To what extent is my credit score affected by a bankruptcy

To what extent is my credit score affected by a bankruptcy

BankruptcyQuestion: I am considering filing for bankruptcy but I am concerned how long my credit score will be affected. So my question is, to what extent will my credit score be affected after a bankruptcy.

Answer: There are many different kinds of bankruptcies and each type affects your credit score and credit worthiness in different ways. The most common form of consumer bankruptcy is called a Chapter 7 which is a complete discharge of all dischargeable debt. In a Chapter 7 bankruptcy, your credit score usually goes up immediately after the discharge. This is because your debt to equity ration is no longer negative as your debt has been discharged. However, creditors evaluate not only your credit score, they also ascertain whether you have filed for bankruptcy in the past seven years. Usually, a prior bankrupcty during this seven year period will cause you to be offered a higher interest rate typically 1% to 2%. The negative of receiving a higher interest rate is significantly off set by the fact that a Chapter 7 discharge eliminates your debt and permits you to have a new fresh start. In any event, if you are focused solely on your credit score, to answer your question, after a bankruptcy, the typical credit score goes up and improves.

Client Review

“I continue to be impressed and grateful for Maurice Arcadier’s depth of knowledge, methodical, measured and fair legal guidance. I’ve worked and conducted business across 15 countries, but here at home, he and his law firm feel just as much business partners as legal counsel. The perspective and consideration he offers remains more-than-valuable to me as I navigate each new business endeavor. I would wholeheartedly recommend Maurice to anyone !”
Demetri K
Client Review