The bankruptcy process can be confusing. Those who are struggling with debt will often be unsure about their options, the steps they will need to take to receive relief, and the short-term and long-term effects of a bankruptcy filing. Credit scores are one issue that can be especially difficult to understand, and in many cases, debtors will be worried that filing for bankruptcy will affect their ability to obtain loans or buy a house in the future. Our firm works to provide people with answers to the questions they have about these issues.
How Much Will Bankruptcy Lower My Credit Score?
The effects of bankruptcy on your credit score will usually depend on your score prior to filing. If you had a good credit score that was higher than 700 points, bankruptcy will likely result in a significant decrease of 100 points or more. If you had a lower credit score in the 500s or 600s, bankruptcy will likely cause your score to drop, although the decrease may not be as significant. However, if you are concerned about your credit score, it is likely that it has already been affected by the issues that are causing you to consider bankruptcy, such as missed payments on loans or credit cards. By filing for bankruptcy, you can regain financial stability, allowing you to begin rebuilding your credit score.
How Long Will a Bankruptcy Appear on My Credit Report?
Your credit report includes a variety of information about the loans you have taken out, the payments you have made, and how you have used credit in the past. A bankruptcy filing will appear on your credit report, and it may be considered by creditors when they decide whether to approve you for loans or credit cards in the future. Since a Chapter 7 bankruptcy usually indicates that a person is a higher credit risk, it will remain on your credit report for 10 years. A Chapter 13 bankruptcy and other bankruptcy references, such as actions taken against you by collection agencies, will stay on your credit report for seven years.
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