How long will a bankruptcy affect my credit score

At this point, you’re discharged from your bankruptcy. Most of your debts are formally written off at this time, although you’ll still have to pay some, including student loans, criminal fines and fraudulent debts.

Some other restrictions end at this point. For example you can be a company director again, or you can borrow more than £500 without having to tell the lender about your bankruptcy. If you don’t cooperate with the official receiver, for example if you don’t give them information they need, a court can order your discharge to be delayed until you cooperate.

15 months after bankruptcy

This is when the details of your bankruptcy are normally removed from the public Individual Insolvency Register. However if the official receiver found you acted dishonestly or irresponsibly they may apply bankruptcy restriction undertakings (BRU) which will mean your bankruptcy stays on the public register for longer.

Two years and three months after bankruptcy

Your official receiver or trustee has two years and three months from the date your bankruptcy application was approved to decide what to do with any equity in your home.

Depending on how much equity you have, they might sell the property, apply a charging order so they can get the equity back if you sell or remortgage in the future, or they may give you the equity back if it’s only a small amount. They then have another nine months to take the action they’ve agreed.

Three years after bankruptcy

The deadline for your official receiver or trustee to finish dealing with any equity in your home is three years from the date your bankruptcy application was approved.

But if you didn’t declare your property to the official receiver at the start, this three year period runs from the date they found out about your property, not the date of your bankruptcy.

Three to four years after bankruptcy

If the official receiver found you had money left over each month after you paid your essential living costs, they may have set an income payment arrangement (IPA). This will order you to make payments for a three-year period which will start sometime in the first 12 months before you’re discharged.

If you had an IPA set, the last payment will be somewhere between three and four years after your bankruptcy, although you can still be chased for any missed IPA payments after this.

Six years after bankruptcy

Details of your bankruptcy will be removed from your credit file which is used to calculate your credit score. All your creditors should have updated your credit file to list the debts which will be defaulting on or before the date of your bankruptcy. This means all the debts you had before your bankruptcy should now have disappeared from your credit file too.

It’s a good idea to check your records with all three credit reference agencies to make sure this has happened. For most people, getting credit again will become much easier from this point.

If the official receiver applied a bankruptcy restriction undertaking (BRU) or order (BRO) for more than six years, because you acted dishonestly, your bankruptcy will still appear on your credit file until this ends.

Sixteen years after your bankruptcy

If the official receiver found you had done something seriously dishonest, they may have imposed a bankruptcy restriction undertaking (BRU) or order (BRO) for up to 15 years. This could start any time before you were discharged, so the end could be up to 16 years from the date of your bankruptcy.

This type of action is rare, and would only normally happen with high-value fraud or other criminal activity.

Indefinitely

Details of your bankruptcy were recorded in The Gazette at the start. They stay in The Gazette records forever and can be searched by looking through back editions, or by searching online. If you live in Northern Ireland, bankruptcy listings are also published in the Belfast Telegraph every Friday.

Don’t worry though – it’s very unlikely anyone will find details of your bankruptcy this way by accident and lenders don’t use this information when they’re credit-checking you.

Your payment history is one of the most important elements the major credit bureaus use to determine your credit score. Therefore, filing bankruptcy can have a huge impact on your credit report. The good news is that a bankruptcy filing does not stay on your record forever. The amount of time it takes to get it removed from your credit report depends on which of the two types of bankruptcy you file.

The two main types of bankruptcy and how they affect your credit report

When does bankruptcy get removed from your credit report? That depends on whether you file for Chapter 7 or Chapter 13 bankruptcy.

Chapter 7 bankruptcy

Filing for Chapter 7 bankruptcy means that the federal government will liquidate any qualifying assets — like a car, property you own or expensive jewelry. You will have to pay what you can towards the debt, then the court will discharge everything else. This means that you won't have to repay them. However, not all types of debt are dischargeable through Chapter 7 bankruptcy. Debts such as child support, alimony, most student loans, and certain tax debts are typically not discharged.

A Chapter 7 bankruptcy is typically removed from your credit report 10 years after the date you filed, and this is done automatically, so you don't have to initiate that removal.

Chapter 13 bankruptcy

Chapter 13 bankruptcy, also called a wage earner's plan, considers the wages you earn regularly. This bankruptcy type allows people with regular income to develop a repayment plan for part or all their debt. Chapter 13 bankruptcy is typically removed from your credit report seven years after the date you filed, and this is done automatically. The turnaround is quicker because you're required to at least partially repay your debt.

Can bankruptcy be removed from records more quickly?

If you notice any incorrect information related to the bankruptcy in your credit report, you can file a dispute with the three major credit reporting bureaus to have the information corrected before the typical seven or 10-year marks.

By law, Experian®, Equifax® and TransUnion® must remove incorrect information from your credit report.

How to rebuild your credit after filing for bankruptcy

Filing for bankruptcy does affect your credit score in a significant way. However, you can start rebuilding your credit before your bankruptcy is removed from your credit report. As time goes on, you'll be less affected by the bankruptcy status, even before you hit the seven or 10-year mark. Here are a few ways you can work to build your credit again.

Make payments on time

Payment history has a very high impact on your credit score. If you have other accounts not included in the bankruptcy, make sure you're making the monthly payments on time.

Get a co-signer

If you have a relative or friend who has good credit and is willing to act as a co-signer, that could help you get a small loan or credit card. Keep in mind, any negative information you create will also appear on your co-signer's credit report. So, be extra mindful to keep your balance low and make all your payments on time.

Become an authorized user

Another option is to have a close family member or friend with good credit add you to their account as an authorized user. An authorized user has access to a credit card with the account but isn't responsible for repaying the debt. Make sure that the card issuer reports authorized users to the major credit reporting bureaus, though. Being an authorized user may help improve your credit when reported.

Although bankruptcy is a significant event in a person's financial journey, it does not follow you forever. You can rebuild your credit slowly over time while you wait for the bankruptcy to be removed from your credit report.