How will bankruptcy affect my credit score?

When you’re having trouble paying your bills bankruptcy can seem like a good solution. However, if you’re wondering about bankruptcy and credit score, don’t worry. According to SmartMoney, declaring bankruptcy can improve your credit score. The main reason why your credit score suffers before filing bankruptcy is because you are struggling to pay your bills. However, your credit score improves after filing bankruptcy because most of the credit report is wiped out. In other words, your indications of late payments, unpaid balances and high balances are removed. Instead they are replaced with statements such as “included in chapter 7 bankruptcy” or “included in chapter 13 Wage Earner’s Plan, according to SmartMoney. Of course, there won’t be a huge, dramatic jump in your credit score. However, it won’t go any lower than it was before filing bankruptcy.

Another reason why your credit score won’t sink lower than it did before filing bankruptcy is that you’re now not compared with the general public. This means that your credit score is compared with others who have filed bankruptcy, not those who haven’t. Therefore, your credit score won’t be compared with others who have better credit scores that you do.

Bankruptcy and credit score are a complicated matter. For instance, you can increase or lower your credit score based on what you do after your bankruptcy is successfully discharged. Thus, you should seek legal assistance about your bankruptcy and credit score. The lawyer can advise you on how to increase your credit score after completing bankruptcy.