The Potential Impact of a Bankruptcy Filing on Your Credit Score

August 20, 2024 By: Carrie Weir

Why Filing for Bankruptcy Protection Won’t Necessarily Ruin Your Credit

You may have lost your job or incurred substantial medical bills that are not covered by insurance. You’ve been reluctant to consider bankruptcy, as you’re afraid it will permanently ruin your credit. How does a bankruptcy get reported to a credit agency? What are the short- and long-term consequences of filing a Chapter 7 or Chapter 13 bankruptcy bankruptcy petition?

What Types of Information Appear on Your Credit Report?

The information collected by credit reporting agencies generally falls into three categories:

• Information about credit you have received, as well as your payment history with respect to those creditors;
• Information commonly found in public records, including many court documents, such as bankruptcy filings, judgments, and liens; and
• Information that identifies who you are, such as employment history and your former and current addresses.

What Is the Immediate Impact of a Bankruptcy Filing on Your Credit Score?

Though a bankruptcy filing will always lower your credit score, the exact amount can vary, depending on your current score, as well as a number of other factors. Typically, the reduction will be in the 100-to-200-point range.

How Long Does a Bankruptcy Remain on Your Credit Report?

That depends on the type of bankruptcy relief you seek. A Chapter 7 petition won’t go away for 10 years, but a Chapter 13 filing will fall off your credit report in seven years.

Will a Bankruptcy on Your Credit Report Make It Impossible for You to Get Credit?

Absolutely not. While some potential creditors won’t look past your credit score, many will be more interested in what you’ve done lately. While it may take a few months to establish a record of consistent payments, your willingness to file for bankruptcy protection may be taken by potential creditors as a sign of your intention to resolve your financial challenges.

Contact an Experienced Rockwall, TX Bankruptcy Attorney

At the Law Offices of Carrie Weir, all potential clients are entitled to a free initial consultation. To arrange an appointment to discuss your rights and options in bankruptcy, contact my office online or call 972-772-3083. I handle Texas personal bankruptcy filings in Kaufman County, Rockwall County, Collin County, Dallas County, Hunt County, and the surrounding counties.