Filing for bankruptcy is a significant financial decision, and one of the most common concerns people have is how it will impact their credit score. While bankruptcy does affect your credit, the long-term consequences may not be as severe as many believe—especially when compared to continuing to struggle with unmanageable debt.

The Immediate Impact on Your Credit Score

When you file for bankruptcy, your credit score will likely drop, often by 100 to 200 points or more. The exact decrease depends on your current score and the type of bankruptcy you file—Chapter 7 or Chapter 13. A higher credit score may experience a larger drop, while those already struggling with poor credit may see less of a decline.

How Long Does Bankruptcy Stay on Your Credit Report?

• Chapter 7 bankruptcy stays on your credit report for 10 years from the filing date.
• Chapter 13 bankruptcy, which involves a repayment plan, remains for 7 years.

During this time, the bankruptcy is visible to lenders and may influence your ability to obtain new credit or loans.

Rebuilding Your Credit After Bankruptcy

Although the impact on your credit score is immediate, it’s not permanent. Many people begin rebuilding their credit soon after filing. Some ways to rebuild include:

• Secured credit cards – These require a deposit but help establish a positive payment history.
• Paying bills on time – Your payment history makes up a large portion of your credit score.
• Becoming an authorized user – Being added to a trusted person’s credit card account can help improve your score.
• Monitoring your credit report – Checking for errors or incorrect reporting ensures accuracy as you rebuild.

Bankruptcy Can Be the First Step Toward Financial Recovery

While bankruptcy does impact your credit score, it also provides a clean slate to regain financial stability. For many, it's a better alternative than continuing to miss payments, accumulate late fees, or face lawsuits from creditors. Over time, consistent financial habits can lead to a stronger credit profile—even after bankruptcy.

At Anyama Law Firm, we assist individuals and families across California with understanding the bankruptcy process and navigating the path to financial recovery. If you're considering bankruptcy, we’re here to help you explore your options and plan for a better future.