Many kinds of negative information drop off your credit report after seven years: late payments, collection actions, foreclosures and some bankruptcies. But not all bankruptcies come off after seven years. Depending on the type of bankruptcy case you filed, the information could remain on your credit report for up to 10 years.
Types of Bankruptcies
A bankruptcy case starts when you file a petition with the federal bankruptcy court. An individual debtor usually files one of two types of petitions, and the one you choose determines how long the bankruptcy stays on your credit report. Bankruptcy cases are named for the relevant sections of the U.S. Bankruptcy Code. A Chapter 7 case is a classic liquidation bankruptcy, in which you allow the court to sell off most of your assets in exchange for erasing your debts. A Chapter 13 case isn't really a "bankruptcy" at all. Rather, it's a plan to pay back some or all of your debts under the supervision of the bankruptcy court. Only those debts that you can't repay are erased.
Credit Report Entries
A Chapter 13 bankruptcy should come off your credit report after seven years, according to the Fair Isaac Corp., which developed the credit-scoring formula. However, a Chapter 7 bankruptcy stays on your report for 10 years. A key reason for the difference is simply the nature of the bankruptcy actions. In Chapter 7, you leave more creditors unpaid, and your credit report is going to suffer for longer.
Checking Your Report
If your bankruptcy was a Chapter 13 action and it's still on your credit report after seven years, you may have to contact the credit reporting bureaus directly to have them fix the error (see Resources). While you're checking your report, also look at the accounts that were supposed to have been wiped clean by the bankruptcy. Those accounts should be listed on your report as closed, with a balance of zero. If they're still listed as open and overdue, that's an error that also needs to be fixed by contacting the credit bureaus.
Dismissed Cases
According to the Moran Law Group, a California firm specializing in bankruptcy law, the clock starts running on your seven- or 10-year period on the date you file your petition. If your case is dismissed, the bankruptcy will still appear on your credit report. However, if you voluntarily dismiss your case---that is, you decide you don't want to go through with the case and ask the court to toss it out---the credit bureaus must note the dismissal. If they don't, contact them directly.
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