing itself will remain for 10 years.

Gradual Diminishing Impact

You’ll notice the biggest hit to your credit score right after your bankruptcy filing is final. You are likely to see a drastic drop in your score. However, your credit score won’t continue to fall because of your filing. It will only continue to drop if you continue to make late payments and do other things to harm your credit.

You’ll start to see a diminishing impact from your Mesa bankruptcy filing each year. So long as you continue to make good choices and pay your bills on time, you should be able to get approved for new credit in as little as a year. You can even get approved for a prime mortgage loan in as little as two years. Yes, the bankruptcy will stay on your report, but it won’t continue to cause as much damage as you might think.

Improving Your Credit

You can make big improvements to your credit by taking strategic financial steps. The most important thing you can do right from the start is to pay all your bills on time, every time. Any late payment can show that you are a continued financial risk.

You can take baby steps with new credit by opening a secured credit card. This is typically a card that you open through your bank and that is backed by a deposit you have made. The bank is more willing to extend you the credit because it knows that the money to pay the full balance is available in the account. Once you build a history of using that card wisely and paying it promptly, you will be able to open unsecured credit cards with small limits, allowing you to build your credit more.

Filing for bankruptcy may stay on your credit history for a long time, but it doesn’t have to be the financial blow you think it will be. Keep perspective while you remain patient, and take the proactive steps you can to improve your credit. You’ll be back on firm, financial footing before you know it.

If you are struggling with debt, My AZ Lawyers can help you determine if filing for bankruptcy may be the debt relief solution you need. Our experienced bankruptcy lawyers will carefully review your financial circumstances and make recommendations about whether Chapter 7 bankruptcy or Chapter 13 bankruptcy would be a good solution for you. Our attorneys will help you understand how bankruptcy will impact you in the short and long term, for both good and bad. We serve clients throughout the Phoenix area, Mesa, Glendale, and Tucson. Call us today to talk with a bankruptcy attorney about your options.

My AZ Lawyers

Mesa Location:
1731 West Baseline Rd., Suite #100
Mesa, AZ 85202
Office: (480) 448-9800

Glendale Location:
20325 N 51st Avenue Suite #134, Building 5
Glendale, AZ 85308
Office: (602) 509-0955

Tucson Location:
2 East Congress St., Suite #900-6A
Tucson, AZ 85701
Office: (520) 441-1450

Avondale Location:
12725 W. Indian School Rd., Ste E, #101
Avondale, AZ 8539