The Short Answer
In our experience filing thousands of bankruptcy cases, there is little to no meaningful difference between a Chapter 7 and a Chapter 13 bankruptcy on your credit report. Both can remain on your report for seven to ten years, and lenders generally view both the same way. What matters far more than which chapter you filed is what you do after your discharge — how you budget, how you rebuild, and how deliberately you seek new credit.
This is a question we are asked all the time. Each bankruptcy attorney probably has his or her own opinion on which type of bankruptcy is best for your credit report. After filing thousands of bankruptcies over the years, we don’t believe that there is that much, if any, of a difference between a Chapter 7 bankruptcy and Chapter 13 bankruptcy.
Some attorneys argue that a Chapter 7 may be better because you can get a discharge more quickly that you can in a Chapter 13 bankruptcy. That, in turn, will allow you to have more disposable income that allows you to obtain more credit. On the other hand, other attorneys will argue that in a Chapter 13 bankruptcy you are paying back a portion of your debts, which will look better to a potential lender. The reality is, we haven’t seen much of a difference at all.
The typical duration of a Chapter 7 bankruptcy filing usually lasts approximately four to six months from the time your petition is filed with the bankruptcy court until the time you receive your letters of Discharge of Debt and Final Decree. Once you receive your Discharge and Final Decree, you may immediately start to rebuild your credit.
A Chapter 13 bankruptcy filing consists of a payment plan in which you are obligated to make a monthly payment to the Trustee’s office so that the funds may be distributed amongst your creditors each month. The Chapter 13 bankruptcy filing usually lasts anywhere from three to five years and then you receive your letters of Discharge of Debt and Final Decree.
A bankruptcy typically stays on your credit report for seven to ten years. After the seven-year point, you should contact the credit reporting agencies with a letter indicating that the item has been on your report for seven years and request the agency to remove the poor mark from your credit report. They could deny your request but we suggest that you at least try to get the bankruptcy removed.
There’s no doubt about it, bankruptcy will have a negative impact on your credit. Anyone who tells you differently isn’t being completely honest with you. However, your credit probably isn’t all that great immediately before filing the bankruptcy. Bankruptcy will give you the opportunity to get a fresh financial start and then rebuild your credit. Regardless of which type of bankruptcy you file, rebuilding your credit will take sticking to a budget and being purposeful in how you seek credit moving forward.
Key Takeaways
- Chapter 7 and Chapter 13 bankruptcies are treated similarly by credit reporting agencies and most lenders — neither is clearly "better" for your credit report than the other.
- Chapter 7 typically closes in four to six months, while Chapter 13 requires a three-to-five year repayment plan before you receive your discharge.
- Both types of bankruptcy can remain on your credit report for seven to ten years from the filing date.
- After seven years, you can write to the credit bureaus and request early removal of the bankruptcy notation — they may say no, but it's worth trying.
- Bankruptcy almost certainly won't make your credit worse than it already is at the point of filing — and it gives you a legal fresh start to begin rebuilding.
- Rebuilding credit after bankruptcy requires a real budget and intentional use of new credit — those habits matter more than which chapter you filed.
Attorney Insight
The argument I hear most often — usually from people who've been shopping around — is that a Chapter 13 "looks better" to lenders because you paid something back. After nearly 30 years of doing this, I've never seen that play out in any consistent, meaningful way. What I do see is clients who chose the wrong chapter chasing a credit-report myth, then struggled through a five-year repayment plan they didn't need. Pick the chapter that solves your actual financial problem; the credit rebuilding is a separate effort that starts the day your discharge lands.
