I understand my clients’ concerns about their credit score when considering filing bankruptcy. It’s hard to predict exactly what your credit score will be after filing bankruptcy but here are some guidelines and a few things to think about.
Your Current Credit Score
If your current credit score is in the low 600’s, you can expect about a 50-75 point drop. One year after filing, however, you can expect that your credit score will be higher than it was prior to filing. The reason is after you receive your discharge in bankruptcy, your income to credit ratio is much ‘healthier,’ which raises your score.
If your current credit score is below 600, bankruptcy will lower your score but it shouldn’t be your primary concern. Your credit is already damaged. The benefit of filing—freeing up monthly disposable income and eliminating the balances on credit cards, medical bills and sometimes taxes—will serve you far better than trying to preserve a credit score.
If your credit score is 750, you will most likely see about a 150 point drop. This is perhaps the most dramatic shift, as you are going from perfect credit to bad credit. But keep in mind, you’re considering filing bankruptcy because you can’t pay your monthly bills. If that continues, you’ll start missing payments and your credit score will drop accordingly. At least with bankruptcy you achieve a goal.
There Are Many Factors To Consider
My job is to understand my clients’ objectives, and to help them make a decision based on the options. My personal preference is for a healthy and balanced financial and personal life and in most cases, when unsecured debt has mounted, Chapter 7 and Chapter 13 bankruptcy becomes a powerful option with immediate and lasting changes.
Call Our Questions Line
We’re here to answer questions all day and some evenings. Call any time. There is no charge. You’ll speak with an attorney and come away from the call better educated about your options. 704.749.7747.