Filing bankruptcy is a very emotional and stressful event with huge implications. However, in this current economic hurricane, it may be a practical choice for some. Anyone considering filing should speak with a bankruptcy attorney to consider all possible options and to decide if it is the best choice for you.
Bankruptcy will damage your credit score. How much of an impact will depend on your entire credit profile. For example, someone who had spotless credit and a very high FICO score (780 or above) could expect a huge drop (160 points) in their score. On the other hand, someone with many negative items already listed on their credit report might see only a modest drop in their score.
As time passes, the negative impact of the bankruptcy will lessen. Typically, here is how long you can expect bankruptcies to stay on your credit report (from the date filed):
- Chapter 11 and 7 bankruptcies up to 10 years.
- Completed Chapter 13 bankruptcies up to 7 years.
However, the good news is that eventually you can rebuild your score.
- Creditors must stop all activities related to collecting the debt such as phone calls, letters, etc.
- Fresh start because eligible debt is discharged. The requirements differ depending on Chapter 7 or 13 especially about secured and unsecured debt.
- You cannot be fired solely for filing bankruptcy.
- Will hurt credit score for 7 to 10 years which means it will be difficult to get credit.
- Only temporarily stops foreclosure.
- Once filed, withdrawal is difficult.
- Stigma and embarrassment.