Bankruptcy

               How Does Bankruptcy Effect Your Credit Report            

How will 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(past due) 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. Most score drop 100 points or more depending on your case.


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 Chapter 13 bankruptcy Or A  Chapter 7 bankruptcy?

According to FICO (the most widely-used credit scoring company in the U.S.), whether you file for Chapter 13 or Chapter 7 bankruptcy makes no difference to your credit score.  Chapter 7 eliminates debt and Chapter 13 consolidates your debt to the lowest dollar or with no interest to pay on the debt.

However, it is possible that a potential creditor viewing your credit report will look upon one type of bankruptcy more favorably than another. For example, some creditors might view someone who files for Chapter 13 (in which you repay some or all of your debts over a three to five year period) as more responsible, and thus a better credit risk, than someone who files for Chapter 7.

How long will bankruptcy stay on my credit report?

If you file for either Chapter 7 or Chapter 13 bankruptcy, it will appear on your credit report for up to ten years.
If you apply for a loan or life insurance policy in an amount greater than $150,000 or apply for a job with an annual income great than $75,000, credit reporting agencies can report your bankruptcy longer than ten years. As a practical matter, however, most credit reporting agencies will delete the bankruptcy after ten years


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