Whether you are debating between a Debt settlement and bankruptcy filing or have decided to file bankruptcy but are worried about the effects it might have on your credit, you are bound to have many questions.
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When people file bankruptcy, initially their FICO score usually go down about 150-200 points. And
this is the kind of impact that a shortsale, deed in lieu, or a foreclosure on a home is likely to have on your credit score. Now, the fact that you filed bankruptcy will appear on your credit report for 10 years if you filed a Chapter 7 bankruptcy and 7 years if you filed under Chapter 13.
Does this mean your credit is ruined permanently? The short answer is no. While your credit score will go down initially, with the bankruptcy discharge (wiping out most of your debts), you get a fresh start. You get a chance to bring your credit score back up everytime you pay your bill on time after the bankruptcy. Many people re-establish credit in about 1 to 2 years and maintain good credit thereafter.
Another thing to remember is that if you are considering bankruptcy, then chances are your credit score is not very good to begin with. You probably have balances that are long overdue and/or some late payments. This is why, for many people, bankruptcy is not what ruins their credit but a starting point for repairing their credit.
The information contained on this site is for general education only and it is not, nor is it meant to be, legal advice. You should seek advice from a bankruptcy attorney for your specific situation.