What Happens to My Credit Score After Bankruptcy?
Filing for bankruptcy is a big decision, and one of the most common questions people ask is, “What will this do to my credit?” While bankruptcy does impact your credit score, it’s important to understand what really happens, and how it can actually be the first step toward rebuilding your financial future.
Yes, Bankruptcy Lowers Your Credit Score
There’s no sugarcoating it: bankruptcy will cause a drop in your credit score. How much depends on where your score was to begin with. If you had a high credit score, the drop may be more noticeable, often between 130 to 200 points according to FICO data. If your score was already low due to missed payments or maxed-out accounts, the impact may be smaller.
Bankruptcy also stays on your credit report for:
- 10 years for a Chapter 7 bankruptcy
- 7 years for a Chapter 13 bankruptcy
However, that doesn’t mean your credit will be unrepairable for that entire time.
Bankruptcy Also Wipes Out Debt—And That Helps You Move Forward
While the score drop may feel discouraging, bankruptcy gives you a clean slate. Once the process is complete, you’re no longer burdened by the debts that were causing financial stress and missed payments. That makes it possible to begin rebuilding your credit in a healthier way, often much faster than if you continued struggling with unpaid bills and collections.
- Rebuilding Credit Is Absolutely Possible
Many people are surprised by how quickly they start receiving credit offers after filing bankruptcy. While interest rates may be higher at first, responsible use of new credit can help improve your score over time. Some steps include:
- Applying for a secured credit card and paying the balance in full each month
- Making on-time payments for all bills and obligations
- Monitoring your credit reports to check for accuracy
- Keeping balances low relative to your limits
With consistency, many people start seeing improvements within 12–18 months.
- Bankruptcy May Be the Right Step for Long-Term Credit Health
Sometimes, continuing to struggle with overwhelming debt causes more long-term damage to your credit than filing bankruptcy. Late payments, collections, and defaulted loans all weigh heavily on your credit report. Bankruptcy stops the downward spiral and gives you a clear, legal way to reset.
Putting It All Together
Yes, bankruptcy affects your credit score, but it also gives you the opportunity to rebuild your financial life with less stress, fewer bills, and a clear path forward. If you’re considering bankruptcy, it’s important to weigh all the pros and cons based on your unique situation.
Attorney Greg Kornegay has over 35 years of experience helping clients across Wilmington and Southeastern North Carolina understand their options and move toward financial recovery. If you’re ready to talk about what bankruptcy could mean for you, call today to schedule a free consultation.
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Attorney Gregory Kornegay
Greg is a trial attorney in Wilmington with over 30 years of experience. Greg was born and raised in southeastern North Carolina. Before law school he managed a store with employees making a payroll every week. His first job out of law school was as an Assistant District Attorney investigating and trying cases for the State of North Carolina. Through the years he has handled many different types of cases – including death penalty cases.
Being married with children has been a blessing and a challenge, but has served him well in understanding the problems individuals and families face as they live out their lives. Greg believes that each case is different and the needs of each client are unique, but there are certain themes of life that we all share.
