Credit During and After Bankruptcy
Many people are concerned with how bankruptcy will affect their credit. We are often asked this question during our initial consultation with prospective clients. Often those who are thinking of bankruptcy have already missed many payments to more than one lender. These payments have been reflected in their credit report, and have likely already dragged down their credit score. For these people, bankruptcy over time will in fact improve their credit. After you file bankruptcy, your credit report will indicate you've filed for bankruptcy, but you can often expect a credit score increase of up to 100 points within 12 months post filing.
Those who are filing bankruptcy with a high or perfect credit score can expect bankruptcy to negatively impact their credit. However, even in these situations it is likely they would soon be missing payments to their lenders. No matter how they approach their debt issue, their credit score would decline with or without bankrutpcy. It is better to show future lenders and even employers that you responsibly dealt with a debt issue than ignored it and missed payments. Thus, even here, bankruptcy is the more viable alternative for many people.
Whether you file a Chapter 7 or 13 doesn't have an impact on your credit score. Chapter 13 bankruptcies obviously last longer, and your discharge will not be granted until the end of your case (usually 3 or 5 years). As a result, the length of the bankruptcy may affect your ability to obtain new forms of credit and have a longer term impact.