What Happens When Bankruptcy Comes Off Your Credit Report?

Bankruptcy is the scarlet letter on your credit report that can cause lenders to avoid you like the plague. Fortunately, bankruptcy does not stay on your credit report forever. The Fair Credit Reporting Act dictates that bankruptcy stays on your credit report for 10 years after your file. While that is a long time, bankruptcy does not automatically disqualify you from obtaining credit while you wait for it to come off your credit report.


When you file for bankruptcy, you admit that can't pay your debts in current form. You either file Chapter 7, which is total liquidation of your assets to completely eliminate your debt, or Chapter 13, which realigns your payments to a manageable level. When your bankruptcy is complete, it is considered "discharged." While the bankruptcy is finished, the effects it has on your credit report remain.

Effect on Credit

One of the first sections on your credit report lists public records. This section shows any judgments, liens and bankruptcy. Even though your bankruptcy is discharged, it will remain on your report for 10 years, regardless of whether you filed Chapter 7 or Chapter 13. Every time you apply for financing, lenders will see that you filed for bankruptcy in the past.


You can start rebuilding your credit long before the bankruptcy comes off your report. In the early days after the discharge, you might find it more difficult. You are more likely to be denied credit and, even if approved, you will be subject to higher interest rates and fees than someone with squeaky clean credit. The key is to only take on new debt that you can handle. Make your payments as agreed and always on time to prove you can handle the debt. As time goes by and you handle your credit responsibly, your credit score will improve. By the time the bankruptcy comes off your credit report, you should be in much better shape when applying for financing.

Moving Forward

Before bankruptcy comes off your credit report, try to learn from the mistakes that pushed you toward filing in the first place. While your credit will have improved over the 10 years since you filed for bankruptcy, it likely won't be perfect. Many bankruptcies arise from situations like job loss or high medical expenses. While you can't always prevent these from occurring, putting money aside for emergencies can minimize the damage. Also, work to improve your budgeting. Whether that involves going to credit counseling or using budget software, do what you can to learn to properly manage your money.

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