Bankruptcy and Your Credit Score: What to Expect

Introduction

One of the biggest concerns people have about bankruptcy is how it will impact their credit score. While it’s true that bankruptcy lowers your score at first, it also gives you the opportunity to rebuild. Let’s break down what to expect before, during, and after filing.

How Bankruptcy Affects Your Credit Score

• Chapter 7 Bankruptcy: Remains on your credit report as a public record for 10 years.

• Chapter 13 Bankruptcy: Remains for 7 years after filing.

• Immediate Boost: Most people see a 50-100 point increase in their score initially.

Short-Term Effects Short-Term Effects

• Higher credit score immediately after filing.

• Difficulty getting new credit or loans right away.

• Higher interest rates if approved.

Long-Term Effects (and the Good News)

• The negative impact fades over time.

• Bankruptcy removes unmanageable debt, giving you a clean slate.

• Many clients qualify for credit cards and even car loans within 1–2 years of discharge.

• Mortgage approval is possible in as little as 2–3 years after filing, if you rebuild responsibly.

Steps to Rebuild Your Credit After Bankruptcy

1. Check Your Credit Report: Make sure discharged debts are marked correctly.

2. Pay Bills on Time: Payment history is the #1 factor in your score.

3. Use a Secured Credit Card: Start small, pay in full each month.

4. Keep Balances Low: Aim for under 30% of your available credit.

5. Avoid New Debt You Can’t Manage: Rebuilding is about steady progress.

Myth-Busting: Bankruptcy and Credit

• Myth: Bankruptcy ruins your credit forever.

• Truth: Most people rebuild their credit faster after bankruptcy than if they had struggled for years with overdue debts.

Conclusion Bankruptcy is not the end of your financial life—it’s the start of a fresh chapter. While your score drops at first, with the right steps, you can rebuild stronger than before.

Ready to reset your financial future? Contact Middleton Legal today for a

free bankruptcy consultation.