Your credit score can affect almost every part of your life. You will pay more in interest on a mortgage when you have a bad credit score and also more for car insurance. You may have a harder time getting well-paid positions at companies or qualifying for a promotion with your current employer.
The possible credit impact of bankruptcy is one of the reasons people put off filing even when they know they can’t regain control over their debt. The record of your bankruptcy discharge will continue to lower your credit score and diminish your credit opportunities for years.
How long will the record of your bankruptcy impact your credit report?
There are special reporting rules for bankruptcy
Most creditors can only report a debt or a judgment for seven years. After seven years, those blemishes and missed payments will no longer be visible on your credit report and will therefore no longer factor into your credit score.
For bankruptcy records, the rules are slightly different. The kind of bankruptcy you file determines how long it will remain on your credit report. A Chapter 7 bankruptcy will be on your credit report for 10 years following your discharge. A Chapter 13 filing will remain on your credit report for seven years after discharge.
While lenders and employers can see the bankruptcy for seven or 10 years after your discharge, how much importance they assigned to your bankruptcy will go down a little bit every year. Most people can qualify for credit cards within the first year after their discharge and bigger loans within a few years.
Learning more about bankruptcy and how it affects your finances may help you feel more confident about filing for the protection you need.