Will filing bankruptcy severely damage my credit score?

Will filing bankruptcy severely damage my credit score?

If you are already 60 to 120 days late in payments bankruptcy will not significantly damage your credit score because you are already low end of the curve.  Credit score is a record of all your credit transactions and is determined by many factors such as late payments, high credit balances, charged off accounts, collection accounts and many more.  All late payments will be in your credit report for seven years until you file bankruptcy.  When you file for bankruptcy, these debts will be marked as “included in Chapter 7 or 13 bankruptcy” instead of being reported with so many late payments.

By the time you are considering bankruptcy your credit score is already in the 500 range and by filing bankruptcy the reduction in credit score will not be very much.  In reality, after filing bankruptcy your credit score will improve because of the following:

  1. The negative reporting of late payments and non-payments will not be reported anymore in your credit.
  2. If you file bankruptcy you can start building your credit just after your bankruptcy discharge because there will be no more late payments the lenders will be reporting.
  3. If you managed your credit well after bankruptcy, you can achieve a credit score of around 700 within two or three years.
  4. Historically, when buying secured properties such as house or car, you would be given credit within three years.  Under the current economic situation when credit is hard to find even for those with a 700 credit score find it hard to borrow money.  Good credit and bad credit does not make big difference nowadays when it comes to borrowing money because banks are not lending at all.
  5. You can use your own bank debit card in place of credit card for the first few years after bankruptcy.
  6. You can get a secured credit card by depositing money to the credit card company so that you can have a credit card.  This will help you build your credit score.
  7. You will have more cash after discharge from bankruptcy because you will no longer be paying bills you were paying before.  Hence, your need for credit is basically eliminated.

Question:   Can I still rent an apartment if I file bankruptcy?

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