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Q: How does bankruptcy affect my credit score?

A:While a bankruptcy, which is essentially a legal declaration that you can’t pay your creditors, won’t necessarily lead to the lowest credit score possible, it will have a significant impact on your credit rating.

How low can you expect your score to drop?  According to John Ulzheimer, president of consumer education for, it varies.

“Consumers can normally file two types of bankruptcy: Chapter 7 or Chapter 13,” he explains.

Chapter 7, also known as “straight bankruptcy,” fully cancels all statutorily dischargeable debts, notably credit card debt. Chapter 13, or the “wage earner plan,” requires the consumer to pay a trustee of the bankruptcy court, which then pays your creditors. Chapter 13 is an option for consumers who have steady income and can pay some of the debt back over time.

According to Ulzheimer, Chapter 7 filings remain on your credit files for 10 years from the filing date, while Chapter 13 bankruptcies remain on your credit files for seven years from the discharge date (the time at which the debtor completes all necessary payments). The timeframe in question, however, cannot exceed 10 years.

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The catch here is that most Chapter 13 filings take anywhere from three to five years to discharge, so they almost always remain in your credit history for 10 years, meaning that both bankruptcies essentially affect your credit score for the same length of time. They also will cause your score to drop approximately the same amount.

The exact effect, however, will vary depending on the score you had prior to filing. Those with a high FICO credit score of 750 or above can expect a 200- to 300-point hit. Those with FICO scores that are already down in the dumps  - which, Ulzheimer notes, is the more likely scenario – will be less impacted.

Need some more good news? While the score will be impacted for the entire length of the bankruptcy filing, its effects will lessen over time.

“Within a few years your scores can be very respectable, especially if you’ve started to rebuild your credit and have managed it properly,” Ulzheimer says.

Want to know what affects your credit score? Email your questions to

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