Friday, October 6, 2017

Bankruptcy and Your Credit Score

How long will a bankruptcy remain on my credit report?

One of the main concerns of potential bankruptcy filers is the impact that bankruptcy may have on your credit score.  There are numerous misconceptions about bankruptcy and credit reports.  Some people falsely believe that declaring bankruptcy will destroy your credit score for years to come.  The truth is that bankruptcy will undoubtedly affect your credit score, but there are ways to rebuild your credit post-bankruptcy.  Our Ohio bankruptcy attorneys at Miami Valley Bankruptcy offer some insights into how a Chapter 7 or Chapter 13 bankruptcy may impact your credit score below.

Your Post-Bankruptcy Credit Score

Filing for bankruptcy will cause an initial drop to your credit score.  The extent of the dip depends in part on your starting credit score.  If you have a good credit score, you will likely experience a significant drop in your credit score.  The majority of filers, however, already have moderate to low credit scores due to their debt load.  Credit scores that are already low will drop further, but to a lesser extent than a good credit score.  

Many bankruptcy filers find that after the initial drop, their credit score actually rises significantly.  Without your past due debts taking a constant hit on your credit, you now have the ability to improve your credit score.  In this manner, bankruptcy can act as a refresh button.  

Post-bankruptcy, you will want to take every step possible to rebuild positive credit.  While obtaining a credit card can prove useful for building credit, you should also exercise caution.  Avoid repeating past mistakes when it comes to your finances.

Bankruptcy and Your Credit Report

If you elect to file for a Chapter 7 bankruptcy, the bankruptcy will remain as a flag on your credit report for ten years.  Chapter 13 filers will continue to be flagged for bankruptcy for roughly seven years, given that the bankruptcy process takes a few years and will be visible on your tax returns during repayment.  Those who initiate the Chapter 13 process, but find themselves unable to complete the bankruptcy will be saddled with a flag for seven years.  

A bankruptcy on your credit report will be visible to potential mortgage lenders, landlords, and the like.  However, the negative effect of a bankruptcy will wane overtime.  Bankruptcy filers will generally soon find themselves on the path to better credit and a stronger financial future.


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Miami Valley Bankruptcy, Brian Lusardi, Esq., assists clients with Bankruptcy matters including but not limited to: Common Myths, Cost of Bankruptcy, Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, The New Bankruptcy Law and Personal Bankruptcy in Xenia, Ohio, and the cities of: Wilberforce, Alpha, Spring Valley, Dayton, Bellbrook, Yellow Springs, Cedarville, Fairborn and Clifton; and the counties of Greene and Montgomery.

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