Bankruptcy
A legal process through which individuals or businesses declare they cannot repay their debts. Chapter 7 bankruptcy (liquidation) stays on your credit report for 10 years. Chapter 13 bankruptcy (repayment plan) stays for 7 years. Bankruptcy can cause FICO score drops of 100–200 points but allows for a fresh start.
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- Chapter 7 Bankruptcy
A form of bankruptcy that discharges most unsecured debts (credit cards, medical bills, personal loans) within a few months. Also called liquidation bankruptcy. Chapter 7 remains on your credit report for 10 years from the filing date. You must pass a means test to qualify.
- Chapter 13 Bankruptcy
A form of bankruptcy that involves a 3–5 year repayment plan rather than liquidation of assets. Allows you to keep property (like a home) while catching up on overdue payments. Chapter 13 remains on your credit report for 7 years from the filing date.
Frequently Asked Questions About Bankruptcy
What does Bankruptcy mean?
A legal process through which individuals or businesses declare they cannot repay their debts. Chapter 7 bankruptcy (liquidation) stays on your credit report for 10 years. Chapter 13 bankruptcy (repayment plan) stays for 7 years. Bankruptcy can cause FICO score drops of 100–200 points but allows for a fresh start.
Is Bankruptcy important for my FICO® score?
Understanding Bankruptcy helps you manage your credit profile more effectively, which in turn supports a stronger FICO® score.