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How personal credit scores are affected by bankruptcy

On Behalf of | Apr 16, 2023 | Bankruptcy |

These days, it can seem almost impossible to pay for food, shelter and other living expenses without accruing debt. Unfortunately, it doesn’t take long for debt to pile up and become overwhelming. Filing for bankruptcy is sometimes seen as a last-resort type option in Michigan and elsewhere for those who feel as if they have no way to pay off consumer debt. However, a bankruptcy filing will have certain effects on a person’s credit score. 

How long will a bankruptcy stay on a credit report? 

If an individual has gone through a bankruptcy, it will typically appear under the public records section of their credit report. References to the bankruptcy can also appear under the account information section. The type of bankruptcy filed will determine how long the bankruptcy remains on a credit report. Chapter 7 bankruptcy, which is the most common type of bankruptcy filed by individuals, will stay on credit reports for up to 10 years. Chapter 13 bankruptcies will show up on credit reports for seven years after the bankruptcy is complete. 

Rebuilding credit 

The more time that passes, the less a bankruptcy will affect a person’s credit score. But there’s no need to wait as the individual can take action to improve his or her credit score as soon as the petition is filed. It is important to remember that some debts like student loans, child support and taxes are not eliminated by bankruptcy. It is critical to make timely payments on any remaining debts. 

Help is available 

While it’s understandable to resist filing for bankruptcy initially, sometimes it is the only viable option. Michigan residents who have questions about bankruptcy or want to know how to get started with the bankruptcy process can benefit by meeting with a knowledgeable legal professional. An attorney experienced in bankruptcy law can answer questions and help individuals determine if bankruptcy is right for them.


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