You might have heard that bankruptcy gives you a clean financial slate, but that’s not exactly accurate. For those experiencing serious financial distress, bankruptcy can be a way to eventually restart.
Depending on your financial situation, you can get rid of debts or restructure them. But this doesn’t give you a clean slate, especially on your credit report.
It depends on what type of bankruptcy you file. Chapter 7 is a public record that can stay for up to 10 years, but chapter 13 might only stay for 7 years.
Myth: Bankruptcy ruins your credit forever—or at least an entire decade
Yes, bankruptcy tanks your credit score in the short term. But how much a bankruptcy impacts your credit score depends in part on how old the record is.