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Questions

How Long Does Bankruptcy Affect My Credit?

One of the many myths surrounding bankruptcy is that it permanently affects your credit score. While it’s true that your score can take a hit right after filing, many people are able to recover their score and end up in good standing again eventually. But how long does this process take?

Information About Your Credit Score

Depending on the type of bankruptcy you file, your bankruptcy will stay on your credit report anywhere from seven to 10 years. This may seem like a long time, but it’s not as bad as it sounds. Bankruptcy’s effect on your score lessens with each year. Chances are, your score will take a major hit after filing for bankruptcy, but with each passing month and year, the impact could carry less and less weight.

The type of bankruptcy you file can also affect how your score is impacted. For example, Chapter 7 bankruptcies can have a more negative impact on your creditors, since you are discharging most debt rather than paying it off. Because of this, the number of debts and the amount that you discharge may also affect how much your score will be impacted. An attorney will know more about this and how to best handle your situation.

Rebuilding Your Credit

There are also steps you can take to rebuild your credit soon after filing such as:

  • Establishing a new line of credit
  • Paying off all bills on time and in full regularly
  • Keeping your balances to under 30 percent of utilization

With smart credit management and the lessening effect of bankruptcy with each year, it is more than possible to build your credit score back up to where it was or even higher.

Don’t let the intimidating myths about bankruptcy deter you from filing. Bankruptcy can provide the financial relief you need. Talking to an experienced bankruptcy attorney can help you better understand your situation and make an informed decision about your debt.