How Will Bankruptcy Affect My Credit Score?

Posted by Bruce White | Jul 20, 2017 | 0 Comments

If you're struggling under your financial debt and can't seem to find a way out, bankruptcy may have tremendous benefits for you. However, many people often have significant reservations about bankruptcy and the impact it can have on their financial standing, specifically their credit score. In fact, we find many people refuse to even consider bankruptcy because of the effect it can have on their score. Let's take a look at how exactly declaring bankruptcy can impact your credit, and discuss why it can be advantageous in the long run.

Does Bankruptcy Impact Your Credit?

In short, yes. Bankruptcy will impact your credit rating and your appearance to potential creditors. Nobody lender or landlord is going to like seeing a bankruptcy on the credit report of someone looking to borrow money or move in to a property. However, the impact to your overall score will vary depending largely on your credit standing before declaring bankruptcy. If your credit was strong and you had a good history for most of the time before declaring, then you will see a large impact to your score. However, if you have a lot of debts and very few assets, then your credit score is likely already low, which means declaring bankruptcy will actually have very little impact on your credit report at all.

So to sum it up, yes, bankruptcy will impact your credit score, but it will have a much lower impact to your score if you've been embroiled in financial struggles for some time than it would if you've had a good credit rating and history and just recently fallen into hard times. It makes no difference whether you choose to file for Chapter 7 or Chapter 13 bankruptcy.

Rebuilding Your Credit

A bankruptcy declaration will stay on your credit report for up to ten years, so you should not take the decision lightly. However, for many people who are under severe financial stress, you could start seeing benefits of declaring bankruptcy almost immediately. For starters, the harassing and calls from debt collectors and creditors will cease.

Second, you'll be given a metaphorical “clean slate” with which to start rebuilding your history. Once the process is completed, you'll basically have to start over when it comes to your financial standing, and this time it will be tougher to build credit than it was when you first started out. However, by being responsible and following good credit practices, such as making your payments on time, keeping your outstanding debt levels low, and doing so for several months, you could start seeing a dramatic improvement in your overall rating, even with the bankruptcy declaration on your record.

Believe it or not, it is possible to start rebuilding your credit almost right away. While you may no longer be able to use your previous credit accounts, your credit card company may have an option for a low-limit, asset-backed account that you can use to start rebuilding your own credit rating. Just make sure you follow through on your responsibilities when it comes to making payments and keeping your outstanding debt low in comparison to the amount available to you and you could have a stronger credit rating than ever when the bankruptcy finally comes off your report.

If you are considering declaring bankruptcy, you should discuss your standing with a Richmond bankruptcy lawyer before making any final decisions or filing any paperwork. Bruce W. White, P.C. has helped good people through bad times since opening our doors in 1980. We understand that people who have fallen on hard times need help to get back on their feet, and Mr. White has worked hard to help them reobtain their financial independence through an individually-tailored and customized strategy, developed using over 30 years of bankruptcy law practice.

Call Bruce W. White, P.C. today at (804) 655-0502 to request a free consultation and find out if declaring bankruptcy is the right option for you.

About the Author

Bruce White

Aggressive Bankruptcy Attorney in Richmond Bruce W. White has been helping clients with solutions to their financial problems for over 30 years. He is experienced, skilled, and knowledgeable, and can handle your case from start to finish with the dignity and respect it deserves.


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