Before using bankruptcy to get out of debt, you should do two things. First, meet with a lawyer to find out how it will help your financial situation. Two, figure out how declaring bankruptcy will affect your future. As you discuss these things, you can also talk about the effects that Chapter 7 will have on your credit. If this is something you are wondering, here are the primary effects that you should expect after filing Chapter 7.
1. Your Score Will Drop
It is not uncommon for a person's credit score to drop up to 200 points from a bankruptcy posting. While this doesn't happen in all cases, it can. If your score is currently around 650, for example, you may see a drop of 100 or more points after the posting hits your report. You should expect a decrease in the score, but the amount of the reduction varies.
2. Your Report Will Reflect the Bankruptcy
Your report will not reflect a drop in score until the bankruptcy court posts the bankruptcy filing to the credit bureaus. Bankruptcy courts generally post filings within just a couple weeks of a person filing, so you should expect this to occur soon. The posting will state that you file for Chapter 7, and this posting will not fall off your report for ten years. If it does not fall off after ten years, you can dispute the posting to get it removed from your report.
3. Every Account Will Have a New Remark
Another effect you should expect is a new remark on every account on your report. When you file for bankruptcy, you must list every account you have. When the bankruptcy posting appears on your report, each account listed on your paperwork will receive a new remark. The remarks may state that the accounts were part of a Chapter 7 case. The balances of the accounts will also drop to zero.
4. The Accounts Will Fall off after 7 Years
Any account affected by the bankruptcy case will remain on your credit report for seven years from the date of the posting. After seven years, the accounts should fall off. If they do not, you can dispute the accounts.
You can learn more about how bankruptcy will affect you and your credit by talking to a bankruptcy lawyer. They can answer your questions about Chapter 7 or Chapter 13.
