Bankruptcy offers some life-changing advantages to those struggling with unmanageable debt, but it does carry some negative consequences. For instance, filing for bankruptcy does have an immediate effect on your credit score, which can make it challenging to secure a loan or even rent an apartment in the future. Fortunately, it’s possible to start rebuilding your credit almost immediately after filing.

How Bankruptcy Impacts Your Credit Score

Immediately after you file for bankruptcy, your credit score will drop by a significant margin. As a general rule, the higher your rating was before filing the petition, the more your score will drop once the bankruptcy is discharged. Those who previously had high ratings might lose over 200 points, while petitioners with average scores may only see a drop of 150 points.

How Long Bankruptcy Stays on Your Credit Report

Having a bankruptcy declaration on your credit report may affect creditors’ decisions for years to come, even if you’ve gotten your finances under control. Chapter 7 bankruptcies will typically fall off of your report ten years after the discharge date. If you filed for chapter 13, the notation would stay on your report for seven years after you’ve completed the payment plan.

Rebuilding Your Credit After Bankruptcy

After your bankruptcy has cleared, you should have room in your budget to start saving. Not only does establishing a savings account make you look more trustworthy to creditors, but it also gives you the resources to handle emergencies without going deeper into debt.

Paying off any debts left over after your bankruptcy is essential for rebuilding your credit, but so is opening new accounts. Within a few months, you should be able to qualify for a secured credit card or store charge account. Just remember not to charge more than you can afford to pay and settle the debt in full every month.

If you’re planning to file for bankruptcy, Bender & Bender will provide the detailed advice and legal support you need. They’ve been serving struggling borrowers throughout the Wisconsin Rapids area for over 35 years and are committed to helping you get the second chance you deserve. To schedule a consultation and learn about your debt-relief options, call their office at (715) 423-4400 today.