Most people don't file for bankruptcy because they want to avoid its detrimental effects on their credit. Bankruptcy stays on the credit reports for a maximum of ten years, and it can seriously hurt your credit. However, if you don't file for bankruptcy and let your debts go to collections, it will also negatively affect your credit. Whether you file for Chapter 7 bankruptcy or Chapter 13 bankruptcy, your credit score will decrease from 160 to 230 points. Since most lenders require a good credit score, bankruptcy will make it harder for you to be eligible for home loans, credit cards, and car loans.

Time is the only remedy for this, but there are a few measures that you can take to enhance your credit score. If you can manage new debts well, your credit score will increase gradually, and you will be able to improve your financial situation even if the bankruptcy is still present on your credit report.

How Long Will Bankruptcy Stay On Your Credit Report

Chapter 7 Bankruptcy

A Chapter 7 bankruptcy stays on the credit report for a maximum of ten years. Since all debts associated with this type of bankruptcy are discharged after filing, they should be taken off the report a few years before bankruptcy itself. Generally, discharged debts drop off a credit report after seven years. As the items on the report associated with your bankruptcy get older, they'll have less effect on your credit.

Chapter 13 Bankruptcy

The bankruptcy and debts associated with the Chapter 13 bankruptcy will be displayed on different sections on the credit report. A Chapter 7 bankruptcy stays on the credit report for a maximum of seven years. Discharged debts also stay for the same period after they're discharged.

How to Manage and Improve Your Credit Score after Bankruptcy

·         Review Your Credit Score

It is best to check your credit report on a regular basis if you have recently filed for bankruptcy. Keep a list of all the debts that are included in the bankruptcy and review them after a couple of months. If you filed for Chapter 7 bankruptcy, these debts would show a balance of $0. If you notice that something is wrong in the credit report, ask the issuer of the report to make the required changes.

·         Reestablish Credit

Once the bankruptcy is discharged, you should try to rebuild your credit score. There are a few methods to start this process:

• Make Timely Payments

Make timely payments to rebuild your score. Several factors make up the credit score, and making on-time payments is one of the most important ones. This is why you should try to make payments on time to improve your credit score.

• Get a Secured Credit Card

Try getting a secured credit card. Then, make a deposit that is equal to the credit limit allowed on the card. For example, a $200 credit limit requires $200. Make sure to manage the new credit card properly.