How does bankruptcy affect my credit?

Filing bankruptcy is event reported on credit reports published by most credit bureaus. Under the Fair Credit Reporting Act, a bankruptcy can be reported for up to 10 years after the date of filing. Credit agencies will sometimes remove the filing after 7 years, particularly in chapter 13 cases.

The impact of bankruptcy on proprietary credit scores and subjective creditworthiness is more difficult to pin down. Most bankruptcy debtors already have negative events on their credit reports, or are in a position that negative events will be reported shortly absent a bankruptcy. While some future creditors will likely view the bankruptcy as a negative, some will also appreciate the fact that old creditors are no longer pressuring a debtor's finances, and that a debtor's options for a short-term second bankruptcy discharge are limited.

Bankruptcy is a step in turning one's finances around. For most people it makes sense to focus on actual financial condition, not on reported credit scores.