Chapter 7 and Chapter 13 bankruptcies can be listed on a credit report for 10 years from the date of filing. However, the three primary consumer credit reporting companies will remove a Chapter 13 bankruptcy from your credit report after 7 years. The law allows them to leave it on the credit report for up to 10 years. But they chose to remove a Chapter 13 bankruptcy after seven years as an incentive to consumers to file a Chapter 13 instead of Chapter 7 and attempt to repay their creditors as best they can.

The debts listed in your bankruptcy should be noted on your credit report as “zero balance due” and/or “included in bankruptcy.” However, filing bankruptcy does NOT mean that your credit is “ruined” for 10 years. If you really need to file for bankruptcy protection, it usually means that not filing could lead to lawsuits, judgments, garnishments, and other things that would negatively impact your credit and life for a period far longer than 10 years.

A person with financial problems might consider avoiding bankruptcy because of the potential impact on their credit report. However, sometimes a score/rating will go UP after a case is filed.  Second, in Washington State, a judgment is good for 10 years and can be reported for 10 years. A judgment can also be renewed for another 10 years. So, a judgment for bad debt could be listed for up to TWENTY years — and the consumer might still owe the debt! A judgment unpaid also allows the creditor to garnish wages and bank accounts, and engage in other collection activities.

The point: Sometimes not filing a bankruptcy can be far worse than filing bankruptcy, both for your credit report and the impact on a consumer’s daily life.