Credit score on bankruptcy: filing does not reset a credit score to zero, and a drop is not automatic. What happens depends on the case and on the credit score at the time of filing. Jacob addresses two common misconceptions and the factors that can affect the result.
Frequently Asked Questions
How much will your credit score drop when you file a bankruptcy?
This is a really good question because there are a lot of misconceptions out there. A lot of clients come with the misconception that when you file a bankruptcy, your credit score drops to zero or completely resets. That’s not the case. You still have a credit score.
Another common thought is that when you file a bankruptcy, your credit score is automatically going to drop. It is case dependent, and some of this is going to depend on what your credit score is at the time that you file the case, but some clients actually see an increase in their credit score when they file the bankruptcy.
Several factors can be the cause of that. The common factors are going to be your debt to income ratio, your utilization rate, and whether anyone is negatively reporting. In some cases, those factors can actually lead to an increase in your credit.
Are you struggling financially? Pratt & Maegli Law Firm in Rockford helps Illinois families and individuals explore Chapter 7 and Chapter 13 options with clear answers and a personal approach. Call (815) 315-0683 or visit rockfordbankruptcytoday.com to schedule a confidential consultation and take the first step toward real financial relief.