Filing bankruptcy offers a way out of unmanageable debt for hundreds of thousands of consumers every year. But, this solution comes with a few risks, such as lowering your credit score. In most situations, however, these cons are far outweighed by the benefits of having a clean slate and more control over your financial affairs. To better understand the relationship between bankruptcy and credit scores, below is an introduction to the topic.

How Filing Affects Your Credit Score

Filing bankruptcy automatically causes your credit score to drop significantly. There is, unfortunately, no way around this; it is just a natural consequence of the process. A person with a higher credit score of 700 or above can experience a drop as substantial as 200 points. A score below 700 will still noticeably decrease, usually between 100–150 points.

In the long run, a bankruptcy will continue to impact a credit score because it stays on the report for several years. For Chapter 7 bankruptcy filers, it will remain visible for 10 years. For Chapter 13 filers, it typically stays on the report for around seven years. When a prospective lender runs a credit check on you within this period, they will see that you filed bankruptcy.

How to Bounce Back

While your credit score will dip after filing bankruptcy, the situation is not permanent. There are steps you can take to start rebuilding that number in the immediate aftermath, and every effort helps to reestablish your solvency. For instance, you can open a secured credit card, which functions as a debit card, wherein you spend off a prepaid balance. Obtaining a standard credit card or car loan, for example, are also useful ways to start rebuilding the score. When doing so, be mindful of high-interest rates or fees so soon after bankruptcy.

If you're considering filing bankruptcy, trust the legal professionals at Zebley, Mehalov & White, P.C. Since 2001, they have been representing clients in Fayette, Washington, Greene and Westmoreland  Counties in Southwestern PA, in a variety of legal issues, including bankruptcies. They offer quality legal guidance through every step of the process to help you regain financial freedom. Call (724) 439-9200 today to schedule a consultation, or visit them online to learn more about their background and expertise in this and other practice areas.