If you’re considering filing for bankruptcy, you may be wondering, “Will bankruptcy affect my credit?”  A bankruptcy can remain on your credit report for up to ten years.  During the time that the bankruptcy is on your credit report, you may receive credit offers, but they will generally have very high interest rates (due to the increased risk your bankruptcy represents to the lender).  Shortly after your bankruptcy is discharged, you will need to start rebuilding credit so that you can qualify for good credit offers in the future.  To re-establish trust with creditors, it’s important that you pay your bills on time and avoid debt as much as possible.  After all, you probably don’t want to add a second bankruptcy to your credit report.

Usually, it’s more challenging to re-establish credit after a Chapter 7 bankruptcy compared to a Chapter 13 bankruptcy.  Chapter 7 bankruptcy is the darkest mark you can have on your credit record.  In Chapter 7 bankruptcy, all your debts are discharged (with the exception of child support, alimony, and a handful of other debts that are not allowed to be discharged). This makes it extremely unlikely that you will qualify for a new loan or credit card for at least two years.  Fortunately, you can qualify for a federal student loan and other types of educational loans – even with your past bankruptcy.  This is because educational loan providers are prohibited from discriminating against students based on credit factors.

In a Chapter 13 bankruptcy, you will be making payments to your creditors according to the established repayment plan.  A Chapter 13 bankruptcy shows creditors that you are willing to pay-off your debts, rather than completely discharge them.  Creditors generally view Chapter 13 more positively, compared to Chapter 7 bankruptcy.  With a Chapter 13 bankruptcy, you may be able to obtain new credit within a year (at high interest rates).

Bankruptcy can also affect your ability to qualify for a home loan – but only temporarily.  You may be able to get a home loan beginning two years after a Chapter 7 bankruptcy has been discharged, and one year after filing a Chapter 13 bankruptcy.  Veterans’ Administration (VA) loans and FHA loans can be obtained as soon as one year after filing for either Chapter 7 or Chapter 13 bankruptcy.