Does Filing for Bankruptcy Affect Your Credit Score?
If you are considering filing for bankruptcy, it means that you can’t keep up with your debt load, which can happen because of many unexpected events. Prime examples include job loss, divorce, and serious illness or disability. The fact is that bankruptcy will affect your credit score, but carrying immense debt can do the same – and it can be far more difficult to move past. If you have questions or concerns about bankruptcy, it’s time to consult with an experienced bankruptcy attorney in Harrisburg, Pennsylvania.
Your Current Credit Standing
The stronger your credit score currently is, the more seriously it will be affected by bankruptcy.
Credit scores break down as follows:
- A score of 800 to 850 is categorized as excellent.
- A score of 740 to 799 is categorized as very good.
- A score of 670 to 739 is categorized as good.
- A score of 580 to 669 is categorized as fair.
- A score of 300, which is the lowest score, to 579 is categorized as poor.
For those in the excellent to good range who file for bankruptcy, the average drop in their credit score is generally 200 points. Those who rank in the fair and poor categories, however, can expect to see an average decrease of 130 to 150 points. It’s important to note, however, that filing for bankruptcy can put you in the lowest score group regardless of what your score was when you filed.
The Duration of Impact
The length of time that filing for bankruptcy will impact your credit score depends on the type of bankruptcy you file. Chapter 7 bankruptcy, which generally discharges more debt, will remain on your credit reports for ten years from the date of filing. A Chapter 13 bankruptcy, on the other hand, generally involves paying off more debt – according to a payment plan – and it will remain on your credit reports for seven years from the filing date.
A Fresh Financial Start and Rebuilding Your Credit Score
Bankruptcy can provide you with a fresh financial start that can afford serious stress relief. While the bankruptcy will negatively impact your credit score, there are things you can do to increase that number while you strengthen your financial standing, including:
- Monitoring your credit over time
- Opening a secured credit card that demonstrates your financial responsibility
- Paying your household and personal bills on time
- Sticking to a budget that reflects your income
- Maintaining an emergency fund
Turn to an Experienced Harrisburg Bankruptcy Attorney for the Help You Need Today
The compassionate Harrisburg, PA, bankruptcy lawyers at Cunningham, Chernicoff & Warshawsky, P.C., recognize how challenging it can be to seek financial relief through bankruptcy but also realize what a difference it can make in your life. The bottom line is that bankruptcy can provide a financial do-over, and we encourage you to contact us online or call 717-260-3527 for more information about what we can do to help you today.