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How Long Does Bankruptcy Stay on Your Credit Report

Dena Standley | May 31, 2024

Dena Standley
Legal Expert, Paralegal
Dena Standley, BA

Dena Standley is a seasoned paralegal with more than 20 years of experience in legal research and writing, having received a certification as a Legal Assistant/Paralegal from Southern Technical College.

Edited by Hannah Locklear

Hannah Locklear
Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

Summary: Consumers typically utilize Chapter 13 or Chapter 7 bankruptcy to alleviate the stress of debts they cannot pay. However, it’s essential to recognize that bankruptcy has long-lasting impacts on your credit and life. Bankruptcy can remain on your credit report for up to ten years, so explore all your options before filing.

Filing or contemplating filing for bankruptcy is daunting. You’ve likely experienced some upset in your life that has caused your debts to snowball out of control. To add to the burden, you’ve probably dealt with an onslaught of calls, texts, and letters about past-due debts and may be struggling to protect your mental health amidst the stress created by finances.

Chapter 7 and Chapter 13 are the two most common types of bankruptcy for consumer debt. These stay on your credit for seven to ten years, and the impact can be profound. This is why bankruptcy is usually considered an option of last resort when other debt repayment or settlement methods have failed.

In this article, we’ll discuss the two most common types of personal bankruptcy individuals utilize, the potential impact on your credit history, and possible alternatives.

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The difference between Chapter 7 and Chapter 13 bankruptcy

If you're considering bankruptcy, you should know the difference between Chapter 7 vs Chapter 13

In 2005, income limits were added to Chapter 7 bankruptcy because it focuses on discharging unsecured debts, such as medical bills, credit cards, and other unsecured debts. It is designed for those who genuinely cannot afford to pay their debts.

The Bankruptcy Abuse Prevention and Consumer Protection Act requires a “means” test based on your income from the past six months. Typically, you will need to make less than the median income level for your state to qualify for Chapter 7.

Conversely, Chapter 13 bankruptcy acts more as a repayment plan for secured debts such as houses, cars, and other high-value assets, allowing you to discharge or pay only a portion of unsecured debts.

Some debts cannot be discharged under either plan. These include:

  • Child support and spousal support (alimony)
  • Debts incurred due to “willful and malicious” injury to another person or property.
  • Court fines or penalties
  • Some types of taxes, such as liens, cannot be discharged. Some local, state, and federal taxes may be dischargeable if they date back several years.
  • Student loan debt was once considered non-dischargeable. However, the Justice Department took action in 2022 to make it possible, but not automatic, to discharge student loan debts.

However, it is essential to remember that you should have more income to put toward these non-dischargeable debts after other debts have been discharged.

To learn more about Chapter 7 vs Chapter 13 bankruptcy, we interviewed a licensed bankrupty attorney. Here's what we learned:

How does bankruptcy impact your credit?

When bankruptcy is unavoidable, you should be prepared for the severe and long-lasting impact it will have on your credit. The most crucial portion of your credit score is your payment history. Since filing bankruptcy declares you were unable to repay your debt, it leaves a significant impact on your creditworthiness.

Chapter 7 bankruptcy remains on your credit report for ten years from the date you file, and Chapter 13 remains for seven years from the bankruptcy filing date. Though they remain on your credit for 7-10 years, the negative impact will start to diminish over time. However, you will have to work hard to rebuild your credit, and you can expect it to be challenging to find affordable credit options for several years.

Bankruptcy and the subsequent impact on your credit score can have unforeseen impacts. Just a few of those include:

  • Difficulty renting a home or an apartment
  • Inability to finance a car or extremely high interest rates if you do find a lender
  • Difficulty finding a job as a bankrupt will appear on background checks
  • Inability to obtain a mortgage
  • Restricted access to personal loans without paying exorbitant interest rates
  • Extremely limited options for accessing credit cards and other revolving credit

It is possible to recover from bankruptcy with time and sound financial management strategies. Federal bankruptcy law requires all individual filers to take pre-bankruptcy credit counseling before the filing date and debtor education classes before debts are discharged. These classes are intended to teach good credit habits and may be a valuable tool whether or not you choose bankruptcy.

Potential alternatives to bankruptcy

Bankruptcy isn’t your only option if you’re dealing with crippling debt. Here are a few bankruptcy alternatives that can help you resolve debt for good.

Know your rights

The first step in avoiding bankruptcy is understanding your rights as a consumer. The Fair Debt Collection Practices Act (FDCPA) and the Consumer Financial Protection Bureau (CFPB) are two entities that protect you from over-aggressive debt collection practices. Just a few of the practices not allowed by the FDCPA Section § 806 include:

  • Using violence or threats of violence to harm a person, property, or reputation.
  • The use of profanities
  • Publishing a list of consumers who refuse to pay (except what is sent to a consumer credit bureaus)
  • Calling you repeatedly or continually with the intention of abuse
  • Stating that nonpayment of the debt will result in arrest or imprisonment
  • Threats of legal actions such as seizures, garnishments, or attachments that either cannot be taken or that they do not intend to take.

If harassment by debt collectors has pushed you to consider bankruptcy, you have other alternatives.

Validate your debt

Send a Debt Validation Letter to each creditor. The letter serves two purposes: It stops creditors from harassing you until they produce a response and forces debt collectors to prove that the debt legitimately belongs to you.

Respond to a debt lawsuit

You have options if you’ve received a Summons and Complaint stating that a debt collector has sued you. First, file an Answer to protect your standing in the lawsuit and avoid a default judgment.

Settle your debt

Even if you’ve been sued, debt settlement might be a great way to resolve your debts and pay less than you originally owed. If you choose to settle, you will negotiate with creditors or debt collectors to pay less than the amount they claim you owe. You can explain any financial hardships or unexpected life circumstances that have led to the unpaid debts. Solosettle can help you start the debt settlement negotiation process.

Bankruptcy may feel like the easiest way to achieve a fresh start on your finances, and in some cases, that’s true. Some circumstances make bankruptcy the best option for consumers seeking protection from creditors, but it shouldn’t be the first option. No one knows the future–and it’s hard to calculate the long-term repercussions of filing for bankruptcy. Let SoloSuit help you explore your options before deciding on the best course of action.

How to Answer a Summons for debt collection in all 50 states

Here's a list of guides on how to respond to a debt collection lawsuit in each state:

The Ultimate 50 State Guide

Guides on how to resolve debt with every debt collector

Are you being sued by a debt collector? We’re making guides on how to resolve debt with each one.

Resolve your debt with your creditor

Some creditors, banks, and lenders have an internal collections department. If they come after you for a debt, Solosuit can still help you respond and resolve the debt. Here’s a list of guides on how to resolve debt with different creditors.

Settle your medical debt

Having a health challenge is stressful, but dealing medical debt on top of it is overwhelming. Here are some resources on how to manage medical debt.

Guides on arbitration

If the thought of going to court stresses you out, you’re not alone. Many Americans who are sued for credit card debt utilize a Motion to Compel Arbitration to push their case out of court and into arbitration.

Below are some resources on how to use an arbitration clause to your advantage and win a debt lawsuit.

Stop calls from debt collectors

Do you keep getting calls from an unknown number, only to realize that it’s a debt collector on the other line? If you’ve been called by any of the following numbers, chances are you have collectors coming after you, and we’ll tell you how to stop them.

Federal debt collection laws can protect you

Knowing your rights makes it easier to stand up for your rights. Below, we’ve compiled all our articles on federal debt collection laws that protect you from unfair practices.

Get debt relief in your state

We’ve created a specialized guide on how to find debt relief in all 50 states, complete with steps to take to find relief, state-specific resources, and more.

Debt collection laws in all 50 states

Debt collection laws vary by state, so we have compiled a guide to each state’s debt collection laws to make it easier for you to stand up for your rights—no matter where you live.

Statute of limitations on debt state guides

Like all debt collection laws, the statute of limitations on debt varies by state. So, we wrote a guide on each state’s statutes. Check it out below.

Statute of Limitations on Debt Collection by State (Best Guide)

Check the status of your court case

Don’t have time to go to your local courthouse to check the status of your case? We’ve created a guide on how to check the status of your case in every state, complete with online search tools and court directories.

How to stop wage garnishment in your state

Forgot to respond to your debt lawsuit? The judge may have ordered a default judgment against you, and with a default judgment, debt collectors can garnish your wages. Here are our guides on how to stop wage garnishment in all 50 states.

Other wage garnishment resources

How to settle a debt in your state

Debt settlement is one of the most effective ways to resolve a debt and save money. We’ve created a guide on how to settle your debt in all 50 states. Find out how to settle in your state with a simple click and explore other debt settlement resources below.

How to settle with every debt collector

Not sure how to negotiate a debt settlement with a debt collector? We are creating guides to help you know how to start the settlement conversation and increase your chances of coming to an agreement with every debt collector.

Other debt settlement resources

Personal loan and debt relief reviews

We give a factual review of the following debt consolidation, debt settlement, and loan organizations and companies to help you make an informed decision before you take on a debt.

How to repair and improve your credit score

Debt has a big impact on your credit. Below is a list of guides on how to repair and improve your credit, even while managing major debt.

How to resolve student loan debt

Struggling with student debt? SoloSuit’s got you covered. Below are resources on handling student loan debt.

Civil law legal definitions

You can represent yourself in court. Save yourself the time and cost of finding an attorney, and use the following resources to understand legal definitions better and how they may apply to your case.

Get answers to these FAQs on debt collection

How-to debt guides

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