Let’s be honest—filing for bankruptcy is never anyone’s first choice. But when debt becomes overwhelming, bankruptcy can offer a path toward financial relief. Still, one of the biggest concerns people have is what it does to their credit score. If you’re considering bankruptcy, here’s what you need to know about how it impacts your credit—and how you can bounce back.
Yes, Your Credit Score Will Drop
There’s no sugar-coating it: filing for bankruptcy can drop your credit score significantly. For many people, that means a decrease of 100 to 200 points (or even more), depending on how high your score was before filing. If your credit was already damaged from late payments or maxed-out cards, the impact may not feel quite as steep—but it’s still a serious hit.
How Long Does Bankruptcy Stay on My Credit Report?
That depends on the type of bankruptcy:
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Chapter 7 (liquidation): stays on your report for 10 years
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Chapter 13 (repayment plan): stays for 7 years
During that time, lenders will see the bankruptcy listed on your report, and it can affect your ability to qualify for new credit. You might face higher interest rates, stricter terms, or flat-out rejections in the short term.
But It’s Not All Bad News
While the credit impact is real, bankruptcy can also be the turning point you need. If you’re behind on bills, facing collections, or getting sued by creditors, bankruptcy can stop the chaos and give you a clean slate. It wipes out many types of unsecured debt—like credit cards, personal loans, and medical bills—so you can start rebuilding without the pressure of impossible payments.
Rebuilding Your Credit After Bankruptcy
Here’s the good news: your credit score can—and often does—recover over time. Many people begin seeing improvement within 12 to 24 months if they make smart financial moves. Start here:
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Pay all your bills on time (this is huge for your score)
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Open a secured credit card and use it responsibly
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Keep your credit utilization low—under 30% is ideal
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Regularly monitor your credit report to stay on track
Some lenders even specialize in helping people with recent bankruptcies rebuild credit. These products come with higher interest rates, but used carefully, they can be useful tools.
Bankruptcy Isn’t the End—It’s a Reset
It’s easy to feel discouraged when you see your credit score drop. But remember, bankruptcy isn’t the end of your financial story—it’s a reset. With time, consistency, and good habits, you can rebuild your credit and move toward a healthier financial future.
Thinking about filing? Talk to a bankruptcy attorney or credit counselor. They’ll help you explore your options and decide if it’s the right move for your situation.
Contact FKMALaw.com and find out how we can help you!