Chapter 7 Bankruptcy: 10 Years

Chapter 7 bankruptcy, also known as liquidation bankruptcy, involves the forfeiture of property to a court-appointed trustee. The trustee sells the property and distributes the proceeds among your creditors. This type of bankruptcy remains on your credit report for 10 years from the date of the initial filing.

Chapter 13 Bankruptcy: Seven Years

Chapter 13 bankruptcy, sometimes called a “wage-earner’s plan,” allows individuals with sufficient income to keep more of their assets. You make monthly payments to a court trustee for three to five years, and the trustee uses the funds to repay your creditors. This type of bankruptcy remains on your credit report for seven years from the date of the initial filing.

Can You Remove Bankruptcy From Your Credit Report?

No, there is no way to remove an accurate record of bankruptcy from a credit report. It will appear on your credit reports within a month or two of your court filing and will remain there until its expiration date—10 years for Chapter 7 or seven years for Chapter 13. If your credit report contains inaccuracies, you have the right to dispute them with the credit bureau.

How to Rebuild Your Credit After Bankruptcy

Rebuilding credit after bankruptcy can be challenging, but it’s possible with the right strategies. Here are some proven tactics to help you improve your credit scores:

Become an Authorized User

If you can persuade a friend or relative with a strong credit history to make you an authorized user on their credit card account, their payment history will appear on your credit reports, benefiting your credit scores.

Get a Secured Credit Card

With a secured credit card, you put down a cash deposit that serves as your borrowing limit. Using the card responsibly and paying the balance each month can help establish a positive payment pattern.

Open a Credit-Builder Loan

A credit-builder loan is designed to help individuals with short or damaged credit histories. The lender issues a small loan and places the funds in a special deposit account. You repay the loan in installments, generating a positive payment history. Once the loan is repaid, you gain access to the cash.

The Bottom Line

Bankruptcy can significantly impact your credit, but it’s not a permanent condition. A Chapter 13 bankruptcy disappears from your credit report after seven years, and a Chapter 7 bankruptcy drops off after 10 years. The negative impacts on your credit scores can diminish over time, and you can take steps to restore your credit as soon as the bankruptcy proceeding ends.

At O1ne Mortgage, we understand the challenges of rebuilding credit after bankruptcy. Our team of experts is here to help you navigate the process and find the best mortgage solutions for your needs. Call us today at 213-732-3074 for personalized assistance and to learn more about our mortgage services.