In many situations, bankruptcy may stabilize finances. But bankruptcy damages your credit score. Also damaging to a credit score are a foreclosure, judgment and multiple charge-offs that are continuously reported to the credit bureau. You should consult with an attorney about whether a bankruptcy is appropriate for your situation, as only a review of your specific situation will allow them to give you vital information such as the impact of the bankruptcy on your credit score, in the short and long run. No attorney can advise you of how much your credit score will drop or how much it will improve and when after bankruptcy. But a knowledgeable attorney can talk through a debtor’s history and help give insight on how a bankruptcy may impact future credit needs.
A bankruptcy filing is noted by various credit reporting companies. Federal law limits the length of time that this information may be carried on a report to ten (10) years. A bankruptcy shown on a credit report will adversely affect one’s credit score. However, after filing bankruptcy, debtors can work toward rebuilding their credit score over time.