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How Many Points Will My Credit Score Drop if I File for Bankruptcy?

what is the downside of filing for bankruptcy

If you are considering filing for bankruptcy during these uncertain times, you are not alone. You may be wondering about the long-term impact of filing for bankruptcy. You probably are aware that filing for bankruptcy will impact your credit score. Perhaps your concern that your credit score will drop is keeping you from filing for bankruptcy. We will discuss how much filing for bankruptcy can drop your credit score below.

How Does Filing for Bankruptcy Affect Your Credit Score?

Three major credit bureaus report your credit score. These credit bureaus track all of your credit activity. Anytime you take out debt, it will affect your credit score. Your credit cards, mortgages, auto loans, student loans, and more will be reflected in your overall credit score. Your credit score will range from 280 to 850, with 850 being the best score possible,

Gaming the credit reporting system is impossible because the formula credit bureaus used to calculate someone’s score is proprietary and secret. As a result, it is impossible to game the system. If you do file for bankruptcy, it will affect your credit score because filing for bankruptcy and other events gives you “damage points.”

Filing for Bankruptcy and Your Credit Score

The higher your starting credit score, the more points you lose when you file for bankruptcy. Suppose you have a credit score of 675. Filing for bankruptcy will typically lower your credit score by 130 to 150 points. However, if you have a score of 780, filing for bankruptcy could cost you between  220 and 240 points. The lower your credit score before you file for bankruptcy, the fewer points you will lose. 

How much will filing for bankruptcy decrease your score? The answer is, it depends on where your score started. Many people who filed for bankruptcy have been struggling with making payments for a while. They may have accounts in default, wage garnishment, accounts in collection, or other types of adverse credit events. As a result, their credit score when they file for bankruptcy is usually somewhat low. When this is the case, filing for bankruptcy may not have a tremendous impact on their credit score at all.

Should I File for Bankruptcy?

If you are already struggling to pay your bills, it is probably already reflected in your credit score. For example, making late payments on credit cards or maxing them out will cause you damage points. Likewise, repossession and foreclosure will cause your score to drop. Filing for bankruptcy will decrease your credit score, but it will also allow you a way to start rebuilding your financial track record. Eventually, you will be able to increase your credit score.

Contact a San Diego Bankruptcy Lawyer

Are you trying to decide whether filing for bankruptcy is worth it? If so, you need the help of an experienced bankruptcy lawyer who will carefully listen to your case and provide you with strategic legal advice. Contact Bankruptcy Law Center today to schedule your initial consultation to discuss your case.

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Roger C.

I reached out to BLC to help assist with a chapter 7 business bankruptcy and they provided excellent guidance, advice, and support through the entire process. In my case an adversarial action was filed by one of the creditors and attorney Ahren Tiller and his staff provided sound ...arguments which prevailed. Couldn’t have found a more experienced and supportive team to represent me in a tricky situation. I would highly recommend them to anyone making the difficult but sometime necessary decision to find financial relief. Read more
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Justin R.

Like many others before and during the pandemic, life happenings caused me to be in a financial situation to warrant bankruptcy. The BLC was super professional all the way through the entire process. Right after I paid for my Bankruptcy, I got sick and had to have surgery and recovery. Then we ...were in full Pandemic mode. They were gracious to delay my filing until I was recovered and ready to file. I could not ask for more. The process was over all quick and painless for a simple Bankruptcy like mine. I feel a weight has been lifted and I can rebuild. Thank you for all your arduous work and patience, Gabriel, Ahren, and their teams are knowledgeable and efficient. Read more
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Katey Huntley

Responsive, friendly, kind, extremely easy to work with! So knowledgeable and made this entire process painless. Very grateful!

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Lynn Molina

Gabriel Hanna, Esq and the staff at BLC helped me in a very difficult time. I appreciate all the help and care they gave my case.

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Linda Cramer

I can’t say enough of how much this bankruptcy law firm helped me with my financial situation. They were all so helpful, efficient and made the difficult time and process as quick and easy as possible. I would recommend them to anyone I know and am glad to give my public recommendation as well. T...hey truly deserve a five star plus rating. Read more
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Andrea N.

I am very happy with my experience with BLC. Bankruptcy is not something anyone wants to go through, however everyone at BLC made my experience pleasant and easy. The process was explained thoroughly and I had an easy time reaching out and connecting with my attorney. Anika Renaud-Kim was my attorney ...and she was nothing short of amazing! She was very patient and generous with her time. Ms. Renaud-Kim definitely made me feel at ease and comfortable through the entire process. Read more
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Lidia Paramore

they did a great job for me, helped me anytime I needed something, my Lawyer Gabriel Hanna is the best, gave lots of confidence all the time..thanks BLC I will.always recommend you, I’m very grateful for your service!!!

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Rachael C.

When searching for information I had called a few different firms and received consults. BLC was the only one who didn’t shy away and provided answers and information during the consult. Once I agreed to move forward, they were supportive, informative, and eased my anxiety through the whole process.... I can’t recommend them enough. Read more
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Emily Martinez

AmazingI had many questions and uncertainties and the carefully explained it all and made it easy to understand. They facilitated a fast and easy process making this scary difficult thing simple

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Legal Disclaimer: The Bankruptcy Law Center is a California Licensed law firm with attorneys licensed in the state of CA, NY. Attorney Ahren Tiller is responsible for this advertisement. Bankruptcy Law Center’s principal office is located at 1230 Columbia st. Suite 850 San Diego, CA 92101. Prior results listed on this site do not depict or in any way infer a prediction or outcome.We are a debt relief agency proudly providing options to people with financial problems. View our Privacy Policy

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