I get it. You’re antsy. You want to know exactly how long does a bankruptcy stay on your credit report because… well, who wouldn’t? You want to move on with your life and put your bankruptcy behind you.
I know because I’ve been there. I filed bankruptcy in 2006. You can read all about my personal bankruptcy story here.
I’m not proud of it, but I’ve learned to embrace it. And now I’m doing my best to educate others and hopefully bring some peace of mind and support throughout the process.
I’m going to cover a few things that will hopefully address a lot of questions you have about how long your bankruptcy stays on your credit report including potential exceptions for having your bankruptcy removed early.
- Exactly how long does a bankruptcy stay on your credit report?
- Can you have your bankruptcy removed early?
- What bankruptcy attorneys and credit repair companies will tell you.
- Will your bankruptcy drop off your credit automatically?
- What to do while you wait for your bankruptcy to be removed.
First, the basics.
When does bankruptcy fall off your credit report?
When a bankruptcy falls off your credit report depends on the type of bankruptcy you filed. Most folks file chapter 7 bankruptcy which likely remains on your credit report for 10 years.
If you filed chapter 13 bankruptcy chances are it will remain on your credit report for seven years.
From the Experian website:
The bankruptcy public record is deleted from the credit report either seven years or 10 years from the filing date of the bankruptcy, depending on the chapter you filed.
Chapter 13 bankruptcy is deleted seven years from the filing date because it requires at least a partial repayment of the debts you owe. Chapter 7 bankruptcy is deleted 10 years from the filing date because none of the debt is repaid.
OK, so you probably already knew this information. Not that it’s common knowledge, but a quick Google search uncovers these bankruptcy drop-off dates pretty quickly.
What you’re likely wondering is whether or not you can get your bankruptcy to fall off your credit any sooner than these standard timelines.
Can you remove your bankruptcy early?
The short answer is… no, almost certainly not.
I know, that sucks. It’s not what you wanted to hear, and you’re probably thinking:
“But Travis, you used phrasing like “likely remain” and “chances are” when you described how long my bankruptcy will stay on my credit just a minute ago.”
OK yes, there are fringe cases.
Chapter 13 bankruptcy early removal
The one I know most about applies to getting your chapter 13 bankruptcy removed early. There are several seemingly legitimate reports of individuals successfully having their bankruptcies removed before the seven year mark.
They all mention an early exclusion request to the three major credit bureaus. But here’s the catch, if you are successful in getting an early exclusion you may not get it with all three credit bureaus. Furthermore, you’re unlikely to get it much sooner than your chapter 13 bankruptcy would fall off anyway.
All reports I’ve seen indicate that their chapter 13 bankruptcy was removed via early exclusion between 1-6 months early. Now, if you’ve waited 6.5 years for your bankruptcy to fall off, that next six months generally isn’t a big deal.
But if you’re planning to buy a home, car, etc. it can make a big difference in your ability to borrow at a more competitive rate. Take a look at how much my credit improved after my bankruptcy came off. You can bet my interest rates are far more favorable with an 800+ credit score!
Chapter 7 bankruptcy early removal
When it comes to chapter 7 bankruptcy the road is a bit longer… almost 50% longer (ugh!). It’s a long time to wait, I know. But you will see progress along the way (see below).
Before I get into that though, let’s talk about credit repair companies.
Early bankruptcy removal with a credit repair company
It’s tempting to believe that all you have to do to have your chapter 7 bankruptcy removed early is to work with a credit repair company so they can leverage their expertise and free you from credit purgatory.
It sounds simple, right? Retain a credit repair company on a monthly basis and in a few months… voila, your bankruptcy blemish is gone. Thinking about it now it sounds too good to be true and a bit silly. It’s both.
But when I was looking into credit repair companies back in 2011 many of them boasted the number of bankruptcies they’ve successfully removed for clients. So while it sounded like fantasy, it sure seemed plausible. And although the monthly fees for credit repair aren’t cheap, they sure would be worth a bankruptcy removal!
Well, the short story is that while I had an overall great experience working with two different credit repair companies between 2011 and 2012, they were not able to get my bankruptcy removed. I had to do it the old fashioned way: waiting for the 10-year mark.
So while I do believe that credit repair companies have their place in rebuilding one’s credit, if you’re signing up with the expectation that they’ll be able to remove your bankruptcy you’re likely to be disappointed.
Errors on your bankruptcy filing is grounds for removal
You’ll hear this all the time. You have a legal right that your credit history is correct and accurate. This is known as The Fair and Accurate Credit Transactions Act (FACTA).
Essentially, this means that if there are inaccuracies on your credit report you can dispute them and have them corrected. The keyword here is “corrected”. Here’s an excerpt from the FTC website I just linked to:
“Under the FCRA, both the credit reporting company and the information provider … are responsible for correcting inaccurate or incomplete information in your report.”
The emphasis is mine. I wanted to highlight the terminology they use about correcting inaccurate information. Notice it doesn’t say removing inaccurate information.
Many credit repair companies, bankruptcy attorneys, etc. will tell you that bankruptcies can be removed if they include inaccurate information. That’s not what the FTC website is saying though. Based on their word choice, the bankruptcy would simply be corrected to reflect the accurate information.
My point here is simple: If someone is telling you that a bankruptcy can be removed you should be skeptical (at best) and consider why someone may be telling you this. Are your interests aligned? Chances are they aren’t.
Finally, I have never met anyone, spoken with anyone, or read an actual, legitimate account of someone having their bankruptcy removed due to an inaccuracy. It likely doesn’t happen. If you’ve had success with this “strategy” please let me know in the comments.
The seventh year stretch
In baseball they have the seventh inning stretch for spectators to get up and stretch their legs before the final innings. Well, waiting for your chapter 7 bankruptcy to fall off has a seven year stretch.
Earlier I told you that you’d see progress along the way while waiting for your bankruptcy to drop off. This is it. After seven years all the accounts that were included in your bankruptcy filing will fall off your credit report.
Yes, your bankruptcy is still there, but this is progress… progress you can see. In fact, you should see a nice bump to your credit score when this happens assuming you’ve been proactive and smart about your credit since filing bankruptcy (see my tips below).
So stay strong and look forward to this milestone.
Will my bankruptcy fall off my credit automatically?
OK, so at this point you’ve accepted that your bankruptcy is likely on your credit report for the respective duration. And if you’re anything like me once you hit the 12-month mark before your bankruptcy falls off you’re probably literally counting the days.
I know I was. The date was on my calendar with multiple reminders days before. I felt like I was a kid counting down to Christmas. Naturally, you want to know exactly what’s going to happen. Will your bankruptcy be removed from your credit report automatically?
Again, this is where The Fair and Accurate Credit Transactions Act (FACTA) is your friend. That’s the act that requires credit bureaus to report accurate information on your credit reports.
Since the maximum time a bankruptcy can stay on your credit report is 7 or 10 years (depending on type of bankruptcy), your bankruptcy will automatically fall off at that time.
If your bankruptcy isn’t automatically removed on the date you believe it should be I would do two things:
- Quadruple check the filing date. This is the date that a bankruptcy’s age originates from. If you don’t recall the exact filing date you won’t know exactly when your bankruptcy will fall off.
- Give one (or more) credit bureaus a call and see why the bankruptcy wasn’t automatically removed.
After checking my filing date about a thousand times, I knew when my bankruptcy was set to fall off. I wasn’t disappointed. I fired up CreditKarma the exact day of the drop off and it was gone. My credit score popped big time!
What you to do while you wait for your bankruptcy to fall off
If you aren’t being proactive with your credit while waiting for your bankruptcy to clear from your credit report, chances are you won’t see a big pop in your credit score like I did. Here are some things you should be doing while you serve your 7 or 10 year jail term.
Get a new bank account if you need one
The first thing I had to do after filing for bankruptcy was to open a new bank account. I was with Bank of America and I had a credit card with them too. The credit card account was included in my bankruptcy so I was no longer in good standing with them.
I opened an account at a local, regional bank and was good to go.
Start budgeting, seriously!
If you asked me the one thing I wish I’d started doing 10 years ago, this is it: start budgeting!
Budgeting isn’t sexy, it never will be. But you know what’s even less sexy than budgeting? A financial emergency. Yeah, not fun.
Every month the wife and I sit down and go over our finances with YNAB, the only tool that just might make budgeting sexy. We have set it up so that we’ve planned for literally everything.
Get a free month of YNAB when you sign up here with my referral link.
No, it’s not a free tool, but it’s only $55/year and the amount of stress and headaches it saves us is worth ten times that. I’ll do a post about how I use YNAB in the future, but if you’re serious about taking control of your financial future it’s a must have tool.
Open new credit accounts
Once you feel comfortable with your budget it’s time to focus on rebuilding your credit history. This is tough at first; you might have to get a crappy credit card with an annual fee. That’s all that seemed to be available to me for awhile, but I refused to pay an annual fee so I waited.
Eventually I was approved for a Capital One credit card with a very low balance, but it was a nice start. Capital One was always good to me during my post-bankruptcy life. It truly felt like they gave me a shot when nobody else would. After a few years post-bankruptcy I actually secured a car loan with them too.
Remember, quality is better than quantity here just like anything else. Work your way up to 3-4 total credit accounts and make sure you’re paying them all on time and using them responsibly.
There’s no need to have a bunch of different accounts. In fact, having too many accounts might make potential creditors worry about your potential to go nuts and fall deep into debt you can’t climb out of. Try thinking about things from their perspective.
Clean up your credit history
My bankruptcy wasn’t the only blemish on my credit reports. Chances are you have several derogatory marks hurting you too.
Whether these are valid or not doesn’t matter in my opinion. If you’re truly reformed and humbled after your bankruptcy and ready to get with the program, do everything you can to have them removed.
You can dispute items yourself or work with a credit repair company. In my experience this was an ongoing process, but also well worth it.
Stay current with your payments
I shouldn’t have to say this, should I? Pay your bills on time!
If there’s one signal that broadcasts trust to potential creditors it’s a history of on time payments, every time. This is easy to do. Set up automatic payments on everything so nothing slips through the cracks.
And if you’re using YNAB to budget like I discussed above, you should have no problems planning for and paying your bills every month.
Monitor your credit
I use CreditKarma to monitor my credit. They don’t provide you a “true” score, but I’ve found that it’s relatively accurate. If anything, their score underreports what your actual credit score truly is.
There are services you can pay for to access your true credit score, some even offered by the main credit bureaus themselves. I’ve used them but I don’t recommend them.
Credit Karma is a free service and does a great job for my needs. They make money when you sign up for credit card offering through their site. I’ve never done this because I prefer doing more independent research on credit cards, loans, etc. before making a decision. So be aware that Credit Karma’s interests may not always be aligned with yours.
Waiting for your bankruptcy to finally leave your credit card is a long process. But there’s no shortage of things to do while you wait! My advice is to stay strong and positive. Focus on building for the future rather than looking back and trying to erase the past. It’s far more beneficial and mentally healthier. You’ll also be able to see yourself make progress along the way.
Best of luck on your journey to being bankruptcy free. I hope this article helps educate and give you some guidance. And please, don’t hesitate to reach out in the comments if you have any questions.