Don't Let Bankruptcy Kill Your Credit Forever
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Don’t Let Bankruptcy Kill Your Credit Forever

John Ulzheimer
Written by John Ulzheimer

You won’t be surprised to find bankruptcy on the list of credit killers you want to avoid. When you choose to file for bankruptcy protection from your creditors, the impact to your credit scores will be devastating and long-lasting. The temptation of walking away from overwhelming debt may sound appealing, but it is important to only use bankruptcy as the absolute last resort.

How Bankruptcy Impacts Credit Scores

Bankruptcies will have a negative impact on two different sections of your credit reports. First, it will show up in the public record section of your three credit reports.  In addition to the public record, each debt that was included in the bankruptcy will be noted as such on your credit reports. Each account will be considered a serious derogatory.

How Long Bankruptcy Impacts Credit Scores

The Fair Credit Reporting Act (FCRA) is the law that governs how long bad stuff can remain on your credit reports. A Chapter 7 Bankruptcy, also known as liquidation, is permitted to remain on your credit reports for 10 years from the date the bankruptcy was filed. A Chapter 13 Bankruptcy, also known as reorganization, has slightly more complicated credit-reporting rules than the Chapter 7. The credit reporting agencies must purge a Chapter 13 Bankruptcy from credit reports either 7 years from the date the bankruptcy was discharged or 10 years from the date the bankruptcy was filed – whichever comes first. Essentially both types of consumer bankruptcies can remain on your credit reports for a decade.

About the author

John Ulzheimer

John Ulzheimer

John Ulzheimer is a nationally recognized expert on credit reporting,
credit scoring and identity theft. He is the credit blogger for
VantageScore Solutions, JD Byrider, The Credit Solution Program , and
the National Foundation for Credit Counseling. Formerly of FICO and
Equifax, John is the only recognized credit expert who actually comes
from the credit industry.

1 Comment

  • It is interesting just how often the question is asked “how will my credit score be affected by filing for bankruptcy?” The answer almost always to this concern is “well, isn’t your credit score bad now?”

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