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Does Bankruptcy Ruin Your Credit?
What Happens To My Credit Score When I File Bankruptcy?
In many cases, filing a bankruptcy case improves your credit score within a year or two after filing.
Your payment history and the amount of debt you owe make up over half of your credit score.
Most people have already damaged their credit score because of missed payments and too much debt by the time they make the decision to file for bankruptcy relief.
Can Filing Bankruptcy Help Improve My Credit Score?
Filing bankruptcy helps improve the “amounts owed” portion of your credit score by discharging unsecured debt.
In addition, creditors cannot continue to report late payments on debts that are discharged thereby helping to improve the payment history portion of the credit score.
By not filing bankruptcy, you prolong the time it takes to improve your credit score.
If you don’t pay your debts, creditors continue to report late payments and other negative information.
Even if you begin paying the debt, the negative information remains on your credit report for years.