How Does Bankruptcy Affect My Credit Report?

Use these links to jump to different sections:

• How Long Will Bankruptcy Remain on My Public Record?
• How Should My Discharged Accounts Be Reported After Bankruptcy?
• Check Your Credit Score Often After a Bankruptcy Case

Bankruptcy provides a legal way for Nevada residents to obtain a fresh start, free from their overwhelming debts. But filing for bankruptcy is not without consequence. Obviously, your credit rating will suffer significantly in the short term if you file for bankruptcy. That said, it is important to understand exactly how bankruptcy, and the debt relief through bankruptcy, are actually dealt with on your credit report.

How Long Will Bankruptcy Remain on My Public Record?

Let’s start with the bankruptcy itself. By law, a Chapter 7 bankruptcy can remain on your credit report for up to 10 years from the date the case was filed. A Chapter 13, in contrast, will only remain on your credit history for seven years after the filing date.

Why the difference? This goes to the fundamental difference between types of bankruptcy. In a Chapter 7 case, your non-exempt assets are liquidated, and a Nevada bankruptcy court will then discharge most, if not all, of your remaining unsecured debts. This means you no longer have any obligation to repay the creditor.

Under Chapter 13, however, your debts are not immediately discharged. Instead, you must submit a repayment plan to the bankruptcy court, which typically lasts between three and five years. In other words, your creditors will get at least some of their money back. This is essentially why a Chapter 13 bankruptcy stays on your credit report for less time than a Chapter 7 filing.

“The biggest determining factor between them is which one you qualify for, which is based on your income,” says Nedda Ghandi, an attorney at Ghandi Deeter Blackham in Las Vegas. Bankruptcy is a last resort, and the type of bankruptcy you file for “is not always a choice. Most people would elect to go into a 7, but because of their income, they don’t qualify. So, they go into a chapter 13.”

How Should My Discharged Accounts Be Reported After Bankruptcy?

Aside from the actual bankruptcy filing, your post-bankruptcy credit report should also reflect the status of your individual accounts. Bankruptcy may eliminate your obligation to repay, but that does not mean that your previously delinquent accounts will simply disappear from your credit report. Rather, your credit report should note these accounts have been discharged in bankruptcy and currently have a zero balance.

One thing to keep in mind is that even if you never file for bankruptcy, any “derogatory” information can only stay on your credit report for up to seven years. So if you have a 10-year-old credit card debt that was written off by the lender, that information should not still appear on your credit report even if you have not sought bankruptcy protection.

Also, if you filed a Chapter 13 repayment plan, the individual payments you make are not necessarily included on your credit report prior to discharge. Your creditors are not required to report these payments. After you complete your repayment plan and receive a discharge from the bankruptcy court, your accounts should be reported as closed with zero balances.

Check Your Credit Score Often After a Bankruptcy Case

There are three major credit reporting agencies in the United States: TransUnion, Equifax and Experian. All three are required to provide at least one free credit report each year. It is therefore a good idea to request these reports at staggered intervals throughout the year to ensure they accurately reflect your bankruptcy and the discharge of any relevant debts.

If you need further advice or assistance, consult with a qualified Nevada bankruptcy attorney—“most bankruptcy lawyers do free consultations,” Ghandi says. An experienced lawyer can talk to you about your financial situation, including your types of debt (secured and unsecured credit card debt, student loan debt, etc.), the various debt management and debt relief options available to you, and whether it makes sense to file for bankruptcy. A lawyer can also advise on what kind of bankruptcy you qualify for.

If you decide to file for bankruptcy, a lawyer can also advise on mitigating the negative impacts of a bankruptcy discharge and the process of rebuilding poor credit to a good credit score again.

And if you’d like more general information about this area of the law, see our bankruptcy law overview.