We’ll Start Your Case for $100!
Four Convenient Office Locations - Honolulu, Aiea, Kaneohe, Maui
Woman sitting down looking at finances

What Happens to My Credit Score After I File Bankruptcy

Filing bankruptcy is typically a last resort action for most people. It is a process in which individuals eliminate different types of debt they might have. Deciding to file for bankruptcy is a life-altering decision— one of the main reasons why: the lowering of one’s credit score.

Consumers usually file one of two chapters of bankruptcy, while others do exist. These are Chapter 7 and Chapter 13. We will review these types of bankruptcy and how they impact your credit score. Furthermore, there are ways to raise your credit score even after bankruptcy.

Chapter 7

This type of bankruptcy allows you to liquidate specific assets and property. The money from this liquidation helps wipe out the debt. However, not many people have enough assets to offset their debts. What happens in these cases? The courts will often absolve the debt even if there is not enough money to pay it off.

When you file this type of bankruptcy, you face impacts on your credit score for potentially up to ten years.

Chapter 13

When you file for this type of bankruptcy, you can discharge certain portions of your debt. For example, some individuals might choose to put aside their medical bills. This allows you to pay off other debts that you have. With chapter 13 bankruptcy, you can continue to make those payments for a three to five year period.

This type of bankruptcy impacts your credit score less, and it will only remain on your credit score for up to seven years.

Comparing Options

Out of the two aforementioned chapters, Chapter 7 bankruptcies tend to be more impactful on your credit score. Chapter 13, however, allows you to make regular payments and absolve some of your debt without the need to forfeit any of your property.

Improving Your Score

Just because you had to file for bankruptcy doesn’t mean your credit score can’t improve again. Your score can improve over a few years by taking small steps such as making payments on time and starting a new credit card with a low line of credit. Additionally, creating a strict budget for all of your expenses will help you maintain payments on your obligations while prompting healthy organization and decision-making when it comes to your finances.

Without taking intentional steps to improve your credit score, you won’t see the change you are looking for. We offer our “2 Years to 720 Credit Score” program to not only help you rebuild your credit score, but to set you up for future financial success. Through our program we can help you reap the benefits of:

  • Lower interest rates
  • First choices on houses or apartments
  • An easier time applying for credit cards or loans

We do our best to ensure raising your credit score after bankruptcy is simple and straightforward. Contact the team at Law Offices of Blake Goodman if you have any questions about navigating the bankruptcy process and how you can help your credit score today!