Chapter 13 Bankruptcy

• A Chapter 13 is the longest type of consumer bankruptcy but it remains on your credit report for the shortest length of time. By filing Chapter 13, you agree to pay back a certain percentage of your debt to creditors. The payback period lasts between three and five years. In exchange for your good-faith efforts to pay, the credit reporting agencies reward you a shorter reporting period on your credit report. Typically, a Chapter 13 bankruptcy falls off your credit report seven years after you file.
  
  

Chapter 7 Bankruptcy

• If you file Chapter 7 bankruptcy, you may not be able to get the filing off your credit report in nine years. The standard reporting period for a Chapter 7 bankruptcy is 10 years, rather than the seven years of a Chapter 13 bankruptcy. You can get a discharge in as few as three months with a Chapter 7 bankruptcy, and the court requires no monthly payments as in a Chapter 13 bankruptcy. The consequence is the 10-year reporting period on your credit report, which cannot be shortened.
  
  

Associated Negative Accounts

• When you file bankruptcy, your credit is damaged not only by the bankruptcy itself but also by all the negative accounts associated with the bankruptcy. Filing bankruptcy does not remove your other negative accounts from your credit report, which will continue to show your late payments or overbalance notices. However, these negative accounts will come off your report in seven years, rather than the 10 years of Chapter 7 bankruptcy. Your credit score may show improvement when these accounts fall off your report.
  
  

Diminishing Negative Effect

• Even if you can't get your bankruptcy off your credit report in nine years, the negative effect of your bankruptcy will diminish over time. The longer the period of on-time payments you can put between you and your bankruptcy, the better your score will be. By the time your bankruptcy is due to fall off your report, the negative effect on your score may be minimal.