Bankruptcy Basics

Score Hit: What to Expect After Filing for Bankruptcy

Posted by Craig Black | May 22, 2024 | 0 Comments

Let's talk credit scores and bankruptcy. As a bankruptcy lawyer, I know many people considering this path to financial freedom worry about the potential damage to their credit score. Should they be?

The answer is mixed. Bankruptcy will impact your credit score, but it might not be as bad in the long term as you think. Here's what you need to know:

The Bad News: Your Credit Score Will Drop

Bankruptcy filings appear on your credit report for a designated period—usually 7-10 years, depending on the type of bankruptcy. This negative mark will undeniably bring down your score. The severity of the drop depends on your pre-filing score:

  • Scores above 700: Expect a significant drop, potentially 200 points or more.

  • Scores below 700: Expect a decrease, but not necessarily a dramatic one.

  • Scores below 600: There's a possibility for an increase here due the updated credit report showing a new balance of zero.

Why the drop? Credit scores are based on trust. A bankruptcy filing signals that you've had difficulty managing debt, a red flag for lenders.

A credit score says nothing about someone's value as a person. What it does say is how credit-worthy someone is in the eyes of financial institutions, based on their payment history, how much they owe and for how long, and the types of credit they have.

The Good News: It's Not Forever

Chapter 7 and Chapter 13 bankruptcies remain on your credit report for a specified, finite period. Chapter 7 bankruptcies typically remain on your credit report for ten years from the date of filing, while Chapter 13 bankruptcies may appear for seven years from the date of filing or up to ten years if the repayment plan extends beyond that timeframe.

The negative impact of bankruptcy eventually goes away as positive credit behavior is reported. Positive credit earned by:

  • Making on-time payments: Consistent, timely payments on remaining debts and new credit lines significantly boosts your score.

  • Building new credit: Use a secured credit card or loan specifically designed to help rebuild credit responsibly—and, again, make your payments on time.

  • Developing good credit habits: Keep your credit card balances low, avoid taking on excessive debt, and—you guessed it—make your payments on time.

  • Ensuring your reports are accurate: Regularly check your credit reports for errors and dispute any items you believe are in error.

Bankruptcy Isn't a Dead End

By understanding the impact on your credit score and taking proactive steps to rebuild, you can emerge from this chapter stronger and with a brighter financial future. Call The Craig Black Law Firm at (678) 888-1778 or contact us online today so we can discuss your options and create a personalized plan for you to move forward.

About the Author

Craig Black

I had never thought much about bankruptcy law, but after graduating from law school, I moved to Chicago. My first job as an attorney was with a law firm that specialized in bankruptcy. Within a few years, I went from being the youngest attorney in the firm to a managing attorney. During my time t...


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