How Long Will a Chapter 13 Bankruptcy Stay On My Credit?

by Chip Parker, Esq.

May 4, 2007

Recently, I read an article published by bankrate.com which included significant misinformation about consumer bankruptcy. The article erroneously reports that a Chapter 13 personal reorganization bankruptcy appears on one’s credit report for a period of 7 years from the date the case is completed. It warns that someone who successfully completes a Chapter 13 bankruptcy will have the “cloud” of bankruptcy for 12 years. This is absolutely false.

According to Maxine Sweet, Experian’s VP of Public Education, a Chapter 13 appears on a debtor’s credit report 7 years from the date of filing. Since a Chapter 13 typically takes 3 to 5 years to complete, it will completely disappear 2 to 4 years thereafter. If a Chapter 13 bankruptcy is dismissed, it will still remain on a credit report for 7 years from the date of fling.

Furthermore, it is common knowledge that, while a bankruptcy stays on one’s credit for a period of 7 years for a Chapter 13 and 10 years for a Chapter 7 liquidation bankruptcy, the “bankruptcy effect” weakens over time. A two year old bankruptcy means more to creditors that a six year old bankruptcy because creditors are primarily interested in present financial circumstances. If one’s debt-to-income ratio is much improved from years earlier, the negative effect of a prior bankruptcy is minimized.

Quite frankly, it is important for consumers to recognize that bankruptcy is not a cure for financial distress. It is but one part of an overall strategy to fiscal stability. So, even though credit card offers will return to a debtor’s mailbox shortly after his or her bankruptcy is finished, it is probably a good idea to just throw them away.

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Chip Parker is the managing partner of Parker & DuFresne, P.A., where he represents Northeast Florida businesses and consumers facing bankruptcy, and homeowners facing foreclosure. His firm files more homeowners in the Mortgage Modification Mediation Program than any other law firm in Northeast Florida. Parker is the recipient of Jacksonville Area Legal Aid's prestigious Award for Outstanding Pro Bono Service. Mr. Parker is an active member of the National Association of Consumer Bankruptcy Attorneys and National Association of Consumer Advocates.

Last modified: March 8, 2013