Bankruptcy and Your Credit FAQ

How will filing a bankruptcy affect my credit score?

Many people considering Chapter 7 or Chapter 13 bankruptcy are worried about the effect that bankruptcy will have on their credit score. Although creditors don’t like to see a bankruptcy on your credit report, the damage it will do to your credit score depends, in large part, on how good your credit was before you filed.

If you are delinquent on many accounts and your debt-to-asset ratio is high (meaning you have lots of debts and few assets), your credit is already in the tank. If you file for bankruptcy, your score will take a modest dip, but it won’t take a huge plunge.

If, on the other hand, your credit is good before you file for bankruptcy, then your score will take a much bigger hit post-filing.

(To learn about credit scores, including what it is, factors affecting it, and how to improve it, see our Credit Reports & Credit Scores topic area.)

by: , J.D.

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