How Bankruptcy Affects Your Credit

Bankruptcy certainly can be a wise tool if you are overwhelmed and simply unable to pay the debts that you accrued. In that sense, bankruptcy can give you a fresh start. A bankruptcy filing and discharge, however, also will significantly impact your credit.

Whether you intend to buy a new car, apply for a credit card, or get a home mortgage loan, your credit report is instrumental. Potential creditors look at your credit report to determine how big of a risk it would be to loan you money. If you have negative entries on your credit report and a lower credit score, the amount of money you can borrow will be lower and the interest rate higher. As a result, having good credit can be crucial to getting the best deal when looking to make high-dollar purchases for which a loan is necessary.

Similarly, having a bankruptcy on your credit report may prevent you from getting credit. You may be unable to get a credit card. You also may be unable to get approval for a mortgage or vehicle loan. If a landlord runs a credit check before renting to you, he or she may decide not to rent to you out of fear that you won’t pay your rent in the future. However, having multiple delinquent accounts on your credit report already lowers your credit score, so adding a bankruptcy notation may not do more damage.

How Bankruptcy Impacts Your Credit Report

Unfortunately, a bankruptcy discharge will remain on your credit report for years, but it will not remain forever. The length of time that your bankruptcy will remain on your credit report depends on the type of bankruptcy discharge that you received. A Chapter 7 bankruptcy discharge will remain as a negative mark on your credit report for ten years. Additionally, any debts that you discharged in bankruptcy will appear on your credit report with a “bankruptcy” or “discharge” notation for seven years from the date that you filed bankruptcy or became delinquent on the account.

In a Chapter 13 bankruptcy proceeding, you typically pay off a portion or all your debts over a three or five-year period. A Chapter 13 bankruptcy discharge remains on your credit report for seven years. Just like with a Chapter 7 discharge, the debts you discharge in your bankruptcy will drop off your credit report seven years from the date you filed bankruptcy or the date that the debts became delinquent, whichever is earlier.

How Your Bankruptcy Could Affect the Credit Reports of Others

In some cases, even if only you file for bankruptcy, your bankruptcy filing may adversely affect the credit of other people, too. For instance, your bankruptcy filing won’t be noted as a bankruptcy on your spouse’s credit report (unless you jointly filed for bankruptcy). Nonetheless, if you and your spouse are jointly responsible for a debt and the debt is delinquent or involved in the bankruptcy, then the credit bureau could note that debt as being subject to a bankruptcy filing. This notation could negatively affect the credit score of the spouse.

Likewise, if you had a friend or family member co-sign a loan for you, and the debt becomes delinquent or subject to your bankruptcy, the friend or family member could seek a negative mark on his or her credit report. While the bankruptcy filing will not appear on the co-signer’s credit report, the delinquent debt could still impact the co-signer’s credit score, even if you agreed to be responsible for the debt. However, if the account is a vehicle or mortgage loan and you can keep the account current, the debt should not affect your co-signer’s credit.

Call Us Today for the Legal Advice that You Need

LBE Law Firm offers personalized legal advocacy for individuals and businesses, including bankruptcy proceedings. Not only will we consider your eligibility for various forms of bankruptcy filings, but we will analyze your circumstances to determine if your creditors have committed any consumer protection or Fair Debt Collection Practices Act violations. We will counsel you about your legal rights and work to take all actions needed to protect your rights. LBE Law Firm also provides legal representation for clients for other legal issues, such as immigration cases, family law, business law, and estate planning. Call, text, or use WhatsApp to contact our office at +1.424.273.5501. You also can reach us via email at

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