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How Long Does Chapter 13 Bankruptcy Stay on Your Credit Report in Phoenix?

By Phoenix Bankruptcy Attorney on January 12, 2025

Filing for bankruptcy is a big step. But for many people in Phoenix, it’s the best way to get out from under crushing debt. But if you’re thinking about filing for Chapter 13, you’re probably wondering how long it’s going to affect your credit report.

According to the Fair Credit Reporting Act (FCRA), a Chapter 13 bankruptcy remains on your credit report for seven years from the date you file. This means that even after your repayment plan is complete, which usually takes 3 to 5 years, your credit report will still reflect the bankruptcy for some time afterward.

That said, the impact on your credit score is not permanent, and you can take steps to improve it even while the bankruptcy is still on your report.

Chapter 13 vs. Chapter 7: Why the Timeline Matters

It’s worth noting that Chapter 13 is considered less damaging than Chapter 7 in the eyes of credit bureaus. That’s because Chapter 13 involves a structured repayment plan—you’re not walking away from your debts completely. Instead, you’re working with the court to pay back a portion over time.

Because of this, Chapter 7 stays on your credit report for 10 years, while Chapter 13 drops off after seven. That shorter timeline can be a big help as you begin your financial recovery.

How Chapter 13 Bankruptcy Affects Your Credit Score

When you file for Chapter 13 Bankruptcy, your credit score will probably drop. The amount of the drop depends on your starting score and how much negative information was already on your report. For most people, the drop is between 100 to 200 points.

But over time, Chapter 13 can actually help you stabilize and eventually improve your credit score, especially if you were missing payments, defaulting on loans, or dealing with collections before filing.

Once you begin making steady payments under your Chapter 13 plan, you’re starting to build a new, more positive credit history.

How to Improve Your Credit During Chapter 13

Your credit score doesn’t have to stay low for seven years. In fact, many people begin to see modest improvements within 12 to 18 months of filing, especially if they follow smart recovery steps.

Here’s how you can speed up your credit rebound in Phoenix:

Make Every Chapter 13 Payment On Time

Your repayment plan is your lifeline during bankruptcy. Each payment is a chance to prove your reliability to creditors and the credit bureaus. Late or missed payments can jeopardize both your credit and your case.

Check Your Credit Report Regularly

Keep an eye on your credit reports from Equifax, Experian, and TransUnion. After your bankruptcy is filed, discharged debts should be listed as “included in bankruptcy” or “discharged.” If they aren’t, dispute inaccuracies to keep your record clean.

Get a Secured Credit Card

Secured credit cards require a cash deposit and are easier to qualify for after bankruptcy. Use it sparingly, pay off the balance in full each month, and show lenders that you’re back on track.

Keep Your Balances Low

Once you start using credit again, keep your credit utilization low, which is ideally under 30% of your available limit. This shows you’re not overextending yourself.

Pay All Other Bills On Time

Utility bills, phone plans, rent—anything with a due date should be paid promptly. These payments may not always be reported, but missed payments or collections will hurt your credit even more.

Consider a Credit-Builder Loan

These small loans are specifically designed to help you establish or repair credit. Some local banks and credit unions in Phoenix offer these with favorable terms to help you recover.

What Happens After 7 Years

Once the seven-year mark passes, the bankruptcy listing should automatically disappear from your credit report. This doesn’t erase your credit history entirely, but it removes a major red flag and can significantly boost your credit score.

That said, your progress toward a better score doesn’t depend on waiting out the full seven years. The steps you take in the meantime make all the difference.

The Positive Financial Impact of Chapter 13

A lot of people worry that bankruptcy will ruin their ability to get credit forever, but this isn’t true. In many cases, people who file Chapter 13 are more attractive to lenders afterward because:

  • They’ve reduced or eliminated much of their debt
  • They’ve shown consistency with court-supervised payments
  • They’ve taken steps to live within their means

So while lenders will see the bankruptcy on your credit report, they’ll also see the positive financial behavior that followed. And that goes a long way.

Reasons to Choose Hilltop Law Firm

If you’re thinking about filing Chapter 13, talk to Cy Hainey at Hilltop Law Firm. He’s been helping people in Phoenix get debt relief for over a decade.

We help clients across Phoenix:

  • Understand how bankruptcy affects credit and long-term finances
  • Choose between Chapter 7 and Chapter 13
  • Navigate the court system with confidence
  • Build a strategy for debt relief and credit repair
  • Stay compliant throughout their repayment plan

Schedule a Free Consultation With a Bankruptcy Lawyer in Phoenix

At Hilltop Law Firm, we’ll help you protect your assets and get back on the road to financial stability, keeping your credit future in mind every step of the way.

Call (602) 466-9631 to speak with an experienced bankruptcy attorney today. And if you’re interested in a free Zoom meeting, someone from the Hilltop Law Firm office will be happy to help you set up your virtual meeting in advance.

Posted in: Bankruptcy

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