Credit Scores and Bankruptcy

Everyone who consults a Bankruptcy Attorney needs to know what will happen to their credit score when they file for Bankruptcy.  Most people assume that their credit will be ruined forever, and they will never again get credit cards or loans.  While everyone who enters bankruptcy should strongly consider never using credit again, it is just not true that your credit will be ruined forever.

We will start with the law.  The law provides that you must answer the question, “Have you Ever Been Bankrupt” YES for a period of 10 years.  After that ten years, your record of bankruptcy is no longer reported.

But, even though they could, the credit and collection industry does not want debtors to be disabled from accessing credit.  So, currently, by choice and NOT by law, the major credit bureaus all drop a Bankruptcy filing from your credit record after 7 years.

Having said that, there are a large number of lenders who will give credit to recently discharged debtors on the spot.  Car dealers, furniture companies, and many high interest rate low credit limit credit cards will happily issue brand new credit to Debtors just exiting Bankruptcy.

Our experience is that the careful Debtor can have a 700 credit score within about 18 months of getting their discharge.  There are even auto lenders who specialize in making car loans to active Chapter 13 debtors!  So, no, Bankruptcy is not the end of credit availability.

This article is written by an attorney at Attorney Donald Wyatt PC. Always consult an attorney before making any legal decisions. To make an appointment today for a free consultation, please click here to contact us.


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