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How Long Must Bankruptcy Remain On Your Credit Report?

held sign that reads what's your score?

Bankruptcy is an appropriate and beneficial option for the millions of Americans struggling with debt.  Bankruptcy, does, of course, have its drawbacks.  Bankruptcy will impact your credit score, both directly and indirectly, for several years.  There are methods to speed up the process of rebuilding your credit score to ensure that your bankruptcy does not prevent you from financing a home or car purchase, renting from a landlord, or otherwise performing tasks which would be hindered by a low credit score.    Below we explain how long a bankruptcy discharge will remain on your credit report and what actions you can take to speed up the process.  Contact an experienced Maryland bankruptcy lawyer with any questions or to discuss your financial needs.

Chapter 7

Chapter 7 bankruptcy involves liquidating any non-exempt assets you may have and using the proceeds to pay off your creditors.  When the proceeds have been distributed to your creditors, all of your qualifying debt will be discharged.  The discharge will generally remain on your credit report for 10 years as a “derogatory mark.”  Additionally, the individual accounts that have been discharged will be listed on your credit report as “discharged” or “included in bankruptcy,” with a balance of $0.  Those individual accounts should disappear seven years after your discharge, or, if the account was already delinquent at the time you filed for bankruptcy, then they should be removed seven years from the original delinquency date.

Chapter 13

A chapter 13 bankruptcy involves creating a repayment plan with your creditors rather than liquidating any non-exempt assets.  The repayment process will typically take three or five years.  Once your debt is repaid, you will receive the discharge.  The discharge will then remain on your credit report for seven years.  As with a chapter 7 bankruptcy, if you were delinquent on an individual account before filing for bankruptcy, that account may be removed from your report earlier.

Steps to Improve Your Credit Score and Credit Report

While it is true that your bankruptcy discharge will appear on your credit report for seven or 10 years, your credit score will nonetheless improve gradually over time.  If you make financially healthy decisions during that time, your score will improve even faster.  For example, when you can secure approval, you can obtain a secured credit card.  If you fully pay it off each month and keep your credit utilization rate low by avoiding maxing it out, your credit will improve faster.

There are also steps to take to ensure that your credit report recovers as quickly as possible.  Your accounts discharged in bankruptcy should update within two to three months; they will be listed as “discharged” or “included in bankruptcy.”  Check your credit report to make sure that the accounts have updated promptly.  After the requisite time period, check to make sure that the accounts are no longer listed.  If the account was delinquent before your bankruptcy, make sure that the account falls off seven years from the date of delinquency rather than from the date of your discharge.  For all other accounts, make sure the negative marks are removed when appropriate.  If there are mistakes on your report, notify the credit bureaus and dispute the errors. 

If you’re struggling with debt in Maryland and want help getting back on the right financial footing, contact a seasoned and knowledgeable Germantown bankruptcy lawyer at Haeger Law for a no-cost consultation at 888-463-3520.