How Long Does Bankruptcy Affect Your Credit Score?

File for Bankruptcy How Long Does Bankruptcy Affect Your Credit Score?

How Long Does Bankruptcy Affect Your Credit Score?

If you've been struggling to pay all your bills, and disputing your debts with a 609 letter or a debt verification letter hasn't stopped the calls from collectors, it may be time to consider your options more closely. One of these options is bankruptcy.

However, before you decide to go that route, you need to make sure that you understand what happens when you file for bankruptcy. You also need to have a good idea of how bankruptcy affects your credit score. Understanding these things can help you determine whether to go ahead and file for bankruptcy. After all, it's clear that filing for bankruptcy is a weighty decision.

If you think bankruptcy could be in your future, read on to learn more about how the process works and how DoNotPay can make it less painful.

What Happens to My Credit if I Declare Bankruptcy?

Declaring bankruptcy can have a negative impact on your credit score, no matter what type of bankruptcy process you follow. This is one of the main downsides of filing for bankruptcy. That said, the impact of a bankruptcy on your credit score will vary depending on a number of factors. These include the following:

Type of Bankruptcy

Individuals can usually file for either Chapter 7  or Chapter 13 bankruptcy. Of the two, Chapter 7 will have a greater impact on your credit score than Chapter 13 because Chapter 7 does not require a repayment plan for your debts. This makes you look like a bigger risk to potential creditors.

Your Current Credit Score

If you currently have a good or excellent credit score, you are likely to see a larger drop from bankruptcy than someone with a fair or poor score. Someone with a score above 700 could potentially lose 200 points or more, while someone with a lower score might lose around 150 points.

The Extent of the Debt Being Written Off

The exact nature of the debts that led you to bankruptcy will also be a determining factor in what the impact on your credit score ends up being. Factors influencing this result include the:

  • Number of accounts you're in default on
  • Balances being discharged

How Long Does a Bankruptcy Stay On Your Credit Report?

As with the above, how long a bankruptcy stays on your credit report will depend on what type of bankruptcy you file for. Let's take a look at each.

Chapter 7Chapter 13
This type of bankruptcy will stay on your credit report for up to 10 years after filing.In these cases, the bankruptcy appears on your credit report for 7 years after filing. It doesn't remain on your report for as long as Chapter 7 because it is understood that you will still be repaying your debts as part of the bankruptcy process.

How Much Does It Cost to File for Bankruptcy?

How much it costs to file for bankruptcy will depend in part on whether you file for Chapter 7 or Chapter 13.

Chapter 7 Filing FeeChapter 13 Filing Fee
$335$310

There are also fees associated with the required credit counseling you have to do as part of the process. And then, if you're using an attorney, there are attorney costs as well, and those can often be steep.

How to File for Bankruptcy Yourself

If you want to avoid attorney fees, it is technically possible to file for bankruptcy on your own, although doing so correctly without an attorney can be quite challenging. In brief, the steps to file for bankruptcy on your own are as follows:

  1. Make sure you have all the necessary documents
  2. Take the required credit counseling course
  3. Fill out the appropriate forms
  4. Get your filing fee and file the forms in court

As you can imagine, there are a lot of ways for one to go astray when one tries to file for bankruptcy without any assistance. The legal process isn't designed to be easy, after all.

Thankfully, though, now there's an easier and more affordable way to get help with filing for bankruptcy — DoNotPay. 

How to File for Bankruptcy With the Help of DoNotPay

If you want to file for bankruptcy but don't know where to start, DoNotPay has you covered in 5 easy steps:

  1. Search for File for Bankruptcy on DoNotPay.

     

  2. Put together a list of your debts, expenses, and assets. If you need help accessing information like your credit report, DoNotPay can help you get your report.

     

  3. Let DoNotPay walk you through your bankruptcy options and help you determine whether a Chapter 7, Chapter 12, or Chapter 13 bankruptcy is right for you.

     

  4. DoNotPay will then help find the best credit counseling course near you, which you need to complete before filing your bankruptcy forms.

     

  5. Lastly, DoNotPay will gather all of the forms you need (including available fee waivers) and help you locate your nearest bankruptcy court. All you have to do is complete the required forms, prepare your filing fee, and file the application with your local court.

     

Why Use DoNotPay to File for Bankruptcy?

DoNotPay can make the process of filing for bankruptcy much less of a hassle. We'll ask for all the information needed to help you get started without sending you on a lot of wild goose chases. DoNotPay is

  • Fast – Helps you do what you need to do quickly
  • Easy – Simplifies the process of finding the necessary forms and helps you figure out where to file them
  • Successful – Gets you the results you need to get free of debt collection calls

Keep in mind that DoNotPay can currently only help individuals with the bankruptcy process. We cannot assist with corporate bankruptcies.

Give DoNotPay a try today to see how it can help you file for bankruptcy and so much more!

Want your issue solved now?