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Central Texas:254-304-7161

The Impact Of Bankruptcy On Your Credit


A common question for Dallas bankruptcy attorneys is how a person’s credit score will be impacted by filing for bankruptcy. Will it go down substantially, or take a small hit? Could it even go up? Contrary to popular belief, credit scores don’t always tank after bankruptcy. Here’s what you should know. 

Your Credit Prior to Bankruptcy 


If you owe a great deal of debt to many different creditors, they are all likely reporting default activity to one or more of the three U.S. credit bureaus. This may mean that your credit score is already fairly low, even surprisingly so. If you owe federal or state back taxes or have a lien against you, this may be even more significant of an issue. 

Your Credit Post-Bankruptcy 


Once your bankruptcy is filed, your creditors may not continue to contact you — this is called an automatic stay. If filing a Chapter 13 bankruptcy, your assets won’t be liquidated, but you’ll be placed on a 3 to 5 year, income-based repayment plan. A Chapter 7 bankruptcy, however, requires that non-exempt assets are liquidated to satisfy debts in priority order and any debt leftover is discharged. A Chapter 13 bankruptcy stays on your credit report for 7 years, while a Chapter 7 is not dismissed until after 10 years have passed. 

How Bankruptcy May Impact Your Credit Score 

A large number of people do see a dip in their credit score after they file for bankruptcy of either chapter. Depending on the debt you owed, the type of bankruptcy you filed, and other factors, this dip could be either minor or substantial. However, as you make new payments on time and those payments are reported to the credit bureaus, your score should begin to rise. 


In some cases where an individual’s score was very low, to begin with, and their debts were discharged, their post-bankruptcy score may even be higher after filing. 

When to Call a Texas Bankruptcy Attorney

If you’re struggling to pay an overwhelming debt, you’re not alone. Bankruptcy may be a viable solution for your family if you’re having difficulty making payments on critical obligations, like your vehicle or home. Depending on your individual circumstances, the hit to your credit score may not be as drastic as you anticipate. To schedule a consultation to discuss your legal options, call Sims Bankruptcy Law, PLLC today at 469-751-7467 or 254-304-7161. 

By : First Page Attorney | February 17, 2020 | Chapter 7 Bankruptcy