While there are several factors which impact your credit, filing for bankruptcy will likely have a negative impact on your credit for a long time. Of course, the severity of the impact will depend on your pre-bankruptcy credit, as well as your actions post-bankruptcy. If you had strong credit pre-bankruptcy, then the negative impact will be far more dramatic than if you already had poor credit. If you take out modest and responsible lines of credit post-bankruptcy, then with time, your credit score will surely improve. In terms of the length of time of the impact, Chapter 7 bankruptcy can be reported for 10 years from the date of filing, and Chapter 13 can be reported for 7 years. However, with patience and effort, your credit will improve.
According to FICO, the type of bankruptcy (Chapter 7 vs. Chapter 13) makes no difference to your credit score; in other words, filing under one chapter will have no less of an impact on credit than the other. However, potential creditors might view one type of bankruptcy more favorably than the other. This is because a Chapter 13 debtor, who repays at least some of the debts over a certain period, may look less risky than a Chapter 7 debtor. In any case, if you are considering bankruptcy, you should seek advice from an experienced bankruptcy attorney who will be able to explain the benefits, qualifications, and differences of each type, and will work with you to strategize and find the best plan for you.
The Werner Law Group is the only consumer bankruptcy firm based in Victoria, TX. Attorney Leslie A. Werner has over thirty years of bankruptcy experience. Our bankruptcy paralegal, Jim Hoffman, has been a CPA for over 45 years. Jim can advise on financial matters if he feels bankruptcy is not your most productive option. You can text us your bankruptcy questions seven days a week at 361-648-6888.