Our office continues to operate during our regular business hours, which are 8:30 am - 5:30 pm, Monday through Friday, but you can call the office 24 hours a day. We continue to follow all recommendations and requirements of the State of Emergency Stay at Home Order. Consultations are available via telephone or by video conference. The safety of our clients and employees is of the utmost importance and, therefore, in-person meetings are not available at this time except for emergencies or absolutely essential legal services.

How Is Your Credit Score Affected By Bankruptcy? :: Charlotte Bankruptcy Lawyer

A common concern among those considering filing for bankruptcy in North Carolina is how much the bankruptcy will go on to impact their credit history and resulting credit score. Many fear that the bankruptcy will dramatically impact their ability to operate and will destroy any chance of making large purchases for the foreseeable future. While it’s true that bankruptcies will damage your credit score in the short term, the damage is not permanent.


Negative Bar Graph Charlotte Bankruptcy Lawyer North Carolina Debt AttorneyAnother important benefit of filing bankruptcy, something that is seldom discussed, is that though your credit score will take a hit initially, in the long run you will be poised to rebuild your credit with a clean financial slate, hopefully avoiding many of the problems that led to the bankruptcy in the first place.


How long will bankruptcies stay on your credit report?


The answer to this question depends on what kind of bankruptcy you received. Those filing for a Chapter 13 bankruptcy will have the issue appear on their credit report for seven years from the date that the bankruptcy was filed. Under Chapter 13 bankruptcies a person continues to repay at least some portion of their overall debts, which is why the length it stays on your credit report is somewhat shorter than in a Chapter 7.


In a Chapter 7 bankruptcy, the mark will remain on your credit report for 10 years from the filing date. Chapter 7 bankruptcies occur when a person does not repay any of their dischargeable debts, instead having the slate wiped clean.


How much of a hit will a bankruptcy cause?


The reality is that there is no clear answer to this question. According to MyFICO.com, the amount your score will drop depends almost entirely on your individual credit history. For example, someone with previously spotless credit and a high FICO score can expect a very steep drop in their score. However, someone who already has negative marks on their record may only suffer a minor drop.

One thing that should be pointed out is that all bankruptcies are not treated the same in terms of impact on credit scores. Bankruptcies that involve more accounts will have a comparably more severe impact on your credit score than those involving fewer accounts.


What can you do?
While your credit score will take a hit, try not to worry. The fact is that most people are able to begin rebuilding their credit within 1-2 years after having their bankruptcy discharged. Starting slow by opening a secured credit card or having a co-signer vouch for your creditworthiness are all ways to begin the process of starting over financially following a bankruptcy.


If you find yourself needing the services of a Charlotte, North Carolina bankruptcy attorney, please call the skilled lawyers at Arnold & Smith, PLLC today at (704) 370-2828. As professionals who are experienced in the bankruptcy arena, our attorneys will provide you with the best advice for your particular situation.



“How will my FICO score consider a bankruptcy?,” published at MyFICO.com.


See Our Related Blog Posts:

What Can I Do About Aggressive Debt Collectors? :: Charlotte Bankruptcy Lawyer

What Is A Reaffirmation Agreement And How Does It Work? :: Charlotte Bankruptcy Lawyer



Contact Information