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How long will a discharge show up on someone’s credit report?

On Behalf of | Jul 28, 2023 | Bankruptcy And Debt Relief

The ultimate goal of a bankruptcy filing is the discharge of someone’s unsecured debts. While many people time their filings to benefit from the protection of an automatic stay in ways that will halt aggressive collection activity, the main benefit that most filers derive is a discharge at the end of the process.

Creditors will not be able to continue pursuing the amounts discharged during bankruptcy, allowing the filer to rework their budget and move on with their life. The main downside to a bankruptcy discharge is that it results in a very significant blemish on someone’s credit report. A successful bankruptcy will likely bring an individual’s credit score down by a few hundred points. How long will the credit bureaus continue to report someone’s bankruptcy discharge to lenders, employers and others who perform credit checks?

The type of bankruptcy determines the length of reporting

There are actually different rules that apply to different types of personal bankruptcy. Those who qualify for Chapter 7 bankruptcy because they can pass the means test can receive a discharge relatively quickly. However, the record of their discharge will remain on their credit report for 10 years after the discharge. A Chapter 13 filing will take much longer to result in a discharge. People have to complete a multi-year repayment plan before the courts will discharge the balance that remains on their unsecured debts. After discharge, the record of the Chapter 13 filing will remain on someone’s credit report for seven years.

The impact drops over time

Although a bankruptcy will still show up for roughly a decade after someone initially files, the negative impact of that bankruptcy record on someone’s credit report will decline steadily, especially if someone starts building a positive history of appropriate credit use.

Overall, many people find that the long-term impact of a single credit report issue related to a bankruptcy discharge is less damaging than the credit damage caused by multiple delinquent accounts and judgments. Understanding the long-term consequences of a personal bankruptcy filing may help people make better choices about seeking debt relief and the timing of a bankruptcy case.