How Long Does Bankruptcy Stay on Your Credit Report?

January 7, 2020

Life is full of surprises—both good and bad. And a lot of times, these surprises come with a heavy price tag. Whether it be from illness, loss of employment, or divorce, there may be a time when expenses keep piling up without you being able to pay them off. This ever-present debt can cause great stress in your life, making you unsure if you’ll ever be free from it. When this occurs, some turn to the option of declaring bankruptcy to alleviate the situation.

If you’re considering declaring personal bankruptcy, it’s important to know all the potential implications it can have on your credit report. Keep reading to learn what bankruptcy is, how to declare bankruptcy, and how long it stays on your credit report.

What is bankruptcy?

According to, bankruptcy is defined as “a court proceeding in which a judge and court trustee examine the assets and liabilities of individuals and businesses who can’t pay their bills and decide whether to discharge those debts so they are no longer legally required to pay them.”

The two most common types of bankruptcy are:

1. Chapter 7 Bankruptcy

Chapter 7 bankruptcy is the type that you’re most likely familiar with already. After declaring bankruptcy, you (the debtor) agree that some of your belongings may be sold by the trustee in order to begin paying pay what you owe. There is some property that you will not have to sell, including clothing, essential household furnishings, or a vehicle. With that said, declaring Chapter 7 bankruptcy will not free you from paying child support, taxes, or student loan debt.

2. Chapter 13 Bankruptcy

Chapter 13 bankruptcy involves a formal repayment plan where you will offer a timeframe in which you repay your debts back to the trustee, typically within 3 to 5 years. In order to file for Chapter 13 bankruptcy, you must also have and prove that you have a reliable source of income. It’s also important to note that lenders view Chapter 13 bankruptcy more favorably than Chapter 7.

How to file for bankruptcy

To declare bankruptcy, you’ll need to first make sure that you are eligible. Most people need to take and pass the means test before qualifying for a Chapter 7 bankruptcy. After approval, you’ll need to fill out all of the necessary application forms that highlight your property, income, expenses, debt, and more. Once completed, you’ll file the forms, pay the necessary filing fee, and set up a meeting with the trustee at a court.

How long does bankruptcy stay on your credit report?

Although bankruptcy can help dire financial situations, it doesn’t come without some changes to your credit score and ability to take out a future loan. In terms of your credit report, a Chapter 7 bankruptcy will remain on your credit score for 10 years after you officially filed it. A Chapter 13 bankruptcy stays on your credit report for 7 years. With that said, the effect it has on your credit report will slowly diminish over time, even before the 7 or 10 years are up.

After you’ve filed for bankruptcy, you should begin to slowly work to improve your credit report. This can be done by rebuilding your credit with a secured credit card. By making all of your payments in full and on time, you can begin to see your credit report improve.

Want to be prepared for the unexpected?

We’ve put together our top emergency fund tips to be ready when unexpected costs come your way. And for more personal finance advice, check out our blog.

Illinois Lending is not just a loan provider—we’re a better way to borrow. Find out about our flexible loans so you can avoid payday loans today!

Share on

Complete our secure online form in minutes and get a quick decision!

Get Started