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How long does bankruptcy affect credit scores

Bankruptcy may damage your credit for an average of 7-10 years, depending on the type and amount of debt before bankruptcy. 

The damage to your credit. 

Nobody likes to file bankruptcies primarily because the credit report is very harmful. On filing, the filer's total credit rating will drop from 160 to 220 points. According to laymen, this is enough to get a good score and bring it down to a financially devastating and bad credit score. 

However, bankruptcy is always safer than allowing debts to grow more, which will harm a credit record even further. With debts piling up, many in this financial situation are late paid, account delinquent, opening new lines of credit and so on ... This can lead to a credit ruin. If you have been in this trouble so it may be time to apply for bankruptcy. 

While bankruptcy can seriously damage your loan, this does not mean that bankruptcy must always be the end of a good credit rating. 

How long is the bankruptcy recorded. 

There are two types of bankruptcy – Chapter 13 and Chapter 7. 

Chapter 7 Bankruptcy – Also known as a bankruptcy just liquidation, in a few months of declaring Chapter 7 bankruptcy will discharge most creditors but the bankruptcy record itself usually stays open for 10 years on a credit sheet. 

Chapter 13 Bankruptcy – Many (and possibly all) debts will remain active during chapter 13 bankruptcy, while collectors are working out a 3-5 year payment plan. Some debts may be released depending on the income of the filing party. Whilst Chapter 13 generally produces a credit report, some of these debts may remain active for a longer period after seven years. 

Bankruptcies tend to vary considerably between individuals and situations and while the period of time that a bankruptcy remains active on a credit report is considered the general rule, many cases of bankruptcy fall much earlier, sometimes only within 2 to 3 years. 

Your credit rebuilding. 

It is never too early to start repairing the reputation after a bankruptcy has been declared. Although you most likely take a significant blow from submitting a Chapter 13 or Chapter 7 loan on your credit scores, you may still be able to purchase a secured credit card, auto loan or rent-to-own loan. This is significant, because you will find yourself without a new line of credit after bankruptcies and debts fall off after 7-10 years. 

It is always necessary to insure that any of the issued debts avoid posting following bankruptcy to the main credit offices, such that the credit score is not excessively diminished.

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