Thursday, November 11, 2010

The Effect of Bankruptcy on Your Credit Score


If you end up filing a Chapter 7 or Chapter 13 Bankruptcy, expect your credit score to dip at least 200 points.  All of your past open accounts will show that they're included in the bankruptcy, and you'll essentially have no liabilities.  In the case of a Chapter 7 Bankruptcy, all of your debt is eliminated after the sale of your assets.

Besides the dip in your credit score, the bankruptcy will show up as a public record on your credit report.  Even if you do build your credit score into the high 600's and low 700's 2-3 years after bankruptcy, which is totally doable, your bankruptcy will still be listed.  A Chapter 7 Bankruptcy will stay on your credit report for 10 years, and a Chapter 13 Bankruptcy will stay on your report for 7 years.  If they show up any longer than the stipulated time, you can appeal to the credit bureaus to have them removed.

However, years after these public records are removed from your report, creditors such as American Express keep records on those who have had their debts discharged via bankruptcy no matter how long ago it happened.

53 comments:

  1. Don't do bankruptcy pay your bills on time :)

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  2. didnt think your credit score could go below 400 =/

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  3. always good to know man, glad you could keep us updated

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  4. @thenitefalls, how can you do that when people are losing their jobs left and right?

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  5. this is why i never use credit

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  6. thats what id expect to happen to ur credit wen u file for bankruptcy

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  7. Very helpful information...thanks for sharing.

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  8. thanks for your support! showing some love

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  9. NOOO I don't want to be poor :( No charge card thanks.

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  10. There is a saying that goes "Don't waste what you don't have". If you are using a credit card is because you want to work in your credit score, you supposed to have already the money to pay your debts. I always pay even couple days before the bill comes to my mailbox. =) Good info!

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  11. I don't even have a credit card. Is that a good thing or a bad thing?

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  12. very interesting info, thanks

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  13. That sucks. The info is good to know though.

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  14. The last bit of info is really usefull because that way it never really clears of your record... Which is shitty...

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  15. oh man... bankuptcy has more effects on your life than you can imagine :(

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  16. Very true. My grandmother was supposed to help me with a student loan (retired a long time ago, very economically comfortable) a while back but couldn't. We were like, wtf, her credit score is awesome but it was because she'd filed bankruptcy like a decade ago. Horseshit.

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  17. lol i read this on someone elses blogs.

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  18. I hope I never become bankrupt.

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  19. Yikes! Glad I pay off my card monthly!

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  20. i think its good that it goes away after a while. otherwise a lot of people would be screwed.

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  21. pay for everything in cash, make credit obsolete!

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  22. 200 points seems like a lot and I know nothing about it.

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  23. man, seems like bankruptcy would totally screw you over!

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